Research

Continued boom on the warehouse market

14 August 2018

Poland’s warehouse and logistics market is truly booming at the moment. The data for the first half of 2018 shows that, following last year’s success when the total volume of modern warehouse space increased by 21%, the market is not slowing down.

One record after another

In the first six months of 2018 the stock of modern industrial space increased by another 5.5%, thus reaching 14.2 million sqm. The vacancy rate at the end of the first half of the year reached, yet again, a historical low of 4.0%, which was partially due to the record breaking high demand from tenants. However, this is not the only record of this year. The extremely favourable market conditions encourage further development, which resulted in the volume of space under construction exceeding 2.2 million sqm

Central Poland growing the fastest

In the first half of the year the stock of modern warehouse space increased by 741 800 sqm. Central Poland was the leading region with nearly 260 000 sqm of space completed, which accounts for 35% of new supply across the country. It was in this region that the largest schemes were delivered to the market: the build-to-suit warehouse for B/S/H (79 000 sqm) and another phase of the P3 Piotrków scheme (60 200 sqm). Both of the schemes are located in Central Poland. The highest volume of warehouse space outside of Central Poland was completed in Upper Silesia (124 700 sqm) and in Warsaw II zone (121 870 sqm).

Furthermore, Central Poland has the highest volume of space under construction.

Developers are the most active in Central Poland, where nearly 630 000 sqm of space is under construction. Traditionally, the second strongest region, i.e. Upper Silesia, upholds its position with nearly 320 000 under development. Additionally, the undiminishing performance of the Wrocław region and the corridor along the newly developed S3 expressway also deserve a mention with respectively 217 000 sqm and 183 000 sqm under construction

Patrycja Dzikowska, Head of Research and Consultancy, Central and Eastern Europe, BNP Paribas Real Estate Pola

Vacant space in the capital

Similarly as in the previous quarter, the highest vacancy rate was recorded in Warsaw I zone, which comprises warehouse and logistics properties located within Warsaw’s administrative boundaries. At the end of H1 vacancy rate there stood at 10.5%.

As far as the key warehouse markets are concerned, Central Poland has the lowest vacancy rate standing at only 0.4%, with fully leased build-to-suit schemes holding a large share in the stock on the market. This is also the reason for the less developed markets having a small volume of available space. Regions such as the Tricity, Bydgoszcz/Toruń, Szczecin and Western Poland had virtually no available warehouse space in existing schemes.

Rent and location determined by workforce availability

Despite recording the highest vacancy rate, it is Warsaw’s warehouses that remain the most expensive scheme on the market. Rents there reach a level of between EUR 3.70 and 5.35 / sqm / month, while in the remaining regions they do not go above EUR 4.00 / sqm / month.

Despite strong competition between the market’s leading players, we have observed upward pressure on rents in the last few months. This trend results mainly from increasing construction costs and limited availability of workforce. We have to remember that the high level of activity in the construction sector means labour shortage, which in turn has an impact on completion dates for new schemes. General contractors, driven by the workforce exerting upward pressure on wages, the low level of unemployment and further increases in the cost of materials, raise the prices for their services. And this will ultimately translate into higher rents

Martyna Kajka, Consultant, Industrial and Logistics Department, Central and Eastern Europe, BNP Paribas Real Estate Poland

Developers elect to locate their properties in regions hitherto not associated with warehouse schemes, which is dictated by the availability of workforce in the regions and the increasing difficulties in finding sufficient numbers of workers close to large urban centres. Furthermore, suitable transport infrastructure is also a key factor in making the decision on location, an example of which can be the great growth dynamics along the corridor of the newly developed S3 expressway.

More details to be found in the At a Glance, POLAND’S INDUSTRIAL AND WAREHOUSE MARKET, Q2 2018, report.

Justyna Magrzyk-Flemming

Head of Marketing & PR CEE at BNP Paribas Real Estate Poland