Nearly 70,000 sqm was delivered to the market across all retail formats in Q1 2021. The new supply comprised eight new retail schemes sized between 5,000 sqm and 11,000 sqm, most of which were standalone stores and small retail parks. Additionally, extensions of two existing retail parks were completed in Q1 2021. Around 35% of the new supply is retail space returned to Poland’s retail stock following the conversion of Tesco’s shopping centres closed in recent months to Castorama DIY stores in Starogard Gdański, Ruda Śląska and Tychy.

Growing popularity of convenience shopping in small retail schemes close to where people live

More than 380,000 sqm of retail space is currently under construction and scheduled for delivery this year and in 2022. The largest projects underway include a mixed-use development Norblin Factory in Warsaw (26,000 sqm of floorspace), Galeria Andrychów (24,000 sqm) and Galeria Bawełnianka in Bełchatów (23,000 sqm).

“Of the 31 schemes in the pipeline, 16 are retail parks, with the biggest expected to provide 18,000 sqm. The pandemic has accelerated the growth of this format, which - together with convenience shopping centres - fits in with the growing popularity of convenience shopping in small retail schemes close to where people live,” says Małgorzata Dziubińska, Associate Director, Cushman & Wakefield.

Q1 2021 was particularly challenging for both tenants and landlords of shopping centres

A total of nine weeks of lockdown, an unclear lease status of many tenants, uncertainty caused by the worsening pandemic and the lack of a specific date for the lifting of retail restrictions have all left their mark on the entire sector.

Many tenants are restructuring their chains and closing unprofitable stores. At the same time, new off-price concepts and brands are emerging, such as CCC’s Half Price, which is planning to open its first five stores in May. Economy brands such as Pepco, Dealz, Action, and KiK, as well as grocery retailers continue to grow. The segment of hard discounters, joined by Russian-based Mere last year, has expanded to include the Polish retailer Vollmarkt, which opened its first store in February 2021.

Other newcomers in Q1 2021 include Rolf Benz from Germany and Swedish-based Duxiana, which opened furniture stores in Warsaw and Kraków. Among new market entrants in the “health and beauty” category is the Italian brand DentalPro Clinic, which started operations in Manufaktura Łódź, while German retailer DM-Drogerie announced plans to expand into the Polish market.

While exhibiting a very high level of caution with regard to making long-term lease commitments, tenants are increasingly opting for short-term pop-up stores. There is also substantial demand for store locations in high streets in residential and office settings or in residential districts.

“The second quarter of 2021 will certainly be a period of major challenges for the entire retail industry, but the lifting of lockdown restrictions as of 4 May is very encouraging to see. According to economic forecasts, the forthcoming months are expected to see a rebound amid substantial consumption growth,” concludes Małgorzata Dziubińska, Associate Director, Cushman & Wakefield.