Polish warehouse market with promising prospects for the future

Poland, which is the fifth warehouse market in the EU, has a chance to take over a large part of investment, production and logistics processes transferred from Asia.

In Poland, 30 percent of new warehouses in Europe, and in terms of demand for space, we are in third position, after Great Britain and Germany. In recent months, the investment market has slightly slowed down, but the prospects for the sector in our country are very promising.

The changes in the world economy and the anxiety related to the conflict in Ukraine have not limited the record high interest in leasing warehouse space in our country so far. Demand in the warehouse market is record high. On the other hand, the number of new projects implemented in this segment decreased.

"In the first half of this year alone, nearly 4 million sq m was delivered to tenants. area, by about 12 percent. more than a year earlier. The record-high absorption capacity of our market, which, let us recall, in 2021 exceeded as much as 7 million sq m. space, places Poland on the European podium in terms of demand," informs Agata Karolina Lasota, Managing Director of LBC Invest.

However, he admits that the real influence of geopolitical factors on this sector in our country is not yet felt. "The high volume of lease recorded in the first 6 months of the year is a consequence of investment processes initiated last year. However, signs of an economic slowdown are also beginning to be seen in the warehouse market. Although we can talk about a shortage of warehouses in Poland, because there is only 3% of available space, there has been a decrease in the number of investments launched in recent months," he explains.

Slight drop in production
Agata Karolina Lasota points out that the decline in investment activity in the domestic logistics market may turn out to be temporary, because the scenario of a wider transfer of production from China and other Asian countries to our country is quite realistic. He admits that further disruptions to global supply chains from China and the increase in the cost of container transport from Asia effectively motivate companies to shorten the length of deliveries. The influx of customers from Western Europe who want to relocate part of their production and logistics operations to us is also likely.

"In addition to an attractive logistics base, Poland offers investors a large internal market, lower labor costs compared to Western European countries and well-educated people willing to work. We receive inquiries from companies from Russia and China that analyze the possibility of moving production to our country. Ukrainian entrepreneurs also visit us. Companies want to secure the continuity of work in the best possible way and take actions that can guarantee their uninterrupted functioning in the future. They plan to increase warehouse inventories, secure production facilities and strive to increase efficiency and optimize logistics costs," informs Agata Karolina Lasota.

Only in the second quarter of this year. domestic stock of warehouse space increased by 2.2 million sq m. This year, Wrocław, Upper Silesia and the area of ​​central Poland have increased their warehouse potential the most. The stock in the warehouse sector amounts to approximately 26.5 million sq m. modern space. This gives us the fifth largest warehouse market in the European Union.

Poland is the second fastest growing market in Europe
In the middle of the year, almost 4.5 million sq m was under construction. warehouse and industrial space. In terms of the increase in resources, this places the Polish market in second place in Europe. In the middle of the year, the implementation was 30 percent. more than at the end of 2021, but there was an almost 10% drop in production from spring to summer. If you take the average of the last few quarters, the decline is more visible. First of all, the amount of space implemented in the Westpomeranian Region, Lower Silesia and the central part of the country decreased.

"Already in the summer, a decline in the number of warehouse projects carried out in Poland on a speculative basis was visible. Global economic turbulence and the development of the conflict in Ukraine are causing uncertainty among investors. It is difficult to estimate the real amount of future construction costs. However, the largest players are still looking for land for investment, despite the persistently high land prices. The construction of land banks proves that developers are willing to return to the path of intensive investment activity. Firms expect the market to continue to grow rapidly. They are preparing further projects, but the start of project construction is determined by the earlier securing of the space with contracts," admits the managing director of LBC Invest.

The decrease in the number of new investments in the warehouse sector in Poland is not related to the demand. The interest in renting is still record high. In the second quarter of this year, the demand for warehouses reached an all-time high. The slowdown in the pace of market development is mainly related to difficulties in the implementation of projects and an increase in the costs of new investments.

Rents up
The growing costs of building and maintaining real estate also affected the rental prices of warehouse space, which so far in Poland have remained at a very low level compared to other European markets. The highest increases were recorded in the Kraków and Tri-City voivodships and in the Warsaw region. According to LBC Invest data, since the beginning of the year, rents, depending on the location, have increased by about 10%. up to 25 percent

"Due to the low availability of vacant space and the limitation of new supply, further increases in rental rates can be expected throughout Poland, which started to rise at the turn of the year. The Polish market is no exception, the increase in the cost of renting warehouse space is visible throughout Europe," admits Agata Karolina Lasota.

Higher rental prices are certainly a motivating factor for investors due to the increased profitability of the investment. On the other hand, investment activity may be cooled down by high prices of attractive land and twice as high costs related to financing projects by banks. ESG requirements make the warehouse facilities environmentally friendly, energy-saving and comfortable to use, but the cost of implementing such projects is also correspondingly higher.

Photo: Dekpol