Polish retail tenants shift to e-commerce amid rising lease pressures

The Polish retail market in 2025 will continue to experience tensions due to fundamental inequalities in lease agreements, according to the Association of Polish Employers of Trade and Services (ZPPHiU). In response, many shopping center tenants are actively increasing their e-commerce sales share to mitigate risks stemming from landlords’ leverage over lease terms.

ZPPHiU highlights that Polish law does not prevent shopping center owners from shifting the full cost of business operations onto tenants, who are often forced to challenge these financial burdens in court. It is common practice for smaller businesses to bear the expenses of maintaining spaces occupied by major tenants. However, courts are increasingly questioning contract clauses that allow such practices, offering some hope for fairer lease agreements.

A significant challenge for retail tenants is the modernization of aging shopping centers, as more than half of Poland’s malls were built before 2010. Many of these properties are energy-inefficient and require expensive upgrades in areas such as thermal insulation, electrical installations, and fire safety systems. There is growing concern that landlords will attempt to transfer these upgrade costs to tenants, despite property managers publicly committing to sustainability initiatives.

Another financial strain comes from rising insurance premiums, which landlords typically pass on to tenants through service charges, without negotiations. Similarly, property taxes are often shifted onto tenants, further increasing their financial burden.

Fluctuations in foreign exchange rates and inflation-linked service costs also pose challenges. Tenants are now actively seeking contractual limitations on such expenses while simultaneously focusing on revenue growth. One key strategy is expanding e-commerce operations, leveraging online marketing, direct distribution through owned stores, and partnerships with digital platforms. These efforts aim to reduce reliance on physical retail spaces, giving tenants greater control over their business operations.

Zofia Morbiato, CEO of ZPPHiU, emphasizes that Poland’s overregulated retail environment exacerbates these challenges. The complexity of national and EU legislation creates barriers for businesses, particularly smaller entities that lack resources for costly legal audits and consultations. As a result, regulatory burdens widen the gap between dominant and struggling retailers while increasing operational costs related to energy, labor, and compliance.

The “green annexes” in lease agreements present yet another financial risk, as they allow landlords to shift additional costs to tenants under the pretext of sustainability initiatives. ZPPHiU argues that many of these forced upgrades—such as replacing store floors, windows, or installations—do not benefit the environment or improve the shopping experience. Moreover, landlords often undertake common area renovations without prior tenant consultation, later incorporating the costs into service fees.

With these mounting pressures, tenants are expected to continue adapting their business models, placing an even stronger emphasis on e-commerce and digital retail solutions to navigate the evolving retail landscape.

Source: ZPPHiU and ISBnews