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Occupier and developer activity sets a new high on the Polish industrial market

Occupier and developer activity sets a new high on the Polish industrial market

Tenant demand for modern logistics and manufacturing space in Poland is growing at a rapid pace. In H1 2017, warehouse supply totalled 707,000 sq m while take-up hit a record high of 1,786,000 sq m, as revealed in Cushman & Wakefield’s report “MARKETBEAT: Polish Industrial Market in H1 2017”.

At the end of June 2017, Poland’s total warehouse stock stood at nearly 11.8 million sq m. Most of the 707,000 sq m supply was delivered in Bydgoszcz-Toruń (113,000 sq m), Poznań (112,000 sq m) and Central Poland (91,000 sq m). There is currently 1,665,000 sq m under construction, of which 77% is secured with pre-lets. Nearly half of that volume or approximately 800,000 sq m will be delivered in BTS (Build-to-Suit) schemes. The highest concentration of development activity is in Warsaw’s suburbs (approximately 375,000 sq m), Szczecin (293,000 sq m) and Upper Silesia (282,000 sq m).

Despite the high supply level, the vacancy rate stood at 5.4% at the end of June 2017, equating to 634,000 sq m of vacant warehouse space. Vacancy rates edged up in Poznań (8.3%) and Wrocław (7.3%), and decreased again in Warsaw’s inner city (6.9%) and its suburbs (5.7%). Robust developer activity pushed vacancies up in Krakow (12.7% or 38,000 sq m), Szczecin (8.8% or 19,000 sq m) and Lublin (13.9% or 18,000 sq m). The lowest warehouse vacancy rate of 0.3% was in Central Poland.

“Several factors have contributed to the outstanding performance of the Polish logistics market, including Poland’s strong economic growth, rising retail sales, competitive labour market, the expansion of the country’s road network and the large availability of development sites. New infrastructure improvements are paving the way for the warehouse market to expand beyond the core agglomerations, best illustrated by the growing developer activity in Szczecin, Bydgoszcz-Toruń, western Poland, Lublin and Rzeszów. In addition, new warehouse locations have recently appeared on Poland’s industrial map along expressways: S3 (Zielona Góra), S8 (Białystok) and S7 (Kielce),” said Adrian Semaan, report author and Consultant, Industrial and Logistics Agency, Cushman & Wakefield.

In H1 2017, warehouse take-up rose to a record 1,786,000 sq m. The largest leasing volumes were recorded in Central Poland (423,000 sq m), Upper Silesia (414,000 sq m) and in the Warsaw region (367,000 sq m, of which 333,000 sq m was transacted in Warsaw’s suburbs). New lease agreements accounted for 67% of the total leasing volume with lease renewals and expansions making up 24% and 9%, respectively. Take-up was largely driven by logistics operators (32%), retailers (20%), light manufacturing (10%), e-commerce (9%), the automotive sector (7%) and household appliances (6%).

“The record performance of the Polish warehouse market is underpinned, among other things, by the growing demand reported by e-commerce. Poland is extremely attractive to this sector due to its geographic location, strong labour market, large consumer market with growing retail sales, and low leasing costs,” said Joanna Sinkiewicz, Partner, Head of Industrial and Logistics Agency, Cushman & Wakefield.

Headline rents remained flat on the Polish industrial market. At the end of June 2017, the highest were in Warsaw’s inner city (EUR 4.00–5.25/sq m/month) and Krakow (EUR 3.50–4.50/sq m/month) while the lowest were in Central Poland (EUR 2.40–3.60/sq m/month) and Warsaw’s suburbs (EUR 2.50–3.60/sq m/month). Effective rents tend to be lower due to financial incentives conceded to tenants and range between EUR 1.90–3.20/sq m/month. Higher effective rents are in Warsaw’s inner city (EUR 3.50–4.60/sq m/month) and Krakow (approximately EUR 2.80–3.60/sq m/month).

“In H1 2017, rents remained low, indicating a balanced market where developers are able to accommodate the growing demand for logistics space. Intense competition has given a stronger bargaining power to tenants, particularly those leasing modules of over 5,000 sq m, accounting for approximately 80% of the total take-up recorded in the first six months. The downside risks to the occupier market include rising development costs due to rising prices of building materials and services, which is likely to push rents up,” said Joanna Sinkiewicz.

Outlook

The Polish industrial market is the fastest growing commercial real estate sector in Poland. Tenant demand is expected to remain robust, underpinned by optimistic growth forecasts for the country’s GDP, consumption and retail sales in 2017, further improvements in the road infrastructure and the increasing impact of e-commerce. With the development pipeline standing at 1.67 million sq m, this year’s total supply is likely to surpass the 1.2 million sq m mark recorded in 2016. Cushman & Wakefield’s analysts do not expect any substantial changes in vacancy rates or rental costs.

 

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients’ ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com or follow @CushWake on Twitter.

Attachments

Marketbeat_Industrial Poland_H1 2017.pdf
Marketbeat_Industrial Poland_1POŁ. 2017.pdf
Joanna Sinkiewicz
Adrian Seeman
press release_Occupier and developer activity sets a new high on the Polish industrial market.pdf
informacja prasowa_Rekordowa aktywność najemców i deweloperów na rynku magazynowym w Polsce.pdf

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