Poland: Retail parks are entering smaller cities

In the first quarter of 2024, 6 new projects were delivered and 3 schemes were extended, representing 78,000 m² of modern retail space, according to the latest report 'Retail market in Poland 2024' prepared by Colliers. - Retail parks are now entering smaller cities. We also have a revived investor interest in this market segment," says Radosław Jodko, an investment expert.

According to the latest Colliers report summarising the first quarter of 2024 on the retail market, one of the largest retail parks completed since the beginning of this year is OTO Park Koszalin.

Some facilities are changing their purpose - such as one in Bydgoszcz, now functioning as a venue for closed events. New or redeveloped facilities are being built in Mysłowice, Przemyśl and Bytom.

Why are we still betting on retail parks?
"Today we are actually seeing in the market that retail parks are entering smaller cities. Here, the key to success and a good investment is to tailor the offer to the local communities. Judging by their popularity and very low vacancy rates, retail parks are a fairly strong part of the market. This is favoured by the consumer trend: a convenient shopping model, saving time, as it is not uncommon to run several other errands in addition to shopping, so convenient and comfortable parking is key," emphasises Radosław Jodko, an investment expert from RRJ Group.

According to estimates of the Polish Council of Shopping Centres, 110 new retail facilities, including 98 retail parks, will be built by 2025, which is expected to give a total of over 1.2 million m² of space.

"The popularity of this segment of facilities translates into investor interest. This is borne out by hard data - last year, in the retail parks segment, the total wolem of transactions exceeded €440 million. The revival in this market is also evidenced by the fact that as many as 29 brands have debuted over the past year, the highest number since 2017," Jodko calculates.

Why are new investors entering Poland?
"This year, like last year, investors' attention is mainly attracted by retail parks and convenience facilities - they generated more than 60 per cent of the transaction volume in this sector in 2023. - Investors see this type of investment as safe, with the prospect of a long and steady income," concludes Jodko.

"The development of this segment is also evidenced by the fact that new investors interested precisely in the commercial segment are appearing on our market, from Lithuania, Germany, France, the Czech Republic or even funds whose capital comes from Ukraine. It is also characteristic that private investors are also more and more willing to invest in retail parks," notes Radosław Jodko, an investment expert from RRJ Group.

Waiting for a rate cut.
What determines such investor confidence in investing in retail parks?
"The attachment of consumers who like this type of facility. New tenants are emerging - also offering the range of services that we can arrange while shopping, including medical. Besides, the pandemic also showed this attachment of consumers when this segment, compared to the overall market, was thriving. Investors today are looking for safe investment products. There is also a lot of promise from the pending interest rate cut in Europe," concludes Jodko.

As of the first quarter of 2024, there is approximately 430,000 sq m of retail space under construction in various parts of Poland, of which almost 80 per cent are developments involving retail parks and small local shopping centres.

In 2023, the stock of total retail space has increased by nearly 440,000 m². According to a report prepared by BNP Paribas "At a Glance - the modern retail market in Poland", the fourth quarter of last year turned out to be the best - 230,000 m² of modern retail space was delivered.