Polish industrial market under construction
In Q1 2018, Poland’s total warehouse and industrial stock amounted to more than 14.15 million sqm and another 1.90 million sqm was under construction, the largest quarterly development pipeline on record. Central Poland was the leading regional market, accounting for more than half of new supply and most of the leasing transaction volume.
Tom Listowski, Partner, Head of Industrial & Warehouse, CEE, Cresa, said: “Poland is gaining significant importance and solidifying its strategic position on the European industrial map. Record breaking take-up and an extraordinary pipeline of projects currently under construction (close to 2 million sqm) underpin the rate of acceleration and expansion being witnessed. With Poland now in the top tier of key industrial market on the continent, demand is being primarily driven by the e-commerce, logistics, retail and light manufacturing sectors. Developers are also adapting to the needs of occupiers by building out modern space in core sub-markets in addition to unlocking new locations which provide alternative options for occupiers planning new space acquisition, optimizing supply chains and/or looking for a new strategic location with access to untapped labour pools.
“The demand for smaller units and showroom space located close to populated urban areas is a growing trend which to date has been under-serviced, purely due to a lack of available product for occupiers, which will undoubtedly change in coming few years.”
According to “Occupier Insight: Industrial and Warehouse Market in Poland in Q1 2018”, a report prepared by global tenant-only real estate advisory firm Cresa, more than 400,000 sqm was delivered to the Polish market in January-March 2018. Central Poland saw most of the new supply or 212,900 sqm. With more than 400,000 sqm under construction, Central Poland is only second to Upper Silesia, whose development pipeline currently stands at 423,000 sqm. Eastern Poland with nearly 200,000 sqm underway is third.
In January-March 2018, the volume of transaction activity hit 1.17 million sqm. The first quarter’s three biggest leases were signed off for BTS schemes, which shows that more and more companies are opting for facilities tailored to their technical requirements and operational needs to achieve economic efficiency.
Given the transaction volumes in 2013-2017, the strongest average annual occupier activity was recorded in Warsaw (802,800 sqm), Upper Silesia (538,000 sqm) and Central Poland (478,200 sqm). Compared to the average regional volumes, the highest increases in leasing volumes in Q1 2018 were noted in Eastern Poland (207.4%), Tricity (66.2%) and Central Poland (47.9%). The vacancy rate stood at 4.9% compared to the average of 7.9% seen in the last five years.
There is a growing occupier interest in new locations such as Olsztyn, Białystok and Zielona Góra. Core locations such as Central Poland are also witnessing healthy occupier demand. During the first three months of the year, the volume of transaction activity in the region exceeded 48% of the average total annual take-up observed over the last five years, while the amount of space added to the market was in excess of 10% of the total stock for the Central Poland sub-market alone.
Cresa’s report also includes an overview of leading warehouse and industrial owners. One-third of Poland’s existing stock is owned by Panattoni and Prologis.
“The Polish warehouse and industrial market outlook for at least the next two years is very optimistic despite the country’s limited labour pool and rising salaries. The market’s growth will be driven by a steady inflow of foreign direct investments, the upcoming changes to Special Economic Zone regulations and further improvements to the road and transportation infrastructure, improving accessibility to new locations,” said Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.