In the first half of 2021, records were set related to both the total supply of warehouse space under construction and the demand in the best locations in Poland. It should also be emphasized that good results were recorded in most European countries. The pandemic has become the driving force behind the entire warehouse market, mainly due to the dynamic development of e-commerce. We can expect this year to be as successful for the industry as 2020. This is supported by the results from January to June, as well as the expected fourth wave of COVID-19, which may contribute to its further development.
Record half-year on the market
The first half of 2021 ended with a record in the supply of warehouse space under construction, which, according to market analyzes, exceeded 3 million m². This is the first time such a situation has happened in Poland. According to AXI IMMO, in the period from January to June, developers completed over 1 million m² of warehouse space, thanks to which its total stock at the end of the first half of the year amounted to almost 22 million m². The vast majority of the space put into use lies within the so-called the big five – Warsaw and the surrounding area, Upper Silesia, Central Poland, Wrocław and Poznań. Of the above locations, it is worth highlighting the first two, where the largest number of warehouses were built in the first six months of this year.
According to Cushman & Wakefield, in the period from January to June the total demand was at the level of approx. 3.4 million m². According to market analysts, this is even a 50% increase compared to the previous year. A similar growth dynamics was recorded in net demand for new contracts – tenants have leased approximately 2.5 million m². These data illustrate the high activity of companies interested in warehouse space. The pandemic has accelerated the growth of e-commerce, as reflected in the structure of demand by industry. The most active in the analyzed period were tenants from the logistics sector, including courier companies, e-commerce and traditional trade. According to JLL’s analyzes, the geographic interest of tenants was focused on the Big Five. Nevertheless, among other locations, Szczecin and the Tri-City as well as Kujawy and Kraków stood out.
It is also worth emphasizing the low level of the vacancy rate, which, according to CBRE’s analyzes, fell by 1 percentage point at the end of June. compared to 5.7% y / y. We can therefore be sure that the warehouse space delivered in the coming months will be very popular and will quickly find new tenants.
Investors’ interest is not waning
According to AXI IMMO analysts, at the end of June, the volume of investment transactions in the commercial real estate market in Poland amounted to EUR 2 billion, of which EUR 900 million were ownership changes in the industrial and logistics sector. Investors’ interest in warehouses within cities has also increased. The largest transactions on the market were contracts for warehouse space for e-commerce services.
Poland is a competitive market compared to other countries in the region, as evidenced above all by the unwavering interest of foreign investors. The growing capital values of rented warehouse projects encourage entities not only from Europe, but also from Asia and the United States to carry out more extensive analyzes in the context of independent financing of the construction of warehouse facilities, as well as to invest at the level of securing the land.
In the first six months of 2021, the prices of investment land increased, especially those located near cities and along important communication routes. These are the areas most logistically attractive, and therefore the most popular among investors and warehouse developers. The discrepancy between the prices of investment land, depending on the location, remains huge. For example, prices in Warsaw start from PLN 600 / m², while in suburban locations with greater land availability, you can buy a plot for as little as PLN 120 / m², or even cheaper.
In terms of average rents, we did not notice any significant changes. According to CBRE, a slight increase in prices took place, among others, in Warsaw, which is caused by the increased interest in urban locations. Such areas are still the most expensive. Nevertheless, the prices of warehouse properties in Poland and the returns generated by them remain attractive compared to Western Europe, which to a large extent attracts foreign investors from Europe, the United States and Asia.
New locations are gaining in importance
Developers’ attention is attracted more and more often by smaller centers located in Eastern Poland and on the western border, which are convenient for tenants providing deliveries within countries neighboring Poland. New logistics centers will also appear in dynamically developing areas in Pomerania – in the Tri-City and Szczecin, as well as in the south of the country, near Krakow. Further investments are also planned in emerging markets in the region of Bydgoszcz, Toruń and Kielce.
What will the next months bring?
The good results of the Polish warehouse market in the first half of 2021 give hope for further dynamic development of this sector. If the economic conditions are favorable, we can expect the continued high demand and the activity of developers and investors. It seems that an increase in investment land prices, as well as an increase in rents, are inevitable, especially considering the recent low vacancy rate. When it comes to locations, for the last mile and SBU formats, spaces within cities and in their close vicinity will be the most desirable, among others due to communication and employee availability, but also short time to reach customers. Of course, these arguments are also important for big box operators, but land prices, which largely translate into rents, encourage management boards to choose locations further away from urban centers.
Author: Artur Szczepanek, Project Manager at Hines Polska
