Choosing the best location for an industrial property is a highly complex and individual issue. However, it is worth the time and attention, as the right decision might well determine the success of a company. Warehouses generate substantial costs, and these cannot be avoided. Therefore, it is vital to select a location where the use value of this element of the logistics network is as high as possible. Which factors should be considered when choosing a location? We recommend that our clients take into account the following issues:
- transport and logistics network requirements
- workforce availability and employment costs requirements
- warehouse availability and rent rates in particular regions
By analysing the above issues in the context of their business needs, a company can draw up a list of both optimal and backup locations. Considering all three aspects allows our clients to find solutions that best answer their needs. Each element can be of course valued differently; for example, issues related to the labour market are of special importance to manufacturers. Since they often need to hire several hundred, or even several thousand employees, questions such as the proximity to major transport routes or large markets become secondary. This is evident when looking closely at the Polish warehouse map: manufacturers often choose properties in smaller towns and cities if they guarantee a sufficient labour pool. Such examples include Manuli in Radomsko or Pilkington near Sandomierz.
Importantly, due to the rapid growth of the Polish warehouse market, more and more modern space is available in smaller cities, such as Lublin, Rzeszów, Bydgoszcz or Szczecin. There is also a smaller gap in rental rates. As a result, the third item on the list is becoming less relevant, and at the same time the first two factors are gaining importance.
Let us now look closer at the issue of optimal location in the context of a specific business. One of the most interesting tenant groups on the Polish market are e-commerce companies. This industry is considered as having the highest growth potential, and over the next few years it might generate the majority of warehouse demand. So, what are the primary warehouse location requirements for online retailers?
First and foremost is the local labour market, i.e. workforce availability and cost. This is understandable, given this industry’s exceptionally high demand for staff. The differences between Polish and German employment markets were the main reason for Amazon to locate their three warehouses in Poland. Despite the fact that the schemes will serve German customers, the structure of our job market encouraged the Internet mogul to invest in our country.
Another vital factor is the proximity to well-developed road infrastructure, especially main transport routes. Again, this is justified by the nature of e-commerce: companies from this sector view the efficiency and timeliness of delivery as one of the cornerstones for building their brand; after all, customers often choose one retailer over another solely on the basis of shipping quality. Locating the warehouse close to the end-users and the proximity of courier services may also help build an advantage thanks to the efficient processing of online orders.
All of the above is reflected in the locations chosen by e-commerce companies. They usually open their warehouses in central Poland or in the wider Warsaw region. This changes slightly when a firm opts for two warehouses (one is then situated in central Poland or around Warsaw, and the other in Silesia).
To conclude, choosing the perfect location is of strategic importance to the tenants. It requires a thorough analysis of several factors and considering various scenarios. We support our clients at this crucial stage of the process by offering them individual approach and the assistance of partners who are experts in the particular aspects of the issue.
Author: Joanna Sinkiewicz, Head of Key Clients & Tenant Representation, Industrial & Logistics Agency, Cushman & Wakefield