- In the first half of the year, 13 transactions were completed, the most notable of which was the sale of a portfolio of six shopping centres by Cromwell Polish Retail Fund to Star Capital Finance – the largest transaction on the Polish retail market since 2019.
- Although the environment remains challenging, the market situation is clearly improving. The short- and medium-term outlook gives reason for cautious optimism, especially in retail sales, where the cumulative three-year volume growth in Poland is ahead of the forecasts for the established economies of Western Europe.
Inflationary pressure is weakening, but not disappearing. Experts expect the average annual inflation rate to fall from 14.4% reported at the end of 2022 to 3.9% and 3.3% in 2024 and 2026, respectively (Oxford Economics) – says Maciej Kotowski, Director, Research & Consultancy, JLL.
First half of 2024 driven by continued strong growth in the retail park sector
The retail real estate market in Poland grew by another 215,000 sq m in the first half of 2024, which is comparable to the results from the same period in 2023 and to the five-year average.
From January to June this year, over 145,000 sqm of GLA was delivered to the market in Poland within retail parks and 28,000 sqm of GLA in convenience centres, which is in line with the trend observed for several years. In total, both formats accounted for around 80% of the total area built in the first half of the year. The third most popular format is free-standing retail facilities, the supply of which increased by 26,600 sqm. Two Castorama stores and one Leroy Merlin point were delivered to the market. On the other hand, activity in the segment of traditional shopping centres remained relatively low. In the first half of the year, the Galeria Starówka centre was opened in Leszno (15,200 sqm), and the extension of the gallery in Sieradz was completed.
Most of the new supply in small and medium-sized towns
The majority of new supply (62%) was delivered in H1 to small and medium-sized cities with a population of less than 200,000. At the same time, relatively high activity was also observed in the markets of the largest agglomerations – facilities located there accounted for 25% of new space. The remaining 29,000 sqm of GLA (13%) delivered in the past half-year were delivered to cities with a population of 200,000-500,000. In addition, at the end of June 2024, over 460,000 sqm remained under construction in all formats, of which approximately 83% will be delivered to the market this year. In line with the ongoing trend, most of the space is being built in retail parks and convenience centers, which accounted for 79% of the volume under construction in H1. In the case of traditional shopping centers, the reopening of one center is planned – Sukcesja in Łódź. There is also one outlet centre under construction – Designer Outler Kraków (21,000 sq m GLA), which is scheduled to open in 2025.
Investors are increasingly focusing on commercial real estate
The first half of 2024 on the retail market started quite promisingly – 13 transactions were recorded in this period. A significant increase also concerned the total volume, which in H1 2024 reached almost EUR 497 million, which is 149% more compared to the first half of 2023 and 16% more than the five-year average. The largest transaction, which significantly improved the results, was the sale of a portfolio of six retail properties by Cromwell Polish Retail Fund to Star Capital Finance. The total value of this transaction is EUR 285 million, which is the largest investment on the retail market since 2019 (excluding company purchases). In the retail park segment, the largest transaction was the acquisition of a portfolio of two parks: Pasaż Kępiński and Pasaż Grodzki, which Refield sold to Falcon Investment. This was a continuation of the sale transaction of Pasaż Golubsko-Dobrzyński from 2022. Despite the fact that there were no transactions regarding prime properties in Warsaw, based on the general market sentiment, JLL estimates capitalization rates for the best shopping centers at 6.50% and 7.25% for retail parks – says Agnieszka Kołat, Head of Retail Investment, JLL.
