High demand for industrial and logistics space continues.
According to the latest report by the international advisory firm Cushman & Wakefield, the first quarter of 2016 saw a further increase in tenant and developer activity on the modern industrial and warehouse space market in Poland. Total modern warehouse space resources exceeded 10.3 million sq m.
Demand for warehouse space remains high. In Q1 2016, transactions for 637,000 sq m were concluded, which represents an increase of approximately 8% compared to the same period a year ago. The largest warehouse markets were the most popular among tenants: Upper Silesia (144,000 sq m of leased space) and the Warsaw area (140,000 sq m). Tenants were also active in the Central Poland (85,000 sq m), Poznań (76,000 sq m), and Wrocław (71,000 sq m) regions. As for smaller regional markets, high demand was recorded in Bydgoszcz and Toruń as well as in the Tri-City, while less warehouse space was leased in the Szczecin and Rzeszów regions. As in previous years, the most active tenants of warehouse space were logistics operators and retail chains – their share in the total volume of transactions amounted to approximately 60%.
Developers remain active on the warehouse market. At the end of Q1 2016, nearly 783,000 sq m of space was under construction. More than 75% of construction investments are being developed in the largest warehouse markets, such as Poznań, the Warsaw area, Central Poland, Wrocław, and Upper Silesia. Regions such as Kraków, the Tri-City, and Lublin are also gaining popularity.
The growing activity of developers translates into a steady increase in modern warehouse space resources in Poland. However, the pace at which this space is being added is particularly noteworthy. In just one quarter, warehouse space resources in Poland increased by as much as 447,000 sq m, which accounts for almost half of the supply recorded in the entire year 2015. The most new warehouse space was commissioned in the Warsaw area, Upper Silesia, and Central Poland regions.
Due to high demand for warehouse space, the vacancy rate remains low. The vacancy rate at the end of March 2016 was approximately 5.9%, which is about 0.4 percentage points lower than a year ago. The highest number of vacancies is located in Warsaw and its surroundings.
Despite the low vacancy rate and high demand, rents for warehouse space in the largest markets remain stable. However, developers and owners continue to offer tenants attractive incentive packages, especially in newly built facilities, which helps to reduce total rental costs. The highest rents remain in Warsaw (4–5.40 EUR/sq m/month), and the lowest rates were recorded in Central Poland (2.40–3.95 EUR/sq m/month) and the outskirts of the capital (2.50–3.80 EUR/sq m/month). In other regions, rents remained in the range of 2.50–4.00 EUR/sq m/month depending on the location.
The largest amount of warehouse space is still located in Warsaw and its surroundings (over 3 million sq m of space). Among regional markets, Upper Silesia remains the leader (1.85 million sq m), ahead of Poznań (1.48 million sq m), Wrocław (1.39 million sq m), and Central Poland (1.34 million sq m). The largest transactions concluded on the logistics space market in the first three months of the year include: a Panattoni BTS investment for Kaufland in Bydgoszcz (45,600 sq m), a BTS building for Agata Meble in Prologis Park Piotrków II (42,900 sq m), and the renegotiation of a lease agreement for space at Logicor Poznań I by Arvato (27,000 sq m).
– The market for modern logistics and industrial space continues to enjoy a very good economic climate. The favorable macroeconomic situation and the further development of transport infrastructure will remain the main drivers of market growth in the near future. Demand remains at a high level, which encourages developers to implement an increasing number of investment projects, including in smaller regional markets. We expect increased interest from tenants and the development of developer activity in these very locations – says Tom Listowski, Partner, Head of Industrial and Logistics Agency at Cushman & Wakefield. – There is over 780,000 sq m of warehouse space under construction. A significantly larger portion of the space concerns speculative projects, which is justified in a situation where demand exceeds supply. Due to the high absorption rate, we anticipate that the new warehouse space will quickly find tenants, especially in regions such as Poznań, Upper Silesia, or Central Poland, where vacancy rates remain below the national average of 5.9%.