The Polish warehouse space market has felt the effects of the economic slowdown. Demand indicators in 2012 turned out to be much lower than in the previous year, and developers continued to avoid speculative projects.
– In 2012, a total of 1.35 million sqm of warehouse space was leased, with net demand amounting to 755,000 sqm. Compared to 2011, gross demand was 305,000 sqm lower. The weaker demand for warehouse space resulted primarily from the fact that tenants became very cautious and were reluctant to make decisions about transactions – says Tomasz Olszewski, Director of the Industrial and Warehouse Department in the Central and Eastern Europe region, Jones Lang LaSalle.
The greatest interest from tenants in 2012 was shown in facilities located in the vicinity of Warsaw (395,000 sqm of leased space), Central Poland (270,000 sqm), Wrocław (211,000 sqm), and Upper Silesia (200,000 sqm).
Among the largest warehouse transactions of last year, one should mention the agreements signed between: Leroy Merlin Polska and Panattoni (56,000 sqm in Panattoni Park Stryków; lease renewal), DHL and Prologis (33,800 sqm in Prologis Park Dąbrowa; new agreement), and the Lear company and Panattoni (a built-to-suit facility in Legnica with an area of 32,000 sqm). Interestingly, the economic situation had an impact not only on the volume but also on the structure of demand in terms of industry.
– In 2012, logistics operators once again had the largest share in the demand for warehouse space. Their position is growing year by year, which is a direct consequence of the economic slowdown. It forces entrepreneurs to look for savings and cost optimization, which is why they more often decide on, among other things, outsourcing logistics and distribution – explains Tomasz Olszewski.
In addition to logistics operators, who leased as much as 653,000 sqm in 2012, a significant amount of space was also leased by companies from the automotive (129,000 sqm) and food (120,000 sqm) industries. New agreements signed in 2012 (net demand) covered 755,000 sqm, while 599,000 sqm was leased as part of lease extensions. The share of renegotiations in gross demand thus amounted to 44%. A year earlier, it was 40%.
The level of available space remained stable. At the end of 2012, 713,000 sqm of warehouses remained unleased across Poland, and the vacancy rate was 10.1% (for comparison, at the end of 2011, it was 11.2%). Due to the current economic situation and lease agreements expiring in 2013 that may not be extended, this indicator may increase.
– Despite the noticeable drop in demand, tenants should not count on an increase in the supply of space available immediately. Developers have limited speculative activity to a minimum, especially since a lot of existing facilities remain unleased. If new buildings are being constructed, it is only on the basis of previously signed lease agreements – explains Tomasz Olszewski.
Differences in the availability of space, depending on the region, are significant. Taking into account the largest markets, the most favorable from the tenants’ point of view are the surroundings of Warsaw. 278,000 sqm remained without a tenant here, which is 14.1% of the space in this region. There was also a lot of unused space in Central Poland – 123,000 sqm (vacancy rate of 12.3%). On the other hand, very low vacancy rates were observed in Upper Silesia (available space indicator of 5%) and in Poznań (5.2%).
– Due to the limited availability of existing space, as well as its fragmentation, companies should start looking for a suitable facility well in advance and seriously consider the possibility of commissioning a developer to build a warehouse – adds Tomasz Olszewski.
At the end of 2012, 222,000 sqm was under construction. The most space was being built in Wrocław (91,000 sqm), in the vicinity of Warsaw (43,000 sqm), and in Upper Silesia (36,000 sqm). Speculative projects continued to account for a small part of new investments – only 11.3% of the space under construction was not secured by a lease agreement (at the end of 2011, this indicator was 18%).
Rents for warehouse space remained at an unchanged level. However, differences in rates could be significant not only between regions but even between locations within the same region. This depended mainly on the vacancy rate.
– The highest rents were offered within the boundaries of large cities. This is due to both the lack of suitable plots and their prices. Besides, in large cities, we are dealing with so-called small business units, i.e., parks offering small warehouse modules combined with representative office space. Such facilities are more expensive than typical large warehouse buildings – says Tomasz Olszewski.
Effective rates for warehouses located within the boundaries of Warsaw ranged from 3.60 to 5.30 EUR/sqm/month. Space in Kraków (3.30 – 4.00 EUR/sqm/month) and Łódź (2.80 – 3.85 EUR/sqm/month) was also relatively expensive. Tenants can count on lower rates in parks located in the vicinity of large cities. Rates for the surroundings of Warsaw fluctuated between 2.20 and 2.80 EUR/sqm/month. Similarly attractive rents were offered in Central Poland (excluding Łódź): 2.10 – 2.60 EUR/sqm/month. In other regions, rents started from 2.30 and ended at 3.40 EUR/sqm/month.
The near future of the market is currently in question.
– The pace of development of the Polish warehouse market is conditioned by the current economic condition of the country, which weakened significantly in 2012. According to economists’ forecasts, signs of improvement should appear in the second half of 2013. If the predictions prove true, the warehouse market will immediately consume the effects of the return of the economic upturn – concludes Tomasz Olszewski.