After 15 years of development, the outlet center market in Poland is not expected to see many new project openings in the near future. This does not mean that the sector is not in for major changes
By Adam Zdrodowski
There are now 14 existing outlet centers in Poland, which, according to Colliers International data, offer a total of approximately 250,000 sqm of leasable space. Typically sized between 10,000 sqm and 25,000 sqm of GLA, they accommodate a combined 1,150 retail units. Five more projects of this kind are currently in the pipeline: two in Bydgoszcz (Outlet Center Bydgoszcz and Metropolitan Outlet Bydgoszcz) and one each in Toruń (Outlet Toruń), Gliwice (Silesia Outlet Gliwice) and Kraków (Galeria Plaza Kraków).
The majority of the existing outlet centers in Poland are located in large agglomerations. Admittedly, smaller projects have also been opened in the mid-sized eastern cities of Białystok and Lublin, but no major geographical expansion is expected in this market in the coming years. “The current 2 percent-odd share of outlet centers in the total volume of modern retail space will rather not increase in the near future,” said Anna Staniszewska, consulting and research director, CEE, at BNP Paribas Real Estate.
Asked whether outlet centers would, in the near future, be opened in smaller and smaller cities across Poland just like regular shopping malls have been in recen/t years, Michnikowska replied in the negative, claiming that there is no such need in this sector of the retail property market.
While the outlet center market will not grow in the same way that the market of regular shopping centers did in the past few years (where developers ventured into smaller cities to fill retail gaps as the largest agglomerations became increasingly saturated), it will keep evolving. In Michnikowska’s opinion, the further growth of the outlet center market in Poland will be defined by extensions of existing malls, rather than by new projects in new locations. It will soon be time in this market for quality growth, rather than quantity growth, she said.
Poland’s outlet center market is the largest in Central and Eastern Europe. However, it cannot compare with the markets in Western Europe where both outlet centers and the stores in them are larger than their Polish counterparts, and they offer a wider range of products. Premium brands are one of the major magnets drawing visitors to outlet centers in the more developed Western European markets. By contrast, such brands are virtually absent from outlet centers in Poland, experts note.
Many outlet centers abroad offer a “consumer experience” that their Polish peers will find difficult to emulate in the foreseeable future. The reasons for that include the limited number of retail chains that are present in Poland, and the relatively low purchasing power of Polish buyers. Nonetheless, as the Polish outlet center market becomes increasingly competitive, the existing centers will continue to change in order to become more attractive. Efforts aimed at expanding centers’ offering and improving their operational performance are to be expected.
The modernization of restaurant and entertainment areas in shopping centers, which are now increasingly seen as meeting places as much as shopping venues, has already become a major trend in the retail property market in recent years. Now the trend seems to have also started affecting the outlet center sector of the market. Neinver, for one, has recently announced that its Factory Kraków outlet center will get a new food court and a new interior design, with work on the modernization project scheduled to finish later this year.
According to Colliers International analysts, owners will be adding complementary functions to their existing centers in order to attract larger numbers of visitors. Depending on the location, this could, for example, mean the opening of a supermarket or a cinema in an outlet mall. Besides, new technologies aimed at making shopping more convenient are likely to be introduced to outlet centers. Also, the individual outlets operating in outlet malls will change, with retailers likely to start seeing the latter as a good testing ground for their products and opening pop-up stores there.
One can expect the emergence of lines of products designed specifically for the purposes of outlet centers. Last but not least, the pricing policies of outlets will probably evolve so that more emphasis can be put on bargains and special outlet sales. Whether these strategies will be enough to make Poland’s outlet centers prosper remains to be seen. Apart from opportunities, the future also holds risks for the market with the slower retail chain expansion seen in some sectors remaining a major problem, the Colliers International report said.