Savills still expects a focus on secondary and tertiary cities over the next 36 months, with activity in larger cities targeting retail parks and smaller convenience centres. Development of modern department stores and high street retailing will probably not accelerate until 2012, when 120 projects are due for completion to add three million square meters of modern retail floor space. The majority of these projects are planned for secondary and tertiary cities.

Demand for modern retail floor space has shrunk over the past 12 months, but "there are retailers, in particular low- and mid-range sectors, who are still expanding their chains and getting benefits from lower rental levels and larger incentives offered by landlords. Over 65% of current supply is focused around the eight largest agglomerations, and so the secondary and tertiary areas hold opportunities when the economy improves, says Savills Poland research and development consultant Michal Stepien.

Savills research notes a slight increase in average vacancy rates in Poland over the last 12 months, but overall vacancy rates in major regional cities still remain below 5%. A slowdown in the economy and the depreciation of the Polish zloty has been evident but nevertheless rents remain stable, with declines mostly in secondary locations and older projects. Prime rents in Warsaw are at €60 to €85 per square meter per month, and in regional cities, at €40- to €60 per square meter per month.

C&W predicts 2009 will end with750,000 square meters of new leasable retail space, as development decisions on retail facilities currently being delivered were made 2 -3 years ago at the market peak. But this year's difficulties in obtaining financing have put a number of projects on hold, meaning a drop in supply in 2010-2012, limiting availability of modern retail space. It believes small- and medium-sized cities will be most affected, as the main focus in recent years, and now considered more risky.

Falling retail turnovers and scattered bankruptcies have marked 2009, and zloty weakness negatively impacted retail chains in the early part of the year, though the currency stabilized in the second half, C&W notes. But at the same time, retail companies have also started recovery programs and debt renegotiations; sought strategic investors; optimised expansion strategies; and modified retail concepts; largely with positive results. Several retail chains have used the crisis period to push forward expansion plans and strengthen their market position. TK MAXX chain made a spectacular entry into the market, with plans to open a further 100 stores in Poland.

The increase in total leasing costs has caused rental rates renegotiations and more incentive packages and widened the gap between transactional and effective rent. But after 2010, limited availability of space for leasing will push rents back up and reverse the current market trend. For the retail investment market, 2009 has been a wait-and-see period for both sellers and buyers, but 2010 is expected to usher in a recovery. However, to minimize risk, investors will focus increasingly on prime properties or make sale & leaseback deals, C&W predicts.