According to the “Occupier Insight – Industrial and Warehouse Market in Poland Q3 2023”, a report prepared by real estate advisory firm Newmark Polska, development and occupier activity is focused on Poland’s six core warehouse markets: Warsaw and its suburbs, Upper Silesia, Central Poland, Lower Silesia, Greater Poland and the newcomer – Pomerania. Nearly 89 percent of the construction activity is concentrated in these regions, which accounted for almost 84 percent of the total leasing volume for the first three quarters of 2023. Meanwhile, a slight rental correction is being observed in some locations and industrial parks.
At the end of the third quarter of 2023, Poland’s total warehouse and the industrial stock was almost 31.1 million sqm, an increase of 13.3 percent on the same time last year. Over 80 percent of the existing space is concentrated in Poland’s six core regions: Warsaw and its suburbs, Upper Silesia, Central Poland, Lower Silesia, Greater Poland, and Pomerania (whose total stock is likely to reach almost 2 million sqm of warehouse space in 2024).
New supply in the year to date amounted to more than 3.12 million sqm, a decrease of 12.9 percent year-on-year. Only 527,000 sqm came on stream in the third quarter of 2023, down by over 55 percent at the same time last year and by 23.9 percent over the quarter. Newmark Polska estimates that 4 million sqm will be added to Poland’s total warehouse and industrial stock in 2023.
“Development activity has remained at a stable, moderate level since the beginning of the year, but started to gather pace towards the end of the third quarter. At the end of September, the volume of commenced warehouse and industrial space amounted to 2.5 million sqm, up by 17.4 percent compared to Q2 2023, but down by nearly 38 percent year-on-year,” says Agnieszka Giermakowska, Research & Advisory Director, ESG Lead, Newmark Polska. “However, there is a noticeable trend of strong concentration of developers’ activity on six core warehouse markets, which account for nearly 89 percent of the space under construction. The Lesser Poland Voivodeship also stands out, where almost 167,000 sqm were underway at the end of Q3,” added the expert.
“An uptick in development activity in the third quarter of 2023 was accompanied by a slow recovery in leasing markets. Gross take-up for the period July-September 2023 surpassed 1.5 million sqm, up by over 47 percent quarter-on-quarter and by more than 1 percent year-on-year. The first three quarters of 2023 saw nearly 3.75 million sqm leased, a decrease of 27.1 percent year-on-year,” says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska. “Occupier activity – similarly to development activity – also focused on the six core warehouse markets, which accounted for nearly 84 percent of the total leasing volume in the year to date,” added the expert.
The structure of demand in the first three quarters of 2023 was dominated by new leases and BTS projects which accounted for 53 percent of all deals. Renegotiations and expansions made up 35 percent and 12 percent of the total take-up respectively. It is also worth noting that a total of 175,400 sqm was transacted in that period under shorter leases of up to one year. Another notable trend is the significant increase in expansions which saw their share rise to even over 14 percent at the end of September 2023.
The third quarter witnessed two large BTS transactions for over 100,000 sqm each. One saw a fashion retailer take 120,000 sqm in Psary and the other – Raben sign a lease for 110,000 sqm in CTPark Warsaw West.
Poland’s overall vacancy rate has been on an upward trajectory since the end of the fourth quarter of 2022. At the end of September 2023, it stood at 7.8 percent, up by 1.1 pp over the quarter and by 3.4 pp year-on-year. Vacant stock comprised over 2.4 million sqm in existing buildings and 1.3 million sqm in the pipeline. The largest quarterly increases in warehouse availability were in Łódzkie (up by over 185,500 sqm) and Lubuskie (up by almost 88,000 sqm).
In the third quarter of 2023, prime warehouse and industrial rents remained relatively unchanged from the previous quarter, but a slight rental correction was observed in some locations and industrial parks. The highest rental rates were in Warsaw (zone 1) and Kraków.