We use cookies to make sure our website better meets your expectations.
You can adjust your web browser's settings to stop accepting cookies. For further information, read our cookie policy.
IN Warsaw
Exchange Rates
Warsaw Stock Exchange - Indices
The Warsaw Voice » Special Sections » February 23, 2012
The Real Estate Voice
You have to be logged in to use the ReadSpeaker utility and listen to a text. It's free-of-charge. Just log in to the site or register if you are not registered user yet.
Growing Demand for Warehouse Space
February 23, 2012   
Article's tools:

Last year was a better one for Poland’s commercial real estate market than 2010, with increased activity in each of the market’s segments, including warehouse and industrial space, which experienced some stagnation in previous years.

With growing demand in the warehouse segment, vacancy rates fell for the second year in a row. However, speculative projects were still in the minority, and most of the warehouses currently being constructed are build-to-suit (BTS) projects—constructed on the basis of specific transactions and adapted to the individual needs of the tenants. In terms of new supply, developers started building about 600,000 sq m of space last year. Build-to-suit projects are increasingly popular among developers and tenants alike with approximately 40 percent of 2011 logistic facilities under development being tenant-tailored schemes.

According to data by real estate services company Jones Lang Lasalle, the supply of modern warehouse space in Poland increased by 75,000 sq m during Q4 2011. The total warehouse space in Poland reached 6.59 million sq m. Q4 2011 saw a take-up volume of 398,000 sq m. Demand levels therefore decreased in comparison to the previous quarter (459,000 sq m). For the full year 2011, demand in Poland reached a level of 1.69 million sq m of warehouse space. Such a result has not been observed since 2008.

According to data by another leading real estate services company, Colliers International, almost 1.8 million sq m of modern warehouse space was leased, resulting in a 20 percent increase from the previous year. Demand throughout the year was relatively steady, however during the third quarter the highest volume of transactions was reached (nearly 30 percent of the total number of transactions). Most lease agreements were signed in Warsaw (Zone II) and in Upper Silesia. New deals, most of them of a “pre-lease” type, constituted 60 percent of transactions.

Real estate consultants CBRE, in their Big Box Poland: Industrial Market View report, say that total leasing activity in 2011 amounted to 1.86 million sq m and exceeded the level registered a year earlier by 30 percent.

In 2011, industrial space developer Panattoni Europe delivered the largest amount of space in Poland, 164,100 sq m of new buildings and had a further 100,000 sq m under construction as of December 2011. The transactions carried out by the developer account for over 350,000 sq m of space, of which 254,000 sq m are contracts signed with new customers.

The projects developed by Panattoni Europe in 2011 included dedicated facilities for the Zelmer, Danone, Tech Data and Nagel Polska companies as well as expansion of existing logistics parks in Poznań, Mys³owice, Gliwice, Gdańsk, £ód¼ and Wroc³aw. Currently, Panattoni is developing space totaling altogether 87,300 sq m. Vacant space accounts for only 1 percent of Panattoni Europe’s portfolio.

Companies such as Segro, Goldman, P3, Real Management, and Prologis were also active on the warehouse market last year.

Warsaw market still attractive
As in previous years, Warsaw was the strongest regional market in Poland in 2011. According to Jones Lang Lasalle, there were 157,000 sq m of warehouse space leased in the final quarter in the capital, representing 39 percent of the Polish market. The warehouse space in Warsaw was leased mainly by logistics operators (59 percent of space), followed by electronics (23 percent).

According to Colliers, the supply of modern warehouse space in three zones in Warsaw at the end of 2011 amounted to 2.54 million sq m. Throughout the year around 80,000 sq m was delivered to the market, of which nearly 74 percent was in Warsaw zone II. Colliers estimates that at the end of 2011 the total resources of warehouse space in central Poland amounted to 950,000 sq m, whereas in Poznań just over 846,000 sq m. Upper Silesia, the second largest warehouse market in Poland, shows a level of supply at over 1.33 million sq m. Other cities listed by Colliers offer the following amount of warehouse space: Wroc³aw over 640,000 sq m, Gdańsk 136,000 sq m, Cracow around 115,000 sq m, and Toruń less than 100,000 sq m. Warehouse stock in Szczecin has remained unchanged for several years at around 42,000 sq m.

In terms of transaction volume, three Warsaw zones dominated the market, according to Colliers. During 2011 more than 735,000 sq m were leased, with nearly 52 percent in Warsaw zone II. Most lease agreements were signed in the third quarter of 2011. Among the agreements, new contracts dominated the market and constituted 58 percent of tenants’ activity and renewals around 36 percent.

According to real estate services company CBRE, the largest deals were registered in Sector II around Warsaw covering logistics parks located 15 to 80 km from the center of Warsaw, along major access roads, in the Mazovia region. The largest 2011 deals included renegotiations in Prologis Park Sochaczew, Panattoni Park Teresin and Prologis Park Janki. Over 60 percent of all 2011 leasing activity was reported in Sector III, including over 330,000 sq m in Silesia and about 250,000 sq m in the Wroc³aw region.

The most active are tenants from the logistics and manufacturing sectors, mainly automotive and building material producers.

According to Colliers, space leased in 2011 in central Poland exceeded 200,000 sq m. Other cities listed by Colliers recorded the following volume of space leased: Poznań about 168,500 sq m, Cracow over 54,000 sq m, Wroc³aw over 226,000 sq m, Gdańsk nearly 55,500 sq m, and Szczecin 13,500 sq m. Toruń is the only region in Poland where no lease transactions for modern warehouse space were signed.

The increase in demand has meant that the vacancy rate has dropped in comparison to 2010. According to CBRE, the overall vacancy rate is now around 10 percent, while Warsaw and several Sector III regions such as Silesia, Central Poland, Poznań, Northern Poland and Wroc³aw are below 10 percent.

Colliers estimates that vacant space in Poland over the first three quarters of 2011 declined steadily. However, in Q4 2011, a slight increase was noted and vacancy stood at under 11.4 percent.

In comparison to 2010, the vacancy rate dropped in all Polish regions including Warsaw, where at the end of 2011 it amounted to 16 percent. According to Colliers, the lowest vacancy rate was recorded in Toruń and Poznań and the highest in Szczecin, although this region saw the biggest drop in vacancy rates.

According to Colliers, throughout the year rental rates remained relatively stable, with a slight upward trend in regions where demand was the highest and vacancy rates were the lowest.

Optimistic forecasts
Colliers estimates that new supply in 2012 will reach a level similar to that in 2011. At the end of 2011 around 340,000 sq m of warehouse space was under construction, of which 74 percent should be completed in 2012. It is worth noting that around 72 percent of space slated for completion in 2012 is already leased. Therefore, a further decrease in vacancy rates can be expected in the coming quarters.

Markets with low vacancy and limited total supply of industrial space will continue to attract developers. It is also possible to expect growth in the number of projects built speculatively, but a new boom is unlikely due to restrictions in obtaining funds. Therefore, the strongest and most experienced developers who can finance investment projects from their own resources or have easier access to external financing may achieve further success on the market, Colliers experts say.

According to Colliers, demand in 2012 will remain relatively stable, in both Warsaw and most regional markets, though a small drop in the second half of the year cannot be ruled out. “Given the relatively limited supply planned for 2012, and the fact that more than 70 percent of this space is already leased, we can expect that in the next two quarters, the vacancy rate will be gradually reduced, while rents will grow slightly in selected markets,” Colliers said in a report.

CBRE experts are more cautious in their forecasts for rents. “Rental levels in 2012 are expected to remain similar to those recorded in 2011, especially in locations with high vacancy levels (for example in areas around Warsaw and in Szczecin),” said Patrick Kurowski, Head of Industrial, CBRE Poland. “Prime headline warehouse rents in Warsaw are currently at 4.50-5.00 euros per sq m per month.”

Industrial Developers Optimistic
Ben Bannatyne, Prologis Managing Director Central & Eastern Europe:
Last year was marked by uncertainty related to both the global economic situation and financial turmoil in the euro zone. However, the most recent agency ratings show that the Polish economy, along with the Czech Republic and Slovakia, were somewhat immune to pessimistic forecasts regarding the global market and have continued to be resistant to the volatility observed on international financial markets.

Despite the perspective of an economic slump that made many companies put off their investment planning decisions, 2011 brought no significant changes to the number of warehouse spaces leased. Developers continued to pursue their strategies based on the assumption of leasing the space available, extending existing lease agreements and implementing projects under long-term pre-let agreements. Also, after nearly three years, the first speculative developments have commenced.

Forecasts for 2012 for industrial developers are optimistic. If no major changes occur in the European Union in the first half of the year and demand is maintained at a satisfactory level, we might expect further speculative developments. Pre-let and build-to-suit facilities will still be the dominating types of investments, while developers will be focusing on leasing the available space and developing their existing logistics parks.
Latest articles in Special Sections
Latest news in Special Sections
Mercure - The 6 Friends Theory - Casting call
© The Warsaw Voice 2010-2018
E-mail Marketing Powered by SARE