Investment market
Retail parks and convenience retail
Retail parks and convenience retail schemes remain the most in demand product as far as Polish retail investment market is concerned.
Contrary to the years 2016‑2019, when investment volume transacted within the analysed sector did not exceed 10% on average, 2020 saw the new height of over 20% share in total retail volume (as many other investments were put on hold due to the pandemic), followed by 2021 with 12% (€117 m) and Q1-Q3 2022 period with 15% (€127 m).
Nevertheless, the number of transactions in this sector breaks records. High liquidity accompanied by the lower volume reflects the investors’ turn to small retail parks and convenience schemes, including those located in smaller cities and towns. In Q1-Q3 2022 period, 17 out of 26 transactions recorded in the retail sector were due to retail parks and convenience retail, which was the highest result since the beginning of the market.
Note: Following report focuses on the transacted retail parks and convenience retail schemes, defined as retail facilities with convenience offer, i.e. retail parks (over 5,000 sqm of GLA), convenience centres (GLA below 5,000 sqm) and stand‑alone grocery stores.
The market growth dynamic is relatively slow, because the majority of investors are long‑term holders. Therefore, investment volume depends mainly on developers and newly-delivered assets. In Q1-Q3 2022, 40% of transacted schemes were new developments (under 2 years on the market). Analysed period saw only one portfolio transaction regarding the sale of 3 retail parks. On another matter, Avison Young represented Newbridge Poland in the refinancing process of SMART Portfolio, composed of schemes located in Grodzisk Mazowiecki, Włocławek and Namysłów.
Polish retail park and convenience retail market attracts investors growingly. So far, 2022 welcomed two newcomers, namely Lords LB and LEOFF Group who acquired two prime properties in Wrocław and Opole. By the end of the year, we expect the debuts of three newcomers to the Polish investment market from France, Israel and Czech Republic attracted by the retail park product.
Investment market in the analysed sector has been shaped by two major players during last two years, who were responsible for 36% of transacted volume in 2021 - Q1-Q3 2022 period.
What is worth noting, aquisitions are very often hindered because of the market fragmentation and require increased effort into transaction process in relation to the involved capital.
Retail parks are still interesting assets for investors.
The prices and estimated values of retail parks depend particularly on the tenant mix, including the presence of a grocery market, run by well-known operators. The highest prices and thus the lowest yields are observed for facilities with a WAULT of more than 7 years and food anchors at over 15 years.
Depending on several market factors and the property’s specification, prices range from EUR 800 to EUR 2,000 / sqm of leasable area. The most common rates of return are in the range of 7.00% - 8.50%.
Monika Bronicka MRICS
Director, Head of Valuation and Advisory Business Development
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