Coffee with Craig Show – daily CRE news covering the CEE region – Monday, May 23 with Winston Norman, Editor and Chief of EuropaProperty.com.
GROWTH SEEN ACROSS CORE REAL ESTATE SECTORS FOR FIRST TIME SINCE 2019
Cushman & Wakefield’s latest real estate research, tracking performance across the office, high street retail, and logistics markets in 23 countries, reveals that quarter-on-quarter growth has been recorded for the first time in two years.
Nigel Almond, Head of Data Analytics, EMEA at Cushman & Wakefield, said: “For the first time since the onset of the pandemic rents across all three sectors grew quarterly, with yields also compressing for a second-quarter across all sectors at the European level.”
Nearly all logistics markets have seen rental growth over the pandemic, with prime European rents across the 43 tracked markets up by 11.3 percent since Q4 2019. The UK has posted the strongest rise at 23.1 percent followed by Germany at 12.7 percent and Central and Eastern Europe (CEE) at 9.8 percent. Only Budapest has registered a fall (-2.1 percent), reflecting an oversupply of space, albeit rents have now started to recover.
The office sector, which was impacted by weaker occupational demand at the height of the pandemic, has largely recovered. However, across CEE and other peripheral European markets, rents remain below Q4 2019 levels.
Stresses in the retail sector continue to ease, with rents turning positive (quarter-on-quarter) for the first time since Q4 2019, albeit a very modest rise.
Sukhdeep Dhillon, Head of EMEA Forecasting at Cushman & Wakefield, added: “Despite increased headwinds, the near-term outlook remains stable. Rising inflation, largely driven by food and energy prices, is becoming more of a concern for Central Banks, raising expectations for interest rate rises.”
ACCOLADE SECURES €500 MILLION OF BANK FINANCING IN POLAND
The industrial investor Accolade is one of the most financed warehouse portfolio holders in Poland. The company has benefitted from over €500 million in bank loans, 40 percent of which have been acquired since February 2020. At the same time, in the Czech Republic, the company has signed a loan agreement with a club of banks for €137.5 million.
“Thanks to the high quality of our portfolio and our long-term focus, Accolade is able to secure satisfying financing conditions from the banks that share our view on the importance of environmental awareness and appreciate the attractiveness and stability of the warehouse segment,” says Michał Białas, Country Head of Accolade in Poland.
The Banks financing Accolade include. Bank Pekao, mBank, Santander Bank Polska, BNP PARIBAS, Alior Bank and Aareal Bank.
“Accolade is one of the key Pekao’s counterparties in the Warehouse market. We cooperate with Accolade since 2016 and borrowed the Group already €250 million,” says Łukasz Białecki, Head of Real Estate Financing in Bank Pekao.
“The expertise of Accolades in an attractive asset class, with strong demand by tenants, makes the portfolio very attractive for investors,” says Hubert Manturzyk, General Manager of Aareal Bank.
BANKS DOMINATE THE WARSAW OFFICE MARKET – Q1 2022 SUMMARY
According to JLL experts, Q1 2022 saw trends including a gentle decline in vacancy rates, the second-highest volume of office take-up on record, and increased interest in flexible workspace. One of the key events in the capital’s office market in the first three months of this year was the activity of tenants, who took up approx. 273,200 sqm of office space.
“Space leased by companies from the banking and finance sector was responsible for 42 percent of the total demand for offices in Warsaw,” emphasised Tomasz Czuba, Director of the Office Space Leasing and Tenant Representation Department.
Flex offices and subletting are still very popular – a good alternative for companies is the flex office market, which offers the possibility of subletting office space. As a result, in the first quarter of 2022, JLL experts recorded an even greater interest in flexible offices than in previous periods.
Significantly less new space – in Q1 2022, the capital’s market was enriched by six office buildings with a total area of 93,400 sqm, which had an occupancy rate of over 80 percent.
The beginning of this year confirms that the peak of developer activity is behind us. Developers are becoming more cautious about new developments, so we predict a gap in new supply for 2023, JLL predicts.
Prices on the rise – in the first quarter of 2022, prime transactional rents for prime office properties in Warsaw recorded a slight increase related to both rising labour costs and an increase in the price of construction materials. JLL predicts that significant changes in this area are expected in 2023. As a result of the anticipated gap in new supply, rental opportunities in newly delivered buildings will be severely limited.
PANATTONI TO DELIVER A FURTHER 70,000 SQM IN THE KUJAWSKO-POMERANIA REGION
Panattoni, after numerous developments in Bydgoszcz and Toruń, is to further develop the market of the Kujawsko-Pomerania region – this time in Grudziądz. The developer is planning to deliver a complex of almost 70,000 sqm just 10 km from the centre of the city.
A leading provider of modern logistics services in Poland is its first tenant, leasing around 9,000 sqm. Construction work on the first building has already begun and is to be completed within the year. With the development of Panattoni Park Grudziądz, the developer is drawing close to having delivered half a million sqm of space in the region.
“Grudziądz is a superb location midway between two rapidly developing markets – the TriCity and the Bydgoszcz/Toruń area. For this reason, it was only a matter of time for the city to open up with modern industrial space,” says Michał Samborski, Head of Development, Panattoni.
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