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The Polish commercial real estate market is gaining momentum

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“Marketbeat Poland – Spring 2014” presents a summary analysis of the Polish office, retail and warehouse markets in 2013, with forecasts for the near future.

The sale of Silesia City Center was the largest single investment deal on the Polish market, in what was a record year. More than 500,000 sq m of office space is under construction in Warsaw including high rise buildings. US online retailer Amazon’s lease of three warehouse facilities boosted take up to record highs. These are the key events of the commercial property market in Poland in 2013 highlighted in “Marketbeat Poland – Spring 2014”, prepared by Cushman & Wakefield, a commercial real estate consultancy firm. 

Commercial investment market:
• Investment transaction volume in 2013 hit a record EUR 3.12bn, the best result since 2006
• The largest deal was the sale of Silesia City Center in Katowice
• Polish investors accounted for 8% of all deals (EUR 263m)

Office sector:
• The rising supply and vacancy rates in Warsaw indicate that the market is becoming increasingly tenant-led
• Notable downward trend in prelet volume
• Wrocław strengthened its position as the second fastest growing office market in Poland, after Warsaw

Retail sector:
• The number of shopping centres’ extensions is increasing (in 2014 a total of 110,000 sq m of GLA will be delivered in six extensions)
• The biggest shopping centres to open last year were Galeria Bronowice in Krakow, Poznań City Center and Galeria Katowicka
• The shopping centre density in the eight conurbations is the highest in Wrocław and Poznań, and the lowest in Szczecin

Warehouse sector:
• Modern warehouse stock approaching 8 million sq m
• Leasing volume reached over 2.1 million sq m, a rise of around 42%, the highest level of take up ever recorded for the
Polish industrial market
• Amazon’s lease of three distribution centres in Poland totalling approximately 300,000 sq m were most notable transactions


• EUR 412m – the biggest ever commercial single property acquisition in Poland
• 350 – number of discount stores delivered in Poland in 2013 (similar number expected in 2014)
• 300,000 sq m – warehouse space to be occupied by Amazon

Poland remains an attractive market for investors; its scale dominates the Central European market and offers liquidity, office demand remains robust from both existing occupiers and new entrants, the retail sector is benefiting from increasing consumer confidence and spending which is also positively impacting on the demand for warehouse accommodation” – says Charles Taylor, Managing Partner of the Polish office of property consultant Cushman & Wakefield.

Investment market
Polish investment market volume in 2013 hit a record EUR 3.12bn. German investors accounted for the largest share of the total transaction volume, 25%, and were the largest group of buyers. Polish investors came in fourth place accounting for 8% of all deals (EUR 263m).

The retail sector accounted for 44% of the total volume and settled at around EUR 1.38bn, a rise of approx. 20% on the previous year. The biggest deal was the acquisition of Silesia City Center in Katowice for EUR 412m by an international consortium of investors led by German financial services group Allianz. The office market accounted for 38% of the total volume and was the best performing sector with 27 deals totalling EUR 1.19bn. Growing office deals outside Warsaw (EUR 0.19bn), however the biggest deal was closed in the capital, where US Hines Global REIT purchased New City office complex for EUR 127m. Transaction volume on the industrial market in 2013 totalled around EUR 0.44bn (14% of total volume), a fall of around 5% on the value recorded in the peak of year 2012. The key transaction was the Norges Bank Investment Management’s acquisition of 50% shares of Prologis portfolio.

“2013 was a record year on the commercial market in Poland. The transaction volume hit the highest level since 2006. Last year also saw the biggest-ever single deal on the Polish investment market. Investors were more active in the second half of the year. Overall the outlook remains positive for 2014 and investors’ appetite for Polish commercial property market is likely to continue. However, the investment market will maintain its momentum provided there is sufficient supply of prime properties and stronger appetite for investing in more demanding properties, particularly in the retail sector” – says Piotr Kaszyński, Partner, Head of Capital Markets of Cushman & Wakefield.

Office sector
More than 298,000 sq m of new space came onto the Warsaw market in 2013, bringing the capital’s total stock to 4.11 million sq m in December 2013. The majority of new space was delivered in the Upper Mokotów district. The new supply was dominated by several large completions, including Konstruktorska Business Center, Miasteczko Orange and Plac Unii. Some 80,000 sq m of modern office space is scheduled for delivery in central locations in 2014, including the completion of the first building of Ghelamco’s Warsaw Spire complex and the Powiśle Park office building. Leasing activity in Warsaw in 2013 totalled 633,300 sq m. The number of pre-lets declined compared with 2012. New leases accounted for around 60% of Warsaw’s total take-up. The largest deal in 2013 was Polkomtel’s pre-let of 22,680 sq m in Harmony Konstruktorska. Prime headline rents dropped in central locations in 2013 to EUR 25/sq m/month. Prime modern office buildings in non-central locations commanded EUR 14–16.5/sq m/month.

Krakow remains the largest regional office market in Poland with its total stock at nearly 634,700 sq m. The gap with regard to total stock between Krakow and the runner-up Wrocław has narrowed down to just 95,000 sq m and is expected to shrink further owing to strong developer interest and high employment growth in the modern business services sector. Wrocław also saw the completion of the tallest building and the largest lease transaction in 2013 in the regional cities. Getin’s subsidiaries leased 11,700 sq m in completed last year Sky Tower. Headline rents remained flat in regional cities (Kraków, Wrocław, Trójmiasto, Poznań, Katowice, Łódź) and range from EUR 12-14/sq m/month in Łódź to EUR 14-16/sq m/month in Poznań.

“The Polish office market will continue to grow with rents likely to decrease further in the next few months in line with the trends in other CEE countries. The imbalance in supply and demand led to a high increase in vacancies in Warsaw. The market is becoming increasingly tenant-led with occupiers seeking ways to optimize occupancy costs or higher space standard at the current rent levels. Rents are likely to decline particularly in existing office buildings with limited capacity to compete against schemes under construction or in the pipeline” – says Richard Aboo, Partner, Head of Office department of Cushman & Wakefield.

Retail sector
New modern retail supply totalled 650,000 sq m, up by nearly 20% on the 2012 total. Shopping centres accounted for the largest share (74%). The biggest shopping centres to open last year were Galeria Bronowice in Krakow, Poznań City Center and Galeria Katowicka. Most of new projects delivered to the market are located in the largest conurbations. The retail supply pipeline with delivery for 2014 is expected to reach nearly 640,000 sq m of GLA. The biggest retail schemes to open this year are Atrium Felicity in Lublin (75,000 sq m of GLA) and Galeria Warmińska in Olsztyn (41,000 sq m of GLA). The shopping centre density in the eight conurbations is the highest in Wrocław and Poznań, and the lowest in Szczecin.

The highest rents are in Warsaw’s prime shopping centres at EUR 80–90/sq m/month for a clothing unit of 100–150 sq m while in the other seven conurbations rents stand at EUR 35–45/sq m/month. Shopping centres in small and medium-sized cities fetch average rents of EUR 21–27/sq m/month. Among the remaining retail formats, the retail parks are experiencing the fastest growth with Europa Centralna in Gliwice totalling 40,000 sq m of GLA being the largest retail park completed in 2013. In 2013, only one outlet centre – Warsaw’s Factory Annopol providing 19,700 sq m – came onto the Polish market. The development which has recently broken ground in the outlet centre sector is City Outlet Lublin scheduled for 2014. The Polish food sector is expanding mainly through discount chains. In 2013, nearly 350 new discount stores were opened in Poland, more than 70% of which by Biedronka. Discount chains plan to move ahead with similar growth strategies in 2014. High streets sector in Warsaw is awaiting several developments such as refurbishment and extension of the Smyk department store in Al. Jerozolimskie, modernization of the Holland Park (Ethos building) at Trzech Krzyży square and adaptation of tenement houses at the corner of Nowy Świat and Świętokrzyska streets for retail use.

Tenants focused on established retail schemes offering high footfall and satisfactory revenues. Apart from newly-constructed space, re-marketed shopping centres appear an attractive alternative for tenants seeking strong retail schemes. Last year saw a significant rise in retail extensions, giving the retailers potential to expand in prime shopping centres” – says Marek Noetzel, Partner, Head of Retail department of Cushman & Wakefield.

Warehouse sector
At the end of 2013 total modern warehouse stock in Poland reached 7,942,000 sq m, a rise of around 5% compared with the end of 2012. Approximately 354,000 sq m of modern space was delivered, with the Wrocław region accounting for the largest share of total volume. Take-up rose strongly despite a decrease in new warehouse provision by around 30% compared with 2012. Leasing volume reached more than 2.1 million sq m, a rise of around 42%. The largest completions included Wrocław’s Prologis Park V (36,000 sq m), Panattoni’s BTS project for Lear in Legnica (32,000 sq m), further phases of SEGRO’s Tulipan Park Warsaw (24,000 sq m) and SEGRO’s Industrial Park Tychy (21,000 sq m).

For many years the highest concentration of warehouse space has been in the Warsaw region (around 35% market share) followed by several regional markets. New supply is expected to increase significantly in the forthcoming months due to the very high number of transactions signed last year. At the end 2013 around 535,000 sq m of warehouse space was under construction. There is around 870,000 sq m of vacant warehouse space available on the Polish market.

Headline rents remained stable or fell slightly. The highest rents were posted in Warsaw’s inner city (EUR 4.50–5.80/sq m/month) while the lowest were in Central Poland and in the Warsaw suburbs (EUR 2.40–4.00/sq m/month). In the remaining regions, rents were around EUR 2.90–4.00/sq m/month.

The Polish industrial market performed very well in 2013 with the 3 transactions signed by Amazon totalling approximately 300,000 sq m being a major highlight. This being said, several other major transactions were also concluded which again confirms that occupiers perceive Poland as a very attractive and strategic location and we anticipate the growth in occupier activity to continue in the foreseeable future” – says Tom Listowski, Partner, Head of Industrial in Poland & CEE Corporate Relations at Cushman & Wakefield.

Report: Marketbeat Poland - Spring 2014


Eliza Bingul

Associate Director

Warsaw, Poland

Phone +48 228202128

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