Poland’s retail market outlook 2013

Currently there are about 400 shopping malls with a total size of 9.2 million square meters in Poland. Developers continue to build both in big cities and small towns across Poland. We have continuously observed boom in Poland’s smaller towns, especially of less than 100 thousand inhabitants. New shopping centers were opened e.g. in Ciechanów, Belchatów, Tczew, Grudziądz, Świdnica, Kluczbork and Kędzierzyn-Koźle.

In 2012 374 thousand sq. m. of new space were made available for use. According to CBRE, 2013 will bring another 747 thousand sq. m. of new retail space across the country. Approximately 40% of the retail space will be made available to industry players and customers in large metropolitan areas, but smaller markets will also develop.

The retail market is becoming increasingly polarized – on one hand, developers are looking for niches in big cities, on the other – they target even smaller towns. Competitive focus is shifting towards cities with 200 thousand or even 100 thousand residents, such as Grudziądz, Łomża, Olsztyn and Zielona Góra. CBRE reports, that some developers were willing to start their projects in even smaller towns with population of 50-100 thousand inhabitants. In small towns there are about 20 projects currently under construction, e.g. in Chojnice, Czechowice, Ełk, Inowrocław, Łomża, Nowy Sącz and Siedlce. There is demand for new retail development both in small towns in Warsaw metropolitan region, like e.g. Legionowo, Otwock, Pruszków and Wołomin, as well as in smaller cities spread across Poland, e.g. Nysa, Chełm, Wlocławek and Zielona Gora.

Smaller number of prospective customers translates into smaller size of any commercial building that is planned. According to Jones Lang LaSalle expert cited by Rzeczpospolita, commercial buildings in smaller cities should hover about 20 thousand sq. m. depending on their location and characteristics of the city. In cities of less than 100 thousand residents developers are still exploring new concepts and locations to match their solutions to specific local needs. One can find large shopping centers with a regional profile, retail parks for convenience shopping, or city shopping centers.

Retail parks in small towns are usually more modest than similar objects located on the outskirts of large cities. Developers single storey buildings, with direct access, offering groceries, services, pharmacy, drugstore and shops with clothes, sports and media products.

In many cities of less than 100 thousand residents in Poland there is no modern retail building in place. However there are numerous projects already under construction or at an advanced stage of planning, which makes it challenging for new players to enter these cities. In such cities one can locate two or at most three shopping centers. However, cities of less than 50 thousand inhabitants adopt one location.

At the same time most medium-sized cities seem to be saturated with the retail space. Only a few cities with population below 400 thousand residents have some retail potential. However even in the saturated markets, one can find a niche to locate profiled shopping malls, like e.g. outlet centers or retail parks.