Center owners are focused on redeveloping and upgrading the shopping, leisure and service offer to meet ever more sophisticated demands from consumers.

Perceived consumer and therefore tenant demands include an improved F&B offering, a more varied tenant mix, and more imaginatively designed retail offers that provide an enhanced shopping or leisure experience in addition to ESG-related requirements.

Retail demand has been under pressure due to the impact of e-commerce and high inflation, affecting potential spending power. Rising operational costs present continuing problems for retailers, as center owners have been passing on increased energy prices to tenants. However, the development and acquisition of provincial retail parks and retail warehouses is an increasingly popular option with developers and investors, a trend that is evident throughout Hungary and the CEE region. 

“Consumer indicators improved modestly in early 2025; new supply is limited, and the focus is primarily on regional formats and strip malls. Due to the current legislation, supply shortages are expected to continue,” comments Máté Szoboszlay, business development and investment director at Faedra Group.

Total modern retail stock in Hungary stands at 3.1 million sqm, according to Cushman & Wakefield. Development is slow, with 55,000 sqm planned for completion in 2025, including the Zenit Corso shopping center project in the Zugló area of Budapest, and 12 retail parks.

Colliers has traced 23 shopping centers in Budapest, representing 780,000 sqm of space. The “latest” entries were the then all-new 55,000 sqm Etele Plaza by Futureal in September 2021, and the rebuilding and rebranding of the 25,000 sqm GoBuda Mall by Wing in March 2022. The consultancy has traced 57 shopping centers across Hungary in addition to 57 retail parks, with a further three of the latter under construction.

For 2024, CBRE registered 31,000 sqm of new retail unit completions across the country, with 96% of these located in provincial cities. These are typically small retail parks and retail warehouses, averaging 4,000 sqm each. By early 2025, the total modern retail stock was expected to reach 4.6 million sqm, comprising 36% retail warehouses, 32% shopping centers and 32% retail parks.

Demolish and Rebuild

One of the first modern shopping center developments in Central and Eastern Europe, the 34,000 sqm Duna Plaza in Budapest, was delivered in 1996 and renovated in 2002. It is to be demolished in 2026, and a new 50,000 sqm Duna Mall will be developed at the location overlooking the Danube on Váci út. The owner, Indotek, is also extending the Alba Plaza mall it owns in Székesfehérvár, 64 km southwest of Budapest, by road.

“In Budapest’s prime shopping centers, the vacancy rate is minimal, at just 1-2%. Prime regional shopping centers have also seen post-COVID vacancies filled almost everywhere, maintaining low vacancy rates. This trend is highlighted by the extension of Duna Plaza, adding 15,000 sqm, and the Alba Plaza expansion in Székesfehérvár, which will add approximately 20,000 sqm by 2028,” comments CBRE.

Although Hungary had the first Western-style shopping centers in CEE, it now has one of the lowest modern retail pipelines in the region, with just 42,000 sqm under construction. Analysts have expressed concerns over governmental proposals to make the required permission for changes in the use of commercial spaces above 400 sqm tenant- rather than space-specific, which could make retail less attractive to developers and investors.

Developers are currently opting for smaller provincial retail formats, such as retail parks and strip malls of 4,000-5,000 sqm, which provide more flexibility for tenants and do not require the higher critical mass of developing shopping centers in the current uncertain market environment, according to Cushman & Wakefield.

“In the retail sector, countryside strip malls are attracting interest from tenants. Brands are increasingly looking beyond Budapest, aiming to establish broader national coverage,” says Attila Madler, country chief asset management officer at CPI Hungary.

“The success of such developments depends heavily on securing the right location and creating a branded product that attracts flagship tenants. For countryside retail parks, selecting the right location is crucial. Once established, attracting flagship tenants with a branded, well-positioned product is the main challenge,” he argues.

Attractive Assets

Dominika Jedrak, director of market insights for Poland & CEE at Colliers, agrees about the attraction of these smaller developments.

“Retail parks have proven their value not only as essential shopping destinations but also as flexible assets capable of responding to market challenges. Their open-air layouts, ample parking, and their focus on necessity–driven retail have kept footfall and investor interest high,” she says in the Colliers ExCEEding Borders Retail Report.

“Across the CEE region, we have a renewed focus on sustainability, placemaking, and tenant diversification, all contributing to the sector’s long-term appeal,” Jedrak comments

Another vehicle for new retail development is as part of mixed-use projects. One such ongoing scheme in Budapest project is the suburban Zugló Mall by Bayer Property Hungary, which will provide around 11,000 sqm of retail as part of the Zugló City Center mixed-use office, residential and retail project located in the suburban District XIV. The developers aim to create what they term a new city quarter as part of an urban regeneration plan that is due to deliver later in the year.

Of the 22 shopping centers in the capital, only eight meet institutional standards according to Cushman & Wakefield. These are widely viewed as the leading centers with waiting lists for suitable spaces for tenants and minimal vacancy rates.

“The development market is primarily focused on repositioning and upgrading outdated retail infrastructure. With 93% of Hungary’s shopping centers over a decade old, many struggle to meet modern consumer expectations and retail demands,” comments Cushman & Wakefield on current shopping center stock in Budapest.

“In the current demand environment, a number of shopping center owners have improved their F&B and food court offerings. LEED or BREEAM In-Use sustainability accreditations are seen as a necessity for owners to obtain finance. Retail will increasingly prioritize mixed-use, last-mile logistics and ESG-friendly tenant mixes,” says Zsombor Barta, founding partner at Greenbors.

This article was first published in the Budapest Business Journal print issue of October 17, 2025.