“Retail sales in constant prices in January 2023 were up by a mere 0.1% year-on-year, but in February 2023 fell by 5.0% compared to 2022. The retail sales performance for February 2023 was the weakest since January 2021, i.e. an interim period between the first and second COVID-19 lockdown. Despite the influx of over 1.5 million Ukrainian refugees who are contributing to the growth of Polish retail, the consumer recession is deepening,” comments Ewa Derlatka-Chilewicz, Retail Market Expert, Cushman & Wakefield.

Of particular concern is the fact that Polish people are also economizing on groceries, beverages and tobacco, with sales down by 4.6%. Interestingly, fashion and health & beauty – the categories which are particularly important for shopping centres – saw February sales grow by 9.9% and 2.7% year-on-year respectively. Another strong performer was the sales of motor vehicles, motorbikes, and spare parts (up by 7.5%).

In February 2023, Poland’s online penetration rate stood at 8.7%, up by just 0.4 pp compared to January but down by 1.3 pp year-on-year.

A surprisingly strong start into the year for retail space supply

New retail supply for the three months to March 2023 hit around 105,000 sqm, marking the best first-quarter result for eight years. New openings included six retail parks: in Iława, Kłodzko, Łubna, Świdnik, Zambrów and Żnin. In addition, the first quarter saw the completion of the extension of retail parks in Koszalin, Lipnik and Ząbkowice Śląskie, as well as the redevelopment of two shopping centres in Warsaw: Atrium Promenada and Fort Wola. This brought Poland’s total retail stock to just over 16 million sqm. Another 300,000 sq m is expected to be added to the market by the end of 2023.

“At the end of March 2023, there was over 400,000 sqm of retail space under construction and scheduled for opening in 2023-2024. The new retail space supply will be delivered through 32 new projects, six extensions and three redevelopments, including two hypermarkets vacated by Tesco in Opole and Gorzów Wielkopolski, and the Sukcesja shopping centre in Łódź. It is also worth noting that over 51% of the retail stock under construction will be delivered in smaller cities - those below 100,000 inhabitants,” comments Ewelina Staruch, Analyst, Consulting & Research, Cushman & Wakefield.

The largest retail projects underway are Koszalin Power Center, Nowa Sukcesja in Łódź, Karuzela in Biała Podlaska, Vendo Park in Szczecin and Galeria Bawełnianka in Bełchatów.

“The launch of Bawełnianka is undoubtedly one of this year’s most awaited retail openings in Poland. The tenant mix of this new shopping centre will include well-known and reputable brands such as Apart, Carry, CCC, Cropp, Dealz, Half Price, Hebe, House, Media Expert, Mohito, Ochnik, Pepco, Reserved, Rossmann, Sinsay, Swiss, TEDi, Verona, Vision Express, Vistula, W.Kruk, Via Moda, and Wólczanka. In addition, German-based discounter Woolworth, which is expected to debut on the Polish market this year, will open one of its first Polish stores in Bawełnianka,” says Ada Budynek, Leasing Team Manager, Cushman & Wakefield.

Demand – new brands enter Poland

The first quarter of 2023 witnessed four new brands enter the Polish market. The newcomers were Lush, Master Burger, Mix Markt, and MOL petrol stations. The brands expected to open in Poland in the months ahead include Woolworth, Butlers, Popeyes, and Żabka Drive, which will be launched by the owner of Żabka.

Footfall and turnover: a stable customer base

The average monthly footfall for shopping centres and retail parks in March 2023 was approximately 416,000 per retail scheme, representing a 12% increase year-on-year.

“High levels of footfall were recorded throughout the first quarter of 2023, with the average up by 18% year-on-year. The largest shopping centres - those sized over 60,000 sqm - outperformed, attracting on average around 860,000 customers per scheme in March 2023, up by 14% compared to the previous year,” says Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.

In February 2023, net nominal retail sales for prime retail schemes averaged PLN 877 per square metre of floorspace, marking a nominal increase of over 30% compared to February 2022. Real turnover (taking account of inflation) was, however, up by only 11% year-on-year.

Rental growth driven by strong occupier demand

Prime shopping centre and retail park rents rose in Q1 2023, with rental growth largely driven by inflation-linked indexation under lease agreements. However, only prime units in the best-in-class shopping centres in the largest conurbations are likely to fetch higher rents under new leases. High street rents remain flat.