The outlook for the Polish warehouse market
The warehouse and logistics space sector in Poland maintained its high growth rate in 2021. The results included, among others, record amounts of new space delivered to the market, a record number of square metres under construction, as well as a record demand.
The sector's growth is based on the country's improved network of highways, which has significantly improved transportation.
New logistics centers and warehouse parks have grown along these roads and next to junctions. The improvements have put the Polish warehouse and logistics sector in a strong position not only for the Polish market as a whole, but also for Central and Eastern Europe (CEE) and, more often, for Western Europe.
The second reason for the sector's growth is the increasing influence of e-commerce on the situation of the whole sector, which has brought with it the development of courier and transport services, and the increasing interest of logisticians, developers and investors in ecological issues.
Data from the last years confirm that the warehouse and logistics sector is the fastest developing among all of the sectors in the Polish commercial real estate market. Persistently strong demand, the growing popularity of built-to-suit (BTS) projects, a decreasing number of speculative projects and attractive lease conditions have generated a good outlook for the coming projects.
Warehouses are driving e-commerce and logistics. We have well entered the era of fast deliveries. Consumers’ desire to reduce waiting times for their online purchases will translate into new distribution centers sprouting up as on the outskirts as within the city limits
Opportunities and challenges for the industry in 2022
According to data from the consulting firm, Colliers, the total supply of modern warehousing space in Poland at the end of Q1 2022 was over 25 million sqm. Property developers put almost 1.3 million sqm into service at that time, which was the highest ever result in the history of the Polish market of industrial and logistics space. The healthy condition of the sector and its optimism are also evidenced by record construction traffic. At the end of last year, work was underway on facilities with a total area of more than 4.6 million sqm. In comparison, this is more than twice the result achieved at the end of 2020 (2 million sqm on construction sites) and at the end of 2019 (1.9 million sqm).
Poland’s booming warehouse market in 2021 saw record gross demand for more than 7.3 million sqm of space, which was 40% better than in 2020 and as much as 80% higher than in 2019. Despite the huge supply and millions of square metres under construction, the vacancy rate at the end of last year stood at only 3.9%. This was significantly lower than that of the end of 2020 (6.9%) or the end of 2019 (7.4%).
The volume of investment deals on the market of industrial and logistics space in Q1 2022 amounted to €191m.
Today the business success of many companies is determined by efficiently organised logistics and appropriate warehouse facilities. These are companies of deversified sizes, operating in different industries. The logistics and warehouse real estate sector is once again recording unparalleled growth, going hand-in-hand with e-commerce segment that is on the rise.
Significant increases in construction costs were already noticeable since the start of the pandemic, although the war in Ukraine accelerated this process. Therefore, in the longer term, we can expect increases in base and effective rents, which are dictated, among other things, by higher raw material prices, as well as rising service charges and energy prices. This, in turn, can contribute to changes in the terms of the lease, because, in order to secure future revenues, property developers will be less inclined to offer long-term contracts (e.g. for 15 years) or short-term leases. However, it is worth noting that, although rents will increase, they will still remain competitive in relation to Western markets”, explains Maciej Chmielewski, Director of Industrial and Logistics Agency at Colliers.
So the bottlenecks of the industry will stay a rising construction costs, limited land availability and increasing shortage of qualified workers.
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