August 22, 2017

JLL: Poland in Europe's top three for industrial space demand

JLL: Poland in Europe's top three for industrial space demand

“We have just witnessed the best half-year in the history of Poland's industrial market” said Tomasz Olszewski, Head of Industrial CEE, JLL. “Companies signed lease agreements for a record-breaking 1.72 million sqm. New deals and expansions accounted for 1.3 million sqm. This meant that Poland was number three in Europe for net take-up after Germany and the Netherlands. Such a high level of activity among tenants provides a great opportunity for another record – 3 million sqm in terms of total demand by the end of 2017.”

“The most active sectors in H1 2017 in terms of gross take up were logistics operators, retailers and companies from the light manufacturing industry. What is interesting is the fact that retailers accounted for the largest share of net market demand,” added Tomasz Olszewski.

“At the end of H1 2017, Poland’s industrial and warehouse stock stood at 11.9 million sqm, making Poland the eighth largest market in Europe,” commented Jan Jakub Zombirt, Associate Director, Strategic Consulting, JLL. “While we cannot compete with industrial giants such as Germany – which has the highest European volume totalling 60 million sqm – Poland is still characterized by impressive growth. In H1 2017, the industrial sector grew by 700,000 sqm allowing Poland to claim second position in terms of developer activity across Europe.”

The highest amount of new industrial space (128,000 sqm) was leased in Central Poland.

“Currently, there is 1.66 million sqm of industrial space being developed throughout Poland,” added Jan Jakub Zombirt. “The highest amount of space under construction can be found in the Warsaw Suburbs, Upper Silesia region, Szczecin and Central Poland. Furthermore, it is worth mentioning that the emerging markets continue to gradually grow, with a total of 115,000 sqm currently being built in the Kujawy, Lublin, Opole and Lubuskie regions.”

24 percent of the space under construction is being built on a speculative basis. Developers are typically keen to start unsecured investments only in the regions with high levels of demand, such as Warsaw and Upper Silesia.

According to www.warehousefinder.pl, the vacancy rate decreased by 0.6 p.p., standing at 5.8 percent at the end of Q2.

Prime headline rents remained stable throughout Q2. The most expensive industrial space is still to be found in Warsaw Inner City and Kraków, where rents range from EUR 4.1 to EUR 5.1 / sqm / month and EUR 3.8 to EUR 4.5 / sqm / month, respectively. The lowest rents for big box units are in Central Poland, at EUR 2.6 to EUR 3.2 / sqm / month, followed by two large, but still rapidly developing regions: Upper Silesia (EUR 2.8 to EUR 3.6 / sqm / month) and PoznaƄ (EUR 2.8 to EUR 3.5 / sqm / month). The above rents do not include incentives from landlords and should be treated as a basis for negotiations.

“Currently, the volume of industrial investment transactions is approx. EUR 32 million. However, taking into account deals currently under negotiations, we can expect a busy end to 2017 and an annual result of over EUR 1.1 billion. The volumes are mainly generated by pan-European portfolio transactions,” summarized Tomasz Puch, Head of Office and Industrial Investment, JLL.

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