Despite the turbulence caused by the coronavirus pandemic, the industrial sector maintained its strong growth trajectory over the course of 2020. Particularly positive is the robust demand for warehouse space, which is being increasingly driven by the growth of e-commerce. E-retailing has gained in importance due to restrictions on brick-and-mortar retail and the pressure on increasing social distancing. Special external circumstances have, therefore, forced companies from various sectors to remodel their sales channels, develop multichannel retailing quickly and focus on seamless and efficient logistics. These fundamental changes made under great pressure of time translated into high demand for warehouse space. Growing expectations of consumers as regards delivery times and processing have in turn driving the growth of logistics outsourcing. This is reflected in warehouse take-up where logistics providers account for the biggest share of the leasing volume at over 30 percent.
There is a growing number of logistics companies offering specialised distribution services for e-commerce. It is also logistics providers that are the most active group in terms of new inquiries about warehouse space (next year’s potential demand). The market also saw the strong activity of large retailers offering such products as food and beverages, electronics, home appliances, furniture and homeware. Despite serious challenges of production suspensions or limitations, light manufacturing and the automotive industry continue to provide a major source of demand.
Poland sees new warehouse supply at well above two million sqm every year
The industrial market continues its strong growth momentum and 2020 was the fourth consecutive year with the arrival of more than two million sqm of warehouse space, the average for the three previous years being 2.45 million sqm. Poland’s total industrial stock topped 20 million sqm in 2020, with further million sqm marks expected to be surpassed in 2021. The industrial stock has doubled in the last five years alone. This indicates that the product offer in Poland is also very attractive in terms of age and standard of warehouse space, which is an additional advantage of the Polish market that is appreciated by both domestic and overseas companies.
Core markets dominate but development activity continues to spread to new geographies
Poland’s core regional markets, or the Big Five, comprising Warsaw, Upper Silesia, Central Poland, Wrocław and Poznań, continue to dominate the development activity. They account for 80 percent of Poland’s total industrial stock and are expected to maintain their share at a similar level in the coming year given developers’ expansion plans. Smaller regional markets are, however, gaining in importance and will strengthen their position in the long-term. These include Tricity, Krakow, Szczecin and Bydgoszcz-Toruń. Other growing markets comprise Western Poland, including Lubuskie province in particular, and Eastern Poland with such cities as Lublin, Rzeszów and Białystok. This is being driven by the growth of local markets, further investments in transport infrastructure and the need for diversification of locations across national logistics chains of the e-commerce sector. Another driver of the Polish industrial market is Poland’s favourable geographic position, making for easy distribution to overseas markets (Western Europe, Scandinavia, CEE, the Baltic states or Eastern Europe). What’s more, new locations continue to emerge on the map of developer-led projects every year, with such recent additions as Kutno, Legnica, Gorzów Wielkopolski, Olsztyn and Kalisz.
The logistics network continues to diversify amid the rising role of last-mile logistics
The past year witnessed a growing geographical and product diversification on the industrial market. There was continued growth in big-box units delivered to consolidate warehousing processes, most often for the largest FMCG companies, retailers and global e-commerce platforms. They were increasingly supplemented by networks of smaller warehouses, cross-dock facilities and Small Business Units, the main focus being on optimisation of last-mile distribution. Construction of such facilities close to consumers in both large and mid-sized cities has a positive effect on costs and delivery times. This trend is further supported by investments in the network of expressways including city ring roads which can help service local markets efficiently. This is expected to carry into 2021 and encourage developers to look for new urban locations, including brownfield sites. Product diversification looks set to continue and is likely to include new developments such as retail warehouses.
The pandemic is likely to become a catalyst for nearshoring
The manufacturing and automotive industries, which were the hardest hit in the early phase of the pandemic due to supply chain disruptions and suppressed demand, have been recovering in recent months. Benefiting from its strategic location in the centre of the European continent and its competitive labour market, Poland will continue to occupy a place in the top league of locations of choice for nearshoring as regards distribution and manufacturing facilities servicing overseas markets.
Sustainability in warehouses is on the rise
Key trends of 2020 included the promotion and development of the concept of green warehouses. New warehouses and manufacturing plants are being increasingly delivered in line with the trend of sustainable construction with a special focus on environmental protection. Both occupiers and landlords of warehouse and industrial buildings are growing increasingly aware of the advantages of environmental sustainability audits, which best illustrates changing market realities. A vast majority of newly-built warehouse facilities boast green certificates, primarily with BREEAM certification and frequently a very good rating. Another positive is tenants’ growing acceptance and need for implementation of green solutions which – given their hands-on approach – are economically warranted, among other things, by lower utility charges. In addition to making economies, another increasingly frequently cited argument is the requirement to reduce carbon footprint. This makes us convinced that warehouse sustainability will remain relevant in the coming years and will be increasingly explored by market participants. It is also likely to become another key decision driver in the choice of a final solution in addition to location and commercial conditions.
Authors:
Joanna Sinkiewicz
Head of Industrial & Logistics
Cushman & Wakefield
Adrian Semaan
Senior Research Consultant
Industrial & Logistics
Cushman & Wakefield
