Developer activity on the Polish industrial market remains very robust. According to data released by global real estate services firm Cushman & Wakefield, in Q3 2015 there was 617,000 sq m of modern warehouse space under construction in Poland with total stock of around 9,677,000 sq m, which represents a year-on-year increase of 13% or 1,110,000 sq m.
The highest concentration of developer activity is in Warsaw’s suburbs (148,000 sq m), Upper Silesia (99,000 sq m) and Central Poland (88,000 sq m). Development is also gaining momentum in the smaller regional markets of Lublin, Tricity, Rzeszów and Szczecin, where some 141,000 sq m is currently under construction compared to 83,000 sq m developed in the same period a year earlier.
Warehouse take-up remains very high with 552,000 sq m transacted in Q3 2015, representing an increase of 24% or 107,000 sq m compared to Q3 2014. The strongest leasing activity was in Warsaw’s suburbs where around 157,000 sq m of warehouse space was leased, followed by Upper Silesia (106,000 sq m) and Central Poland (112,000 sq m). A relatively strong occupier interest was also recorded in the smaller regional markets such as Tricity (20,000 sq m), Szczecin (14,000 sq m) and Toruń (12,000 sq m). New lease agreements accounted for around 48% of all transactions, while lease renewals and extensions made up 42% and 10%, respectively.
The largest transactions brokered by Cushman & Wakefield in Q3 2015 included Sonoco’s lease of 26,500 sq m in Panattoni Park Stryków II, a renegotiation and extension of 27,000 sq m leased by Flextronics in Logicor Łódź II and Benteler Automotive’s lease of 5,300 sq m in Panattoni Park Września.
In Q3 2015 Poland’s new supply totalled more than 383,000 sq m, reflecting a more than twofold rise compared to the previous quarter (161,000 sq m) and a similar figure to that witnessed in Q3 2014 (422,000 sq m). In Q3 2015 there was 587,000 sq m of vacant warehouse space available on the Polish market, accounting for around 6.1% of the country’s total existing stock.
Headline rents have remained flat in the core warehouse markets in Poland. The highest rents are in Warsaw’s inner city (EUR 4.20-5.50/sq m/month) while the lowest are in Central Poland (EUR 2.40-3.95/sq m/month) and in the Warsaw suburbs (EUR 2.40-3.80/sq m/month). In other regions they stand at EUR 2.50-4.00/sq m/month.
Tom Listowski, Partner, Head of Industrial Department & CEE Corporate Relations, Cushman & Wakefield, said: “Given the strong growth of the Polish warehouse market, Poland’s total stock will exceed the 10 million sq m mark in the first half of 2016. Nearly 617,000 sq m is currently under construction, half of which has already been secured as pre-lets, which is confirmation of strong developer activity. Despite the large pipeline of planned construction activity and an increase in speculative development, the overall vacancy rate which currently stands at 6.1% is expected to remain at a similar level or may dip. Demand for warehouse and manufacturing space is likely to rise further on the back of positive economic growth and GDP forecast to hit 3.5% in 2016. With industrial and logistics assets being highly sought after by institutional investors, this demand is leading to further yield compression which we expect to continue as we head into 2016. This, coupled with stable land and construction prices is resulting in developers offering higher incentives thus resulting in lower effective rents for occupiers, a trend which we have now noted for several continuous quarters.”