Report – warehouse market in the first half of 2018: Positive macroeconomic data, including an increase in the GDP forecast to 5%, is reflected in the results for the warehouse sector. In the first half of the year, 2.02 million sq m of modern warehouse space was leased, of which 65% were new lease agreements and expansions. Developers are not slowing down the pace, as at the end of June there were over 2.3 million sq m under construction, of which approx. 50% will be delivered on the market by the end of the year. Despite the high number of new investments, the vacancy rate fell to 4% – according to the AXI IMMO report summarising the situation in the first half of 2018 on the warehouse market in Poland.
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After a very strong first quarter, the number of transactions in the second was lower by 37%, but in total, a record number of 2.02 million sq m was leased within 6 months. This figure is better by 11% compared to the first half of 2017. 65% of transactions were new lease agreements and expansions. The highest gross demand, i.e. new contracts and extensions, was recorded in Central Poland, where since the beginning of the year 430,000 sq m has been leased. The Warsaw region took second place (380,000 sq m) and Upper Silesia (287,000 sq m) also achieved impressive results. Most new lease agreements were signed in the Central Poland, Warsaw and Poznan regions.
The demand side is dominated by the five traditional locations in which 1.56 million sq m was leased, but the number of transactions in smaller and new markets is constantly growing. The share of new regions in the demand structure was 23%, 12% more than in the same period last year.
“However, the market which recorded the highest growth (512%) in demand was Eastern Poland, which translated into 153,000 sq m of rented warehouse and production space. The high result of the region is mainly due to the lease agreement for 130,000 sq m for Zalando near Olsztynek, but the number of transactions in progress indicates increased interest in the eastern part of the country by new operators and manufacturing companies present in the region.” – comments Anna Głowacz, Head of Industrial – Leasing Agency.
Developers activity is at a high level, with 640,000 sq m put into operation since the beginning of the year, It was a good result, but 11% lower compared to the same period last year.
According to the Report – Warehouse market in the first half of 2018, from January to the end of June, most new spaces was supplied in Central Poland (225,000 sq m), followed by the Warsaw region (115,000 sq m) and Upper Silesia (nearly 100,000 sq m). In total, these three regions generated 68% of the total new supply in the first half of this year. At the end of June, total warehouse stock in Poland reached over 14.5 million sq m. The following developers had the largest share in the new supply: Panattoni (65%), then, far behind the leader, Goodman (12%), P3 (8%) and Hillwood (6%).
“Developers are taking advantage of very good market conditions and deliver record numbers of square metres. At the end of June, 2.3 million sq m were under construction, 600,000 sq m more than in the same period last year. The most space under construction is in Central Poland (710,000 sq m), followed by Upper Silesia (360,000 sq m) and the Warsaw area with around 240,000 sq m. Among the new locations, the most is being built in Eastern Poland with over 215,000 sq m.” – adds Anna Głowacz, Head of Industrial – Leasing Agency.
Stable, high demand, even with a high number of new investments, means that the vacancy rate is declining. At the end of June this year, the vacancy rate was 4% and was lower by 0.2 pp compared to the previous quarter and 1.9% lower than in the first half of 2017.
There is a lack of ready space in Western Poland. Tenants in young markets also have little choice, i.e. in Bydgoszcz and Toruń (0.25%), Szczecin (0.75%) and Eastern Poland (1.5%). The highest availability due to the size of the regions and the natural rotation of tenants occurs in the main markets, i.e. Upper Silesia (6.4%), the Warsaw region (5.8%) and Poznań (5.3%).
Since the beginning of the year, rates in most regions have been growing, especially in newly built properties. The increase in transaction rates is an effect of higher costs associated with the investment.
The most attractive effective rates remain available in the Warsaw area (1.9-2.4 EUR/sq m), mainly in existing facilities. An upward trend is also visible in Poznań and Wrocław.
The warehouse market in Poland is becoming increasingly mature, but the demand for new warehouse and production space is not diminishing due to high consumption, good production indicators and investments by companies. The sector’s potential is still very high, despite the increasingly visible problem of the labour shortage.
The development of new warehouse locations in former provincial capitals will continue. The reorganisation of supply chain models and new sections of the A1 motorway and expressways will encourage new investments in cities such as Częstochowa, Gorzów Wielkopolski and Kalisz.
Municipal investments necessary for the implementation of quick deliveries to the end customer will gain in importance. Projects of this type have so far been implemented mainly in Warsaw, Wrocław and Łódź. Currently, developers, in response to changes in supply chains, are implementing and preparing investments that will fit into “last mile” logistics. Panattoni with the City Logistics format and 7R with the City Flex platform are particularly active in this field.
The upward trend in rental rates will continue, due to higher costs of land purchase and the construction of new projects. However, despite the increase in rents by 0.2 to 0.5 euros per sq m, rental rates in Poland still remain highly competitive in relation to Western European countries or even our southern neighbour the Czech Republic.