The Polish industrial and logistics market is in a transitional phase between economic shifts. Take-up for warehouse space declined primarily in the first half of 2023, with a resurgence in Q3, resulting in aggregate take-up for the first three quarters of this year of 3.75 million sqm (-25 percent y/y, Q1-Q3 2022). Higher investment financing costs are affecting the volume of space under construction, with developers developing 2.5 million sqm (-36 percent y/y) at the end of September 2023. It also impacts the volume of space delivered, which amounted to 3.12 million (-13 percent y/y Q1-Q3 2022) sqm from January to the end of September. Poland’s largest consulting firm, AXI IMMO, presents its latest analysis of the warehouse market in Poland in the publication “Industrial Market in Poland in Q1-Q3 2023.”
Despite a slower year for the investment sector overall, the warehousing market returns to its leading position. The volume of transactions, including industrial and logistics assets from January to September 2023, amounted to about €842 million (-45 percent vs. Q1-Q3 2022), corresponding to half of the capital invested in Poland in commercial real estate. Among the most active sellers at the time were 7R and Panattoni. In contrast to the situation observed in the first half of 2023, when the sector was dominated by single transactions such as P3’s purchase of the Campus 39 park in Wrocław (185,000 sqm) from Panattoni or DWS Group’s acquisition of 7R Park Poznań East II (51,500 sqm), the second half saw several portfolio sales. Among the most important was NREP’s acquisition of an 80 percent stake in 7R S.A. As part of the package, the majority owner was given access to investments totalling some 4.2 million sqm. It included existing warehouse parks and a land bank with projects to be built. Next on the podium in the investment sector were the sale of three distribution centres (134,800 sqm) by Panattoni in Lodz, Silesia, and Greater Poland to EQT Exeter and P3’s purchase of two logistics parks (95,900 sqm) from 7R in Lodz and West Pomerania.
Grzegorz Chmielak, Head of Capital Markets and Valuation, AXI IMMO, says: “Certainly, 2023 will be remembered as the year when investors made more selective purchase decisions and maximized decision-making processes. Factors such as good location or quality tenant mix remain crucial in a more challenging period. We would like to believe that the biggest transaction of the year, NREP’s acquisition of a stake in 7R, will influence better investment sentiment and herald change and a better 2024.”
The total volume of lease transactions in the Polish warehouse market from January to September 2023 amounted to 3.75 million sqm (-25 percent y/y). On the other hand, 2.43 million sqm were signed within the so-called net take-up comprising only new contracts and expansions, which accounted for about 65 percent of gross take-up. The most active three regions in terms of transactions were the Mazowieckie Voivodeship (882,200 sqm), the Silesian Voivodeship (668,800 sqm), and the Lower Silesian Voivodeship (563,870 sqm). Nevertheless, the big five alone accounted for more than 2.81 million sqm of leased space, concentrating more than 73 percent of the leases signed during the period under review. Among a selection of the most significant transactions, it is essential to point out those concluded in Q3 of this year, i.e., the lease of 120,000 sqm at DL Invest Psary/Czeladź by a confidential tenant from the retail sector and the 110,000 sqm signed by Raben at CTPark Warsaw West (Wiskitki).
Anna Głowacz, Head of Industrial, AXI IMMO, comments: “Inflation, a weaker economy, and high financing costs have forced tenants to change their strategy related to the acquisition of warehouse space. Despite the difficulties, in the first three quarters of 2023, we have seen a high concentration of transactions involving logistics companies, retail chains, and manufacturing companies. The sector’s fundamentals remain stable, thanks to the continued activity of its leaders. Nevertheless, we expect a higher density of transactions related to the reorganization of global supply chains and the relocation of production closer to manufacturing markets, i.e., the development of trends such as near-, friend- or re-shoring.”
Developer activity in the Polish warehouse market from January to September 2023 amounted to 3.12 million sqm (-13 percent y/y in Q1-Q3) and increased the sector’s total stock to 31.07 million sqm. During the period under review, the largest amount of space was delivered in Q1 when more than 1.9 million sqm was completed, while more than 692,600 sqm and 527,000 sqm were delivered in the next two quarters, respectively. The most active markets in terms of new supply between January and September 2023 were Mazowieckie Voivodeship (575,000 sqm), Silesian Voivodeship (471,700 sqm) and Lubuskie Voivodeship (437,200 sqm). The largest positive dynamics of change when considering data for Q1-Q3 2022 vs. Q1-Q3 2023 was recorded in Lubuskie voivodeship (70,000 sqm vs. 437,200 sqm) and Małopolskie voivodeship (94,000 sqm vs. 129,900 sqm), while negative were recorded in Lower Silesia (713,600 sqm vs. 358,400 sqm), West Pomerania (271,100 sqm vs. 93,300 sqm) and Pomerania (212,200 sqm vs. 62,000 sqm). The largest projects delivered in Q1-Q3 2023 include BTS Zalando Bydgoszcz (146,000 sqm), Panattoni Park Wrocław Logistics South Hub (125,000 sqm) and CTPark Ilowa (111,300 sqm). At the end of September this year, 2.5 million sqm was under construction. (-36 percent y/y), with the largest amount of space in the Mazowieckie Voivodeship (528,200 sqm), the Lower Silesian Voivodeship (452,200 sqm), and the Łódzkie Voivodeship (362,700 sqm).
Anna Głowacz, explains: “The quarterly reduction in new supply is related to the decline in take-up and higher requirements in obtaining project financing. During the slowdown, developers focus primarily on acquiring clients on pre-let contracts and developing BTS projects. The situation is reflected in a lower volume of speculatively built space.”
Due to the commissioning of speculative projects launched in 2022 and reduced take-up, the vacancy rate at the end of Q3 2023 stabilized at 7.8 percent (+1.1 pp. q-o-q and +3.4 pp. y-o-y). The highest percentage availability was recorded in the Świętokrzyskie (18.4 percent), Lubuskie (15.7 percent) and Łódzkie (11.7 percent) voivodships. During the reported period, base rents remained in the €3.6 to 5.5 per sqm range for space in big-box developments.
Renata Osiecka, Managing Partner, AXI IMMO, concludes: “We are in a more challenging business cycle, which affects investment conditions and lending. Despite the slowdown in Poland’s warehouse sector, it remains stable thanks to its solid foundations and position in European logistics. The warehousing market needs new impetus from reorganizing global and local supply chains. Poland can benefit as a beneficiary of the new European order, in which companies seeking operational security will move part of their production to this part of Europe.”
