International consultancy agency, Cushman & Wakefield, has summarized the situation on the commercial real estate market. The year 2023 marked an increased activity among developers, who introduced approximately 450,000 sq. meters of new space. The improved condition of the Polish sector is confirmed by a variety of retail chain debuts – within the last 12 months, Poland welcomed 29 new brands, the highest number since 2017. Meanwhile, the slowing pace of price increase has affected consumer sentiment positively, reflecting in higher turnovers of retail objects.
SUPPLY: Q4 with the best result of new supply
According to data from Cushman & Wakefield, developers introduced 447,000 sq. meters of GLA in the form of new objects over 5000 sq. meters or their expansions in 2023. However, the balance that takes into account the closure of four shopping galleries and a discount outlet in Bydgoszcz resulted in a total new supply for the year of 343,000 sq. meters. Retail parks made up 80% of the newly introduced objects while shopping centers accounted for only 15%.
The best results of supply were recorded in the fourth quarter, which saw the completion of 217,000 sq. meters of GLA in modern retail space. In the last three months of the year, 20 new retail properties were opened, three existing ones were renovated, one underwent expansion, and four others were modernized. This brought the total resources of modern retail space in Poland to approximately 16.3 million sq. meters. Notably, projections for 2024 are promising, as analyzing objects currently under construction suggests supply results could be comparable or potentially better than the past year, comments Ewelina Staruch, Retail Market Analyst, Cushman & Wakefield.
DEMAND: Best statistics of new brand openings in six years
Cushman & Wakefield estimates that 11 new brands – Lichi, Moschino Jeans, Herse, Milk Bar, PLNY LALA, Guerlain, OD Store, WMF, Moomin shop, JUST IN CASE, and Mokida – entered Poland in the last quarter of 2023 alone, bringing the total to 29 retailers making their debut in the market for the year. This is the best result since 2017. Moreover, only two retail chains exited the Polish market within the year.
RETAIL SALES: October the only month with growth in 2023
The summary of retail sales statistics in constant prices (January-November 2023) published by GUS shows that October was the only month in which a year-on-year sales increase was noted, reaching 2.8%. The rest of the year recorded declines, with the highest reaching 7.3% in March and April. November recorded a decrease of 0.3% y/y. The period from January to November 2023 recorded a reduction in sales by 2.4% y/y.
VISITS AND TURNOVERS: Good results of attendance, turnovers slightly higher than in 2022 after accounting for inflation
Attendance in shopping centers and retail parks in the last quarter increased compared to 2022, but did not exceed the results from the pre-pandemic year of 2019. In October, an average of 452,000 customer visits per retail object were registered, reaching 424,000 in November, and exceeding 520,000 in December. Compared to 2022, attendance increased by 3.7% y/y in October, 1.8% y/y in November, and 0.5% y/y in December, comments Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.
RENTS: Retail parks record the highest increases
In all three surveyed groups of retail properties, galleries, parks, and shopping streets, average rents have increased throughout the year. Comparing the fourth quarter of 2023 to the same period in 2022 shows that the highest increase in rent rates was seen in retail parks at 12.5%, while rents in centers and shopping streets increased by approximately 7% y/y. Unfortunately, at the beginning of 2024, tenants must prepare for further increases due to rent indexation and the increase in operating costs, says Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
VACANCIES: highest level of unleased space in Poznan (4.4%)
The average vacancy rate in retail objects in the sixteen largest Polish agglomerations with a population exceeding 180,000 was 3.3% (as of the third quarter of 2023). The least available space for rent can be found in Torun (1.1% vacancies), Kielce (1.4%), Krakow (1.7%), and Lodz (1.8%).
