Logistics is growing, but the first signs of slowdown are visible on the horizon

01 grudnia 2022

The market for logistic, warehouse and industrial space is undergoing dynamic changes. Authors of the BNP Paribas Real Estate Poland’s quarterly report point out to a continued high take up, accompanied by low vacancy rates prevailing for a long time, and more recently, also by a slowdown on the developers’ side. Experts also highlight a more pronounced shift towards sustainable construction, and the fact that the logistics industry is managing the electromobility trend.

Polish market for modern logistic, warehouse and industrial spaces closed the last quarter with assets of 27.4 million sqm. This volume included not just spaces where logistic operations are carried out but also the related office spaces and staff rooms. As of end of September, 4.1% of space in all buildings was vacant, which means a slight increase in the vacancy rate by 1 pp. vs. Q2. In contrast to the period from July to end of September 2021, the volume of unleased available space decreased by 0.9 pp.

Despite natural concerns about the economic and geopolitical situation, warehouse logistics continues to be well positioned for growth. International investors see Poland as the key player in a region that bases its competitiveness on still affordable land prices compared to its Western neighbours, attractive rent rates as well as reasonable construction cost and skilled labour force. The continued interest in our country is evidenced for example by the entry of such experienced developer as ECE into Poland

pointed out Michał Rdzanek, Associate Director from the Industrial and Logistics Department, BNP Paribas Real Estate Poland.

ECE, a Germany-based company known in Poland mainly from its operations in the shopping centre segment, has launched its first logistics project in Kąty Wrocławskie. In Lower Silesia, it will develop an international logistic centre with 80,000 sqm of space to be commissioned next autumn.

As of end of Q3, the total space of projects under construction in different locations amounted to 3.9 million sqm of space – some 330,000 sqm less than in the previous quarter. Among the biggest new developments, two are owned by Panattoni: BTS Zalando Bydgoszcz (146,000 sqm) and Panattoni Park Wrocław Logistics South Hub (115,000 sqm). The authors of the report point out that, as in the previous quarter, about a half of the warehouses under construction has already been preleased.

Despite uncertainties related to the economy losing momentum and the geopolitical situation, as well as the post-pandemic environment, the country’s assets of logistic, warehouse and industrial space increased to 1.16 million sqm in Q3. The major commissioned facilities included: Panattoni Park Sosnowiec III (82,000 sqm), 7R BTS Radzymin built-to-suit for Żabka (67,500 sqm) and Panattoni Park Rzeszów North / BTS LPP Panattoni Park Rzeszów North (67,000 sqm).

The continuing uncertainty related to the economic situation and the business environment has affected tenants’ sentiment, who have signed contracts for the lease of 1.5 million sqm of space (gross take-up). This is 33 pp. less than in the previous quarter and about 2 pp. more than in Q3 2021.

The third quarter has been marked by continued increases in rent rates. The only exception from the upward trend was the regional market in the Opole area. According to the report prepared by BNP Paribas Real Estate Poland, the average base rates for the previous quarter exceeded EUR 4/sqm/month, with the highest growth in the Eastern regions of Poland. More than EUR 5/sqm/month must be paid by tenants who are interested in spaces in the Cracow region.

The end of the year should be the moment when rents reach a level acceptable to all parties. We expect also that, although the market is cooling down, we may see more speculative projects in the coming months

says Piotr Załęski, Associate Director from the Industrial and Logistics Department, BNP Paribas Real Estate Poland.

The warehouse sector, which has enjoyed increased interest for a few years, focuses on sustainable solutions, and new facilities are increasingly more environmentally-friendly. This approach has been adopted by the investors, tenants and their clients alike. Sustainability-oriented companies include Panattoni with a portfolio of 6 million sqm of space with different ‘green’ certificates as of end of Q3. Electromobility is another important trend highlighted by experts from BNP Paribas Real Estate Poland. The electrification of fleets operated by logistic, courier and transport companies will necessitate the adaptation of the infrastructure at warehouse logistics facilities.