The warehouse and logistics market has withstood the first wave of turbulence caused by the global pandemic and so far seems to be the most crisis-resistant in comparison with other commercial real estate sectors. Experts from BNP Paribas Real Estate Poland have summed up the first half of 2020 in the industrial real estate market, pointing to record demand, a drop in vacancy rates, dynamic development not only of the leading zones, but also of destinations described as prospective, such as the increasingly popular region West. However, they point out that further effects of the pandemic and the economic slowdown could translate into increased uncertainty and a possible downturn in the sector.
According to the report “At a Glance Q2 2020, Industrial and Logistics Market in Poland", in spite of the pandemic, the warehouse sector in Poland continues to develop at the fastest pace in Europe and grew by almost 1 million sqm in H1 2020, with around 60% of the new supply falling in the period from April to June. The largest amount of new space was delivered in the following zones: Warsaw II (353,000 sqm), Lower Silesia (193,000 sqm) and Upper Silesia (180,000 sqm), with A2 Warsaw Park (104,000 sqm) and P3 Mszczonów (58,000 sqm) being the largest projects.
The pandemic and the large volume of space completed in recent years have not slowed down the developers' activity. At the end of June, over 1.9 million sqm of modern warehousing space were under construction. Most of it can be found in Upper Silesia (435,000 sqm) and Warsaw II zone (324,000 sqm). The authors of the report point out that despite the fact that 60% of the newly created space is located in major warehouse clusters, the rising position of the prospective region West should be noted. There are about 256,000 sqm in the pipeline there, the majority of which can be attributed to the development of Panattoni BTS in Świebodzin (204,000 sqm). The region on the German-Polish border benefits from the potential offered by the proximity to the huge German market, the S3 route and the ongoing development of the road infrastructure.
The market diversification continues, and developers feel increasingly comfortable in less developed areas in terms of warehouse space. The green light is given to projects located in western and north-eastern Poland, some of which are BTS facilities. This trend is going to intensify. It is not only thanks to a good access to human resources, but also to the rapidly improving infrastructure. An interesting example of a developing cluster is the Tri-City zone, where 237,000 sqm of modern warehouses are being built. When completed, the total stock of warehouse space in the region will increase by over 32%
Martyna Kajka, Associate Director, Industrial and Logistics Department, BNP Paribas Real Estate Poland
H1 2020 saw 2.4 million sqm of gross demand, which was the highest figure ever recorded. The authors of the report stress that in Q2 alone, gross demand reached 1.3 million sqm, thus exceeding the previous three months' volume by about 20%. This was also influenced by the economic situation, which has prompted many tenants to renegotiate and extend ongoing leases. At the same time, there were changes in the lease structure and a decrease in the share of net demand in the total amount of space leased from 80% in January-March, to 70% in April-May. By the end of June, the vacancy rate dropped by 0.6 p.p. compared to Q1 2020 and reached 7%. The authors of the report point out that despite the record-breaking levels of new supply in recent years, the share of available space is still at a relatively low level.
The warehousing and industrial sector has smoothly taken the first sharp turn caused by the pandemic. This is very good information not only for the market and the economy, but also for the entire nation. It will certainly take a long time to restore production and consumption levels prior to the pandemic, but it would be difficult to imagine doing so without a strong and healthy logistics sector. Now we will face the time to reorganise supply chains and logistics processes, and to adapt to new business models and new priorities that are already emerging on the tenants' side
Igor Roguski, Head of Industrial and Logistics Department, BNP Paribas Real Estate Poland