According to the latest report entitled At a Glance – Industrial (Q4 2016), the last quarter of the previous year on the warehouse and logistics market was marked by continuously high demand, which yet again crossed the one million sqm threshold in Q4 only and for the entire year achieved a total result of 3.29 million sqm. At the end of 2016 the total stock of logistics and warehouse space in Poland stood at 11,181,000 sqm, which means an increase in supply by 12.8% y-o-y.
The positive run for the domestic logistics and warehouse market continues and will continue. There is potential for further growth as confirmed not only by the increasing number of schemes under construction and those fully leased, but also by the extremely stable foundations for expansion of the sector. The trust shown in the domestic market by investors is also of importance here.
The prospects for further growth of the logistics market will be shaped by geopolitical decisions, including Brexit. We are carefully analysing its possible consequences and are striving to define the needs of the part of businesses from Western Europe that due to the need to optimize costs could take the decision to relocate their centres and services to Poland.
Katarzyna Pyś-Fabiańczyk, Head of Industrial & Logistics, Central and Eastern Europe
Development, supply and fast commercialization
The last three months of 2016 were also record-breaking in terms of delivery to the market of new warehouse and logistics space, where the supply increased by approximately 250,000 sqm, while for the entire 2016 it was 1.33 million sqm. The authors of the report stress that despite the intensifying developer activity that has been in evidence for several years now – the result of which is the dynamically increasing volume of supply – new warehouse schemes find tenants quickly. The dynamic nature of the market is further supported by the fact that frequently speculative projects are already to a large extent leased at the moment of their completion.
Additionally, the high level of demand in Q4 2016 affected the vacancy rate, which stood at 6.1% and was 0.5 percentage points lower as compared to Q3.
There are now opportunities for smaller warehouse markets. The second half of the year saw a considerable increase in interest in land near the country’s western border. In addition to the dynamically growing Szczecin market, developers and tenants are now targeting the Lubuskie voivodship that benefits from the natural asset in the form of its location and is also characterized by the extremely well-developed infrastructure. These are arguments that appeal to businesses from Western Europe aiming to optimize their costs.
Anna Staniszewska, Head of Research & Consultancy, Central and Eastern Europe
OVERVIEW OF REGIONAL MARKETS
Warsaw I – the hub comprises warehouse and logistics space located within the capital’s administrative boundaries. In Q4 2016 it grew by 4,500 sqm, thus reaching a level of 655,700 sqm. Over the last three months of 2016 the vacancy rate fell significantly and it now stands at 8.5% as compared to 9.8% at the end of September. However, it continues to be one of the highest vacancy rates in the country. The considerable share of unleased space is not reflected in the rents, which remain at a consistently high level.
Q4 saw a high level of tenant interest in warehouse space. This is reflected in the vacancy rate, which over the last three months of 2016 fell by 1.4 percentage points and currently stands at 6.7%.
Q4 saw developer interest in the towns of the Upper Silesia conurbation, which so far had not been seen as typical warehouse hubs. Additionally, new schemes are now appearing in more distant locations such as Bielsko Biała and Opole.
Despite the lack of new supply, the vacancy rate increased slightly as compared to Q3 from 8.3% to 8.6%. It is the highest vacancy rate amongst primary industrial and logistics hubs and the second highest result in Poland.
One of the risk factors that could inhibit the growth of the market in the future is one of the lowest unemployment rates in the country oscillating at around 2%. Nonetheless, developers are not disturbed by the relatively high vacancy rate or the potential difficulties in finding staff. Poznań is one of the 4 logistics hubs where the volume of space under construction at the end of 2016 exceeded the 200,000 sqm mark. The highest level of activity is recorded in the western part of the agglomeration in the vicinity of the motorway and the airport, which is where this industrial and logistics hub’s centre of gravity is now shifting to.
The vacancy rate fell by 0.6 percentage points as compared to the previous quarter and currently stands at 5.6%. This shows that there is undiminishing tenant interest in Wrocław’s warehouse market, which is additionally confirmed by the further planned extensions of other logistics parks.
The dominance of large format schemes within the hub means that rents remain at a stable low level. At the moment the cost of leasing 1 sqm in the area oscillates between €2.0/sqm and €3.1/sqm.
The vacancy rate fell by 2.7 percentage points as compared to Q3 and currently stands at 5.5%.
A large volume of land has been secured within the hub by developers for construction of new industrial and logistics schemes, which could contribute to the market’s fast growth in the future.
The vacancy rate increased by 3.4 percentage points and at the end of December reached a level of 9.8%. It is worth mentioning that only as far back as mid-2016 there was no available space in the Kraków area. These extensive fluctuations show that it is a shallow market. The increase in availability resulted in a slight decrease in asking rents, which currently stand at between €2.9 and €3.9 per sqm/month
Developer activity within the hub is mainly noticeable along the A4 motorway in locations such as Skawina and Kokotów, where at the moment there are 19,000 sqm of industrial and logistics space under construction.
Due to the specific nature of BTS projects, the delivery of the above schemes will not significantly affect the vacancy rate (currently standing at 3.0%), or the rents, which range between €2.8 and €3.5 per sqm/month.
4.3% of the above space remains vacant, where further 51,300 sqm are currently under construction.
Rents for warehouse space around Lublin and Rzeszów range between €3.2 and €3.3 per sqm/month.
Toruń / Bydgoszcz
Rents remain stable and oscillate within a range of €2.4 and €3.1 per sqm/month.