AXI IMMO presents the results of the latest report: “Polish warehouse market in Q3 2021”.
Developer activity in the Polish warehouse market at the end of September 2021 remains at a high level. Completions in Q3 2021 660,000 sq m increased the total logistics and industrial stock to 22.4m sq m. There are 3.46m sq m under construction, of which over 1.22m sq m (+120% y/y) are developments without secured leases. In the period under review, gross take-up amounted to 1.44m sq m (+16% y/y), where, as expected, the e-commerce and logistics segments remained the main force. The correlation of strong demand and moderate new supply affects the vacancy rate, which stood at 5.04% at the end of September 2021 (-2.66 pp y/y).
The total volume of investment transactions in Poland’s commercial real estate market after adding up the first three quarters of 2021 amounted to EUR 3.53bn. The warehouse real estate segment is responsible for nearly half (approx. EUR 1.7bn) of the capital generated during this period, with transactions of EUR 800m in Q3 alone.
Among the largest warehouse investment transactions selected in Q3 2021 was the sale of the Tristar portfolio (160,000 sq m) with properties in Poznań, Wrocław, Warsaw, Czeladź and Gdańsk to Exeter. In turn, Savills IM – ELF3 Fund decided to buy Panattoni A2 Warsaw Park (103,700 sq m) located in Grodzisk Mazowiecki from Invesco Real Estate. 7R was also active in Q3, selling three of its warehouse parks, i.e. 7R Park Kowale II (52,000 sq m), to Generali Real Estate. At the same time, CBRE IM became the new owner of 7R Park Poznań East and 7R Park Sosnowiec (totalling over 44,800 sq m).
The strong investor appetite observed in Q3 2021 has resulted in further compression of yields, with big-box facilities valued at 4.5 – 5.0% and warehouse space at around 4.25% – 4.50%.
– The warehouse real estate sector is taking full advantage of its opportunity. After years of domination by office and retail properties, it is now at the forefront of foreign interest. Investors’ greatest attention is focused on large multitenant warehouse hubs, which accounted for more than half of all transactions this year. The rapid development of the urban logistics segment, as well as the increased number of BTS projects, means that these assets are also increasingly being considered as good opportunities to monetise capital – says Renata Osiecka, Managing Partner, AXI IMMO.
From the beginning of July until the end of September this year, gross take-up in the Polish warehouse market amounted to 1.44 mln sq m (+16% y/y). During the period under review, tenants were most active in Warsaw, Upper Silesia, the Kuyavian-Pomeranian region, Lower Silesia, and Poznań. Transactions for logistics operators and e-commerce dominated the take-up structure in Q3. Both accounted for over 50% of take-up.
The five largest transactions in Q3 2021 included the letting (new deal) of over 104,000 sq m by an international e-commerce company at Hillwood Bydgoszcz, followed by three logistics operators opting to sign new agreements for over 53,000 sq m at 7R Park Goleniów II, 34,000 sq m at Panattoni Park Głogów and 29,700 sq m at Segro LP Poznań Komorniki, respectively. In turn, a company from the tool industry signed a contract for 26,000 sqm at Segro Business Park Gliwice.
The total take-up volume from January to September 2021 in the Polish warehouse market amounted to 4.38m sq m, which translates into an increase of 25% year-on-year. The strongest occupier activity in the first three quarters of 2021 was recorded in Warsaw, Upper Silesia, Poznań, Lower Silesia, and Central Poland. New leases and expansions accounted for 75% of the take-up.
– We are on the best way to equal or beat last year’s take-up result in the Polish warehouse market. Breaking the limit of 5.2m sq m is very realistic, which reflects in the excellent results for the first three quarters of this year and a 25% increase in tenant activity compared with last year’s take-up rates. The development of e-commerce and supporting industries is driving the market. The activity of courier companies, which have announced that they will introduce same-day delivery services in selected cities by the end of 2021, should also be monitored closely. Nevertheless, we expect the greater regionalization of supply chains to intensify trends such as nearshoring and cross-border – says Anna Głowacz, Head of Industrial Agency, AXI IMMO.
Developer activity in the Polish warehouse market in Q3 2021 amounted to over 660,000 sq m (5.6% y/y), which translated into an increase in the total stock of modern industrial and logistics space to 22.4m sq m. During the period under review, most new supplies were delivered in Western Poland, followed by Poznań, Lower Silesia and Upper Silesia. In the case of Western Poland, a significant accumulation resulted from the completion of the Panattoni BTS project in Świebodzin (over 200,000 sq m of usable area) for Amazon.
In the first three quarters of 2021, 1.77m sq m of new space was delivered to the warehouse market, similar to the reference period a year ago. During the period under review, most new supplies were delivered in Western Poland, Upper Silesia, and Warsaw.
Good forecasts for the development of the warehouse market and high-demand influence developers’ robust activity. At the end of September 2021, there were 3.46m sq m under construction, of which 35% is space built under the speculative model. The volume of developments without secured leases is 1.22m sq m, increasing over 120% on last year. The largest warehouse parks under construction include GLP Lędziny (111,500 sq m), Hillwood Bydgoszcz (104,300 sq m), Panattoni Park Głogów (73,000 sq m) and two projects from 7R, i.e. 7R Mysłowice (50,770 sq m) and 7R City Flex Katowice II (41,100 sq m).
– In the next few months, we expect that the developers market will face some challenges related firstly to the securing and availability of investment land, secondly to rising labour costs and the extension by about 2-3 months of project implementation. Limited investment alternatives make it difficult to negotiate with investment landowners, who expect higher starting rates – adds Anna Głowacz.
The high level of development activity, together with continuing demand, is driving down vacancy levels. At the end of Q3 2021, there was around 1,129,000 sq m of available space in Poland as a whole, i.e. approx. 5.04% (-2.66 pp. y/y) of the total warehouse market stock. The highest vacancy rate among the analyzed markets remains in Upper Silesia (7.6%), Central Poland (6.6%) and Warsaw (5.2%). There is virtually no space available for immediate lease in Szczecin and Eastern Poland. The relation of demand to supply did not significantly influence the changes in offer rents in the last quarter, which remained at the current level.
– We expect that in the coming months, the performance of the new supply in the Polish warehouse market will not differ significantly from the previous average. Nevertheless, one should bear in mind the increasing challenges related to the availability of investment land and the shortage of employees. The large volume of speculative investments should soon impact the adjustment of average rental rates and satisfy the rapid demand for space from the two most active tenant groups, i.e. e-commerce and logistics operators. On the other hand, at the threshold of activities connected with limiting the sector’s impact on climate change, we forecast a deepening trend related to introducing green solutions to warehouses, in which certification will be one of the standards – sums Renata Osiecka.
AXI IMMO offers commercial real estate advisory services in the areas of leasing and management of office and industrial space as well as acquisition and disposal of real estate assets and development land. The company also offers B2B and B2C supply chain management services. AXI IMMO’s biggest advantage is combining international standards of service with a thorough knowledge of the local market. The company received the award for the Best Local Agency in 2012-2019 and 2021, and the Best Team for the industrial sector in 2016-2017 in the prestigious CiJ Awards organized by the CEE CiJ Journal magazine.