POLAND Trends and Developments Contributed by: Radomił Charzyński, Kamil Majewski, Olga Durawa and Filip Widuch, Greenberg Traurig LLP
Retail Sector In recent years, the retail sector in Poland has been dominated by retail parks in terms of newly completed space. In 2023 and early 2024, a total of approximately 70 new retail projects opened, adding more than 470,000 square metres of gross leasable area (GLA) to the total stock. Strong development activity has been observed in retail parks, with an area below 10,000 square metres GLA and “convenience” projects (usu - ally not exceeding 5,000 square metres GLA). Continuing the recent trend, the developers have clearly shifted their interest towards towns and smaller cities. Retail space in towns and small - er cities (under 100,000 inhabitants) accounts for around a quarter of the total retail stock in Poland. Compared with Western Europe, cov - erage of modern retail projects (calculated per 100 inhabitants) in Poland is significantly lower, which also encourages developers and investors to fill this gap. This shift towards towns and smaller cities and the retail park format is also clearly visible in the retail space currently under construction. By the end of 2023, almost 45% of the approximately 500,000 square metres GLA of new retail space under construction was located in towns and smaller cities, and 75% was designed in the retail park format. Although the retail market has recently been dominated by smaller retail formats, some activity in respect of shopping centres is also underway, particularly in the regions; however, this is not yet visible in the investment or leasing volume. Operators of large shopping centres are currently carrying out a number of revitalisation, recommercialisation and rebranding projects. Older shopping centres designated for redevel - opment and to be sold at competitive prices will
In terms of vacancy rates (currently averaging 10.38% in Warsaw), we are witnessing a two- speed market. While buildings more than ten years old and in less prime locations can have a vacancy rate of more than 20%, only 3% of space is available for lease in prime locations in the centre of Warsaw. Due to this supply gap and the limited opportunities for tenants to relocate to a more suitable space (particularly those ten - ants requiring more space for their operations), it is expected that the renegotiation of concluded lease contracts will intensify. Other major cities are experiencing record- breaking occupier activity, with around 740,000 square metres being leased in 2023. However, the supply of new offices and pending con - struction activities remain at lower levels than in previous years. Given the foregoing and the high tenant activity, the vacancy rate is expected to decrease in the upcoming quarters. In 2023, the highest supply of new office space in cities was in Wrocław and Kraków, whereas Warsaw ranked third. In line with the trend evident in previous years, the expansion of flex office operators areas con - tinues to attract interest. In Warsaw, more than 50% of the buildings delivered in the past eight years offer flex space and the flex office market continues to grow. Currently, tenants from business services as well as manufacturing and energy sectors are very active on the leasing market and – together with landlords – create new office standards. A num - ber of companies relocating their business to new offices are simultaneously reducing space (owing to hybrid and remote models of working).
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