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Robust occupier and developer activity on the Polish industrial and logistics market

The full report

Poland’s total industrial and logistics stock surpassed the 11 million sq m mark at year-end 2016. Leasing activity remained strong for another consecutive year, leading to record high take-up, with more than 3 million sq m being transacted. The largest leasing volumes were recorded in Warsaw’s suburbs and Upper Silesia, and – of the smaller markets – in Szczecin and Bydgoszcz-Toruń. Global real estate services firm Cushman & Wakefield presents an overview of the market for 2016 in its latest report Marketbeat: Poland’s Industrial Market.

Tom Listowski, Partner, Head of Industrial and Logistics Agency Poland and CEE Corporate Relations, Cushman & Wakefield, said: “The industrial and logistics space market in Poland has significantly surpassed expectations as we witnessed record levels of occupier activity and space being leased in a single year, more than 3 millions square metres. With supply chains being optimized, manufacturing output increasing, new transportation corridors opening up and the prevalent e-commerce sector gaining significant momentum, the demand for space is being driven on many fronts and we do not expect any major slowdown in 2017. Poland’s consistently high ranking in the index of the world’s top manufacturing locations over the last several years (currently #13 Globally and #6 in EMEA) is further underpinned by the record high levels of industrial activity being witnessed, re-iterating the positive attributes and foundations Poland holds in not only attracting new manufacturing operations but also supporting the expansion plans of global companies with already established platforms.”

Warehouse take-up hit a record high in 2016 with a 25% increase compared to the previous year’s figure, driven largely by logistics operators (32%), the FMCG sector (12%), e-commerce (11%), automotive companies (8%) and light manufacturing (6%). The largest leasing volumes were recorded in the Warsaw region (760,000 sq m) and in Upper Silesia (494,000 sq m). Strong occupier activity was also noted in Wrocław (355,000 sq m), Poznań (340,000 sq m) and Central Poland (307,000 sq m), and in smaller regional markets such as Tricity (97,000 sq m) and Krakow (89,000 sq m). Improvements in road infrastructure have benefited emerging markets which saw record high take-up levels, including Szczecin (338,000 sq m) and Bydgoszcz-Toruń (128,000 sq m). New lease agreements and extensions accounted for 69% of the total leasing volume with renegotiations making up 31%.

Adrian Semaan, report author and Consultant, Industrial and Logistics Agency, Cushman & Wakefield, said: “Regional markets are seeing increased occupier interest. Leading e-commerce operators signed last year’s two largest lease agreements near Szczecin: Panattoni will develop a 161,000 sq m BTS scheme for Amazon in Kołbaskowo and Zalando will occupy 130,000 sq m in Goodman’s scheme in Gryfino.”

Warehouse supply totalled approximately 1.18 million sq m, which represented the second largest ever annual figure since 2008 and an approx. 25% increase year-on-year. The largest volumes of new warehouse space were delivered to Poland’s five core markets: Warsaw’s suburbs (220,000 sq m), Upper Silesia (216,000 sq m), Central Poland (196,000 sq m), Poznań (177,000 sq m) and Wrocław (123,000 sq m). At the end of December 2016, there was more than 1.3 million sq m under construction with the highest concentration of new developments taking place in Warsaw’s suburbs (302,000 sq m) and in Poznań (227,000 sq m). Other regional markets seeing robust developer activity include Bydgoszcz-Toruń (130,000 sq m), Upper Silesia (123,000 sq m) and Wrocław (102,000 sq m).

The high supply level pushed the vacancy rate to 6.7% at the end of 2016 (up by 1.5 percentage points year-on-year), equating to approximately 740,000 sq m of vacant warehouse space. Of the core warehouse markets, the highest vacancy rates were in Warsaw’s Inner City and Krakow (11% in each). Vacancy rates stood at around 7.5% in Warsaw’s suburbs, Upper Silesia and Poznań, and at below the national average in Wrocław (5.3%). Other regional markets recorded low vacancies (less than 5%). The lowest vacancy rate was in Central Poland (2.9%), and the highest in Lublin (12.7%).

Headline rents remained flat or fell slightly at year-end 2016. Growing competition among developers has given tenants a stronger bargaining power in some locations such as Poznań and Krakow. The highest rents are in Warsaw’s Inner City, standing at EUR 4.00–5.25/sq m/month. In other regions rents range between EUR 2.40–4.20/sq m/month.