Although the Polish retail market is still struggling with the effects of the COVID-19 pandemic, forecasts for the sector are more optimistic than for the rest of Europe. According to Oxford Economics, retail sales in Poland are expected to grow by 4.9% per annum until 2023, which would put Poland in a leading position in Europe. 2021 is expected to see approximately 209,000 sqm of GLA solely in retail parks come onto the market, meaning that 2021 would be a record breaking year for retail parks in terms of space delivered to the market.
The current supply of retail parks, both regional and traditional, and convenience centres in a retail park layout total 2.87 million sqm of GLA. Regional retail parks make up half of this space, however, their share is decreasing year by year in favour of smaller assets,
says Joanna Tomczyk, Senior Research Analyst, JLL.
When choosing new locations for our Vendo Parks, we are still focusing on small towns of around 15 000 inhabitants which are poorly served by their retail offer. The whole of Poland is taken into consideration during this process and our projects always account for the presence of a food operator[SP1] [MM2] . The investment’s sphere of influence has around 30 000 potential visitors living in the city and surrounding area. At present, we have three new retail parks at an advanced stage of construction, namely Inowrocław, Chorzów and Radzymin, which we plan to open by the end of this year. We are also in the process of expanding the Vendo Park in Pułtusk. The secured land bank means we can securely plan investments for 2022 with next year seeing no slowdown in the current pace of Trei's development in Poland,
says Jacek Wesołowski, Managing Director at Trei Real Estate Poland.
Trading headwinds on the retail market in Poland, including a drop in both footfall and turnover numbers in the majority of shopping centres during the COVID-19 pandemic, as well as negotiations between tenants and landlords, have caused a slowdown, as well as a temporary halt to some retailers’ development plans. Value retailers, off-price brands, those offering lower-priced products, and grocery and drugstore chains were the least affected by the pandemic and their expansion plans have hardly changed. Action, Dealz, KiK, Pepco, Tedi and new market entrant, HalfPrice, have successfully attracted consumers to their stores by offering attractive prices on a wide range of products,
says Anna Wysocka, Head of Retail Agency, JLL.
In H1 2021, we opened four Vendo Parks in Zielonka, Myśliborz, Koszalin and Piekary Śląskie with a combined area of almost 20,000 sqm. In the same period, we concluded 35 lease agreements with a total volume of 22,500 sqm. As the pandemic has not affected Trei’s commercialization process of new facilities, the company has been able to successfully implement its investment plans. Today, an increasing number of tenants are considering locating their stores in retail parks. The last fifteen months have proved that we are more resistant to restrictions than large-format shopping centers. We also offer lower leasing costs than a mall. As a result, we are currently holding talks with companies that have not previously had a presence in retail parks, including the entire LPP group and the Smyk brand. In addition, there is a relatively large number of players, making their market debut in Poland, which are also interested in retail parks,
adds Jacek Wesołowski.
Investors’ attention is still focused mainly on retail parks, convenience centres, DIY stores and grocery shops, which is reflected by the number of transactions being concluded this year. So far prime cap rates for the best retail parks remain stable at around 6.80%; however, the high level of interest and limited availability of a good product may result in short-term compression,
adds Agnieszka Kołat, Head of Retail Investment, JLL.
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