The Covid-19 pandemic has highlighted challenges that the Polish retail market already faced, but three lockdowns in 12 months also changed shopping habits and contributed to the growing popularity of smaller retail formats according to JLL.
The firm’s head of retail agency in the country, Anna Wysocka (pictured left), said the pandemic increased online and multi-channel sales and emphasised the need to look for alternative locations that would allow chains to attract new customer groups.
Other locations include high streets, which, Wysocka said, thanks to the adoption of new strategies, may benefit from the current changes taking place on the market.
The pandemic also strengthened the popularity of convenient and fast shopping that can be done within walking distance of home, a trend which was reflected in the new space brought to the market in 2020. During the year developers completed a total of 430,000 sq m in both large-scale retail projects and convenience centres.
“Of the new space delivered in 2020, 41% was located in retail parks and another 28% in convenience centres. Shopping centres, which are still the most widespread format on the market, delivered a mere 20% of the new retail space. As a result, total retail space in Poland, including both large formats and convenience centres, stood at nearly 16 million sq m at the end of 2020,” added senior research analyst Joanna Tomczyk (above).
The largest retail schemes opened in 2020 included Galeria Wiślanka in Żory (20,000 sq m), Dekada in Nysa (19,600 sq m), Galeria Chełm in Chełm (17,500 sq m), and Elektrownia Powiśle – a mixed-use project in Warsaw (15,500 sq m of retail space).
However, approximately 335,000 sq m was withdrawn from stock, due to several closures of older Tesco and Auchan assets as well as the Sukcesja shopping centre in Łódź. There were also a number of conversions from retail space into other functions.
Most tenants slowed or suspended their expansion plans except for grocery chains and value retailers who were less affected by the pandemic. Also 2020 saw the debut of several foreign brands, including Primark (Ireland) and Urban Outfitters (US), American Vintage (France), and Falconeri (Italy). However, some brands closed operations in Poland including Forever21, Camaieu, Promod, and Stefanel, shoe chain Salamander, sporting goods provider Sportisimo, and household goods chain Miniso.
A decline in investment volume in Poland’s retail real estate sector also occurred in 2020 during which the volume was approximately €650 million worth of deals, predominantly focused on retail parks, convenience centres, DIY stores, food stores and assets for repositioning, repurposing or operator change.
“We expect that along with the continued high activity of developers in the segment of retail parks and convenience centres, as well as the changing shopping habits of Polish consumers, investor attention will increasingly focus on these types of formats. Prime retail park yields remain at 6.8% and are expected to compress, due to increased investor demand for this type of product”, comments Agnieszka Kołat (above), executive director, retail investment, JLL.