Poland: 1 million sqm of warehouse space completed in Q2, further declines expected

In Q2 of this year, 1 million sqm of warehouse space was completed in Poland, according to JLL. This figure is expected to decrease further in the coming months. At the end of Q2 2023, 2.5 million sqm of warehouses remained under construction.

"The fact that the volume of new supply under construction is almost at the same level as three months ago means that developers launched almost as much space in new projects in Q2 as they completed. This therefore confirms the stabilization of developers' activity, similar to the dynamics observed in 2018-2019," said Head of Industrial Agency at JLL Tomasz Mika.

At the end of Q2 2023, 2.5 million sqm remained under construction, divided almost half each into secured and speculative space. Most of the projects will fill the largest markets, which is particularly true for speculative space. The Big Five markets and the Lubuskie region are responsible for almost 85% of the unsecured space under construction, further underscoring the conservative approach of developers.

The total existing warehouse stock in Poland stood at 31.5 million sqm at the end of June 2023. The average vacancy rate reached 6.9%, which corresponded to about 2.2 million sqm of available space.

"Although gross demand at 970,000 sqm was similar to the first quarter, the sum of new contracts and expansions increased by about 11% q/q. This result remains about 24% below the five-year average for the first half of the year, but is close to the results of 2018-2020, which at the time were considered high and positive for the market," said Director Research & Consultancy Maciej Kotowski.

The strengthening manufacturing sector accounted for about 31% of net demand in H1, ranking just behind retail chains (32%) and logistics (36%). Despite a significant slowdown in the e-commerce sector, reflected in, among other things, a decline in the share of online commerce in total retail sales to just 7.7% in June 2023, the e-commerce industry continues its steady growth in Poland, accounting for nearly 200,000 sqm leased in H1 2023.

Rental values for the so-called Big Five grew by 5.3% on average compared to December 2022. In June 2023, they were in the range of 3.5-5.75 euros/sqm/month (typical suburban logistics parks). Urban locations show more dynamics - rents in the same period increased by 7.1%. Values reach up to 8.5 euros/sqm/month for urban warehouses in Warsaw, it was reported.

In H1 2023, total investment volume in the warehouse market reached €438 million through 14 transactions. The largest was the acquisition of the Campus 39 park by P3 for nearly €140 million. Another significant transaction was the sale of City Logistics Wrocław II to Czech investor Trigea, demonstrating increased capital activity from Central and Eastern Europe. As for properties with long-term leases, the Swarzedz project, bought by Palmira Capital Partners from Akron Group, is worth mentioning.

Source: JLL and ISBnews