The warehouse market in Poland remains stable and is adjusting its pace to the macroeconomic situation observed in the country and Europe. Limited growth of companies in the industrial and logistics sector remained visible in the gross demand results, which amounted to 870,000 sqm at the end of Q1 2024. Between January and March this year, developers delivered approximately 850,000 sqm, which allowed AXI IMMO analysts to record a slight increase in the vacancy rate to 8.2%. Total warehouse sector stock currently stands at over 32.7 million sqm, with another 2.3 million sqm remaining under construction. The largest Polish commercial real estate advisory firm, AXI IMMO, presents its latest report, “Warehouse Market in Poland in Q1 2024.”
In Q1 2024, the transaction volume including warehouse and production assets amounted to EUR 138 million (-66% y/y). Despite being one of the historically lower results, the industrial and logistics sector remained the leader in the ranking with a 38% share. The largest of the six completed transactions was the portfolio purchase of two adjacent parks, West Park Pruszków and West Park Ożarów, by Hillwood from DWS/RREEF.
– Despite the general market slowdown, the warehouse and production sector remains a key area for investment, attracting 38% of the total capital deployed in the commercial real estate market in Poland. This is a clear signal of its strategic importance and its dominance maintained for many quarters. We hope that the slowly improving macroeconomic situation will contribute to increased investor activity in the sector, with a higher number of transactions expected at the turn of 2024 and 2025 – summarizes Grzegorz Chmielak, Director of Valuation and Capital Markets, AXI IMMO.
At the end of Q1 2024, total demand in the warehouse market in Poland amounted to 870,000 sqm (-25% y/y), of which new leases and expansions accounted for 64% of all completed transactions. The most space was leased in the following voivodeships: Mazowieckie (207,000 sqm), Łódzkie (178,000 sqm), and Wielkopolskie (166,000 sqm). Among the largest lease transactions were, among others, a new agreement for 62,000 sqm signed by a confidential tenant from the retail sector at Hillwood Łódź II (Chocianowice) and 60,000 sqm leased by an e-commerce company at Panattoni Park Poznań A2.
– Most of the trends observed in 2023 are continuing in the first three months of 2024. Tenants are waiting for an economic upturn that will drive production and also contribute to an increase in the number of signed logistics service contracts. This situation is being closely watched by developers, who will be more selective in launching new projects until the vacancy rate decreases. Regardless, the market continues to be accompanied by a transformation towards the implementation of ESG policy goals and strategies, which also influences the type and quality of delivered investments – says Anna Głowacz, Director of Industrial and Logistics Department, AXI IMMO.
At the end of March 2024, total modern warehouse space stock amounted to 32.7 million sqm. In Q1 2024, developers delivered 850,000 sqm (-55% y/y) of new warehouse space. The most supply was delivered in the Lower Silesian Voivodeship (272,000 sqm), Pomeranian Voivodeship (167,000 sqm), and Greater Poland Voivodeship (160,000 sqm). There are 2.3 million sqm under construction (+8% y/y), with the most in the Lower Silesian Voivodeship (686,000 sqm), Łódź Voivodeship (397,000 sqm), and Mazovian Voivodeship (379,000 sqm). The vast majority of currently implemented warehouse parks are projects started back in 2023. Developers are refraining from starting new investments until the vacancy rate, which stood at 8.2% (+1.7 p.p. y/y) at the end of March, decreases. The most space available for immediate lease remains in the Mazovian Voivodeship (558,000 sqm) and Lower Silesian Voivodeship (510,000 sqm). In percentage terms, the highest availability was recorded in the Świętokrzyskie (15.9%), Lubuskie (13.9%), and Lower Silesian (11.5%) voivodeships.
Relatively low new supply and the upward trend in vacancy rates in major markets have not affected changes in base rent levels, which remain in the range of EUR 3.6 to 5.5 / sqm for space in big-box investments. However, AXI IMMO analysts forecast that due to the current market situation and the large volume of vacant space, some owners in highly competitive markets may decide to lower effective rent levels in the medium and long term.
– We assess that until there is greater stabilization and an improvement in the economic situation on the client side, renewals and consolidations will dominate demand. In response to the leasing market, we expect fewer opportunistic decisions to build new investments. However, we remain calm because this situation is regulated by the vacancy rate, and domestic developers have proven many times that in response to high interest in space, they are able to quickly make decisions to build quality projects in any of the regional markets – summarizes Renata Osiecka, Managing Partner, AXI IMMO.
The report is available at the link.
Source: AXI IMMO