According to Cushman & Wakefield, a global real estate advisor, the demand for modern warehouse space in Poland increased in 2007. The main factors driving demand growth included: sustained favorable economic conditions, the growing value of foreign investments, and an attractive location. In Poland, the warehouse space market is developing faster than in other Central and Eastern European countries. In 2007, supply increased by 40%, and demand was as much as 53% higher compared to 2006.
The Industrial and Warehouse Department of Cushman & Wakefield represented tenants and owners of warehouse space in 2007 in leasing nearly 235,000 sqm of space, which is 71% more compared to 2006. Major transactions included, among others: the lease of 25,000 sqm of warehouse space and 1,000 sqm of office space by the “Piotr i Paweł” retail chain at Panattoni Park Poznań, the lease of 18,500 sqm of warehouse space by Ordipol (owner of the Orsay brand) at Panattoni Park Wrocław, and the lease of approx. 11,000 sqm of space at ProLogis Park Sochaczew by Procter & Gamble.
Tomasz Olszewski, Partner and Head of the Industrial and Warehouse Department at Cushman & Wakefield, said:
– A few years ago, modern warehouses were concentrated around Warsaw. In 2005, new regions appeared on the map of warehouse investments: Upper Silesia, Poznań, Wrocław, and Łódź. Currently, these markets are experiencing a period of prosperity in terms of modern space. In 2006, new warehouse investments appeared in the Tri-City and Kraków. Currently, modern warehouses are also being built in Szczecin. Investments are planned in Bydgoszcz. It is predicted that in 2008, the market for modern warehouse space will also develop in smaller cities, especially in the eastern part of the country: in Lublin and Rzeszów. Planned road investments will provide these cities with good access to the rest of the country and to the border with Ukraine. Market development forecasts for modern space for 2008 remain optimistic for both developers and clients looking for warehouses. Competition for clients will intensify in regions where land for investment is easier to obtain, while in cities with a poor supply of investment land (Wrocław, Upper Silesia), developers will dictate the terms.
In 2007, the total stock of modern warehouse space in Poland amounted to 3,818,000 sqm (in Q4 2006 it was 2,722,000 sqm). The number of new investments is growing dynamically, especially in the regions. In 2007, only 16% of newly created warehouse space was located in the Warsaw area. The most was built in Poznań (22.5%), Upper Silesia (20%), Central Poland (over 19%), and Wrocław (14%). At the moment, another 1,428,000 sqm is under construction, of which only 31% is located in the Warsaw area. Investor activity in some regions is limited due to the lack of suitable land for investment. For example, in the Upper Silesia region, mining damage and contamination prevent the location of warehouse facilities on many attractively located plots.
Last year was a record-breaking year in terms of the volume of lease transactions concluded. In 2007, 1,410,000 sqm of modern warehouse space was leased. The highest demand has been consistently generated for several years by logistics operators, as more and more companies are deciding to outsource services related to warehousing and distribution. In 2007, the market share of companies from the logistics industry amounted to 38%. Demand from companies in the retail sector is also growing. As much as 12% of lease transactions were concluded by retail chains. Depending on the region, demand was also generated by companies from the electronics, food, cosmetics, and manufacturing industries. All regions except Wrocław recorded a double-digit percentage increase in total leased space compared to 2006. The decline in the volume of concluded transactions in Wrocław (133,000 sqm in 2007, compared to 167,000 sqm in 2006) resulted from limited supply. Thanks to new investments, it is predicted that in 2008, supply in this region will increase significantly, and consequently, the demand for new space will be reflected in concluded lease agreements. In 2007, the most space was leased in the Warsaw area – a total of 426,000 sqm, in the Upper Silesia area – 358,000 sqm, in Central Poland 222,000 sqm, and in Poznań 217,000 sqm.
The Warsaw area still dominates the market, but its share in the total supply stock in Poland is now only 46% (in 2006 – 59%, in 2005 – 67%, in 2004 – 76%). Previously, we could distinguish three zones in this area. Depending on the distance from the center, they differed in rent rates, the size of average transactions, and the industry of tenants. In 2007, the difference between the second and third zones blurred. Currently, the Warsaw warehouse market is divided into two zones – the part located within the administrative boundaries of Warsaw (the so-called Inner City) and the part located within a radius of 12 to 50 km from the city center (the so-called Suburbs). Parks in the Suburbs zone are located in municipalities south and west of Warsaw (Piaseczno, Błonie, Ożarów Mazowiecki, Nadarzyn, Pruszków, Mszczonów, Sochaczew, and Teresin).
The decentralization of warehouse space resources results, among other things, from the improvement of road infrastructure. Convenient connections to the pan-European road network have contributed to the development of the Upper Silesia region. Since December 2006, over 200,000 sqm of warehouse space has been built in Upper Silesia, and the current supply is 564,000 sqm. The Central Poland region, and in particular the cities of Stryków, Łódź, and Piotrków Trybunalski, are also benefiting from the course of existing or planned motorways. In this region, supply at the end of 2007 amounted to 477,000 sqm. Demand for warehouses is mainly created by suppliers of manufacturing companies from the electronics industry. In the Poznań region, supply increased by 67% compared to 2006 and at the end of 2007 amounted to 619,000 sqm. Space in this region is most willingly leased by logistics operators and retail chains. The markets of Northern Poland and Kraków are developing, and the demand for modern warehouses in these regions is constantly growing.
Modern warehouse facilities are similar in terms of the standard offered, which is why developers compete in terms of availability and location. The largest players on the market are developers: ProLogis, Panattoni, and SEGRO. Together, they account for 48% of existing warehouse space resources (ProLogis – 36%, Panattoni – 7%, and SEGRO – 5%). In 2008, it is predicted that these companies will further strengthen their position, as 80% of warehouses currently under construction are being built in their investments. In 2007, ProLogis leased the most space, totaling 31% of all transactions, excluding renegotiations and previous agreements. The developer Panattoni, operating on the Polish market since 2005, has a 29% market share, taking into account concluded transactions. In third place is SEGRO with an 8% share.
Last year, land prices and construction costs increased, which was reflected in the increase in rental rates. In December 2007, one paid on average 10-15% more for renting a square meter of modern warehouse space than at the beginning of the year, the most in the Warsaw Inner City zone – nominally even 5.5 EUR/sqm.
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