The increase in turnover and in footfall indicates that Poles have permanently returned to shopping centers. At the same time, we are witnessing further development of retail parks, convenience centers, and mixed-used facilities in line with the concept of the 15-minute city. Analyzing the third quarter, experts from BNP Paribas Real Estate Poland also note a decline in vacancy rates in shopping centers and growth in AI-driven retail solutions.
Malls regain popularity
Shopping malls are popular among Poles, especially during the summer season. As the quarterly report prepared by BNP Paribas Real Estate Poland shows, in July 2023, the tenants turnover in shopping centers was 6.5% higher compared to July 2022, and it increased in all categories. This is a good result, considering that according to Statistics Poland (GUS), the growth of retail sales for the entire trade in current prices in the same period was 2.1%.
“The overall footfall in malls increased by 4.3% compared to the previous year in July and was the highest so far this year. The sustained trend of increasing customer numbers shows that Poles have permanently returned to shopping centers. However, when analyzing the shopping baskets of customers in medium and smaller facilities, we observe that during a period of high inflation, their purchasing decisions are still cautious," says Fabrice Paumelle, Head of Retail, BNP Paribas Real Estate Poland.
The trend of increased footfall in shopping centers is prompting the market to react. From January to September 2023, approximately 193,500 sqm of modern retail space were added in 22 facilities. Mostly, small retail parks of up to 10,000 sqm were opened, although there were larger projects as well, such as the opening of Karuzela shopping center in Biała Podlaska with a leasing area of 24,000 sqm. Construction is still ongoing for 474,500 sqm of retail space, primarily in smaller towns. Among retail property tenants, non-food discount stores are growing the fastest.
Dwindling number of vacancies
One of the most important indicators reflecting the situation in each segment of the commercial real estate market is the decrease in the number of vacancies. This applies to six out of eight major cities. By mid-2023, the lowest level of unoccupied space was observed in Kraków, where only 1.7% of retail space remained vacant (a decrease from 1.9% compared to the same period in 2022). Second place in this regard goes to Łódź, where the vacancy rate is 1.8% (a decrease from 4.1% compared to the same period in 2022). In third place is Szczecin, where vacancies account for 2.0%, representing
a 2.6 percentage point downturn from the previous year.
The highest vacancy rate is currently in the Poznań retail market at 4.4%, even though this rate has declined by 4.6 percentage points compared to the previous year. This is due to the closure of two retail properties that noted very high vacancy rates in 2022.
The only major cities that experienced a slight rise in unoccupied space are Katowice, where the current vacancy rate is 3.9% (an increase of 0.5 percentage points compared to the same period last year), and Wrocław with a vacancy rate of 4.3% (an increase of 0.3 percentage points compared to 2022). As indicated by the authors of the report, the average vacancy rate in retail properties in major Polish cities declined by 1.1 percentage points compared to the previous year and was 3.6% by mid-2023. This decrease suggests a gradual recovery of the retail sector in Poland.
AI Makes its mark
The authors of the periodic report point out the growing significance of artificial intelligence, which is effectively transforming retail. AI solutions are revolutionizing the entire market, from production and logistics to sales, in both traditional and e-commerce channels. They enable the optimization of operations, growing efficiency, and better inventory and order management.
"Undoubtedly, the development of technology in online stores was accelerated by the pandemic, which in turn raised customer expectations for shopping, both online and in brick and mortar stores. Retailers, by meeting consumer needs and optimizing their costs and efficiency, more and more rely on AI-based solutions. Their main goal is to improve customer service quality by reaching them with personalized offers and presenting exactly what they need," emphasizes Anna Pływacz, Director, Retail , BNP Paribas Real Estate Poland.
The boom in mixed-use schemes
In recent years, the commercial real estate market in Poland has seen an accelerated growth in mixed-use schemes. Approximately 40 mixed-use developments have been completed in our country, and this market segment is gaining momentum. Such investments are beginning to appear all over the country, with the most prominent in Warsaw and its surroundings, as well as near Tricity, Łódź, Wrocław, and Poznań. Notable mixed-use projects in Poland include Wrocław's Quorum, Poznań's Nowy Rynek, Gdańsk's DOKI, Global Office Park in Katowice, Warsaw's Elektrownia Powiśle, Fabryka Norblina, and Browary Warszawskie, which combine office, residential, and retail.
The development of multifunctional facilities where shopping plays a complementary role aligns with the concept of the 15-minute city. "Mixed-use investments allow for an efficient use of land, especially in large urban centers where there are essentially no empty areas without history to develop. The commercial real estate market has become saturated with traditional projects, as exemplified by Warsaw's Mordor, which for well over a decade was predominantly an office monoculture and is now gradually being transformed into a modern urban district with efficient road communication, green spaces, and educational facilities," adds Anna Pływacz.
Debuts, Expansion, and Sales
The third quarter brought new debuts to the retail market. The Italian restaurant brand L'Osteria opened its first location in Poland at Centrum Praski Koneser in Warsaw. Additionally, the American fast-food chain Popeyes, after debuting in Wrocław and Szczecin, opened its first location in Warsaw at Złote Tarasy.
Primark continues its expansion in the Polish market, with the opening of its first store in Łódź, marking its sixth location in Poland. Meanwhile, the SPAR Group has decided to take strategic actions for the sale of the SPAR network in Poland, which currently consists of 212 stores.