How would you rate last year’s logistics market?
2012 was a year of waiting. It wasn’t a year of dynamic growth, but the number of new transactions indicates the year was stable, with an upward trend. The market was dominated by build-to-suit projects, with speculative investments dominated by short-term, mostly 3-year leases. We’ve also seen a growing number of renegotiation agreements.
There were some bigger transactions in Q4 of 2012, which is usually a bit stronger, demonstrating that demand remains strong from the industrial tenants. Demand has even increased in the fourth quarter near Warsaw, including Błonie, where vacancy is usually much higher (as much as 15 percent).
The logistics operators are driving the market, but they’re also looking for savings?
They are, but they’re forced to do this by the market because their clients are also looking for savings. In fact, the entire supply chain is looking for the cheapest solutions. Rather than move to new projects, though, they usually look to add new components to their current locations. The search for large discounts is also behind the increasing length of time it takes to negotiate a deal. The owners of the logistics parks, who are mostly investment funds, are not willing to give them [discounts]. At the end of the day, the owners are winning, because rent prices have moved only slightly since the beginning of 2012.
How strong you expect the market will be affected by the economic slowdown?
We don’t expect this would have any direct impact on the market. There are a lot of factors indicating the sector will continue to perform. Retailers looking for savings will begin outsourcing their operations to logistic operators. This way, the end-user warehouses will be replaced by the logistic warehouses. This makes us confident about the market.
Source: CiJ Journal