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The Warsaw Voice » Real Estate » February 27, 2015
The Real Estate Voice
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Warehouse Market Sets New Records
February 27, 2015   
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Demand for warehouses in Poland continues to run high with 1 million square meters of new space delivered to the market last year.

According to a report by real estate services company JLL, 2014 was a busy year for both tenants and developers of warehouse and industrial space in Poland. Even though new market players did not make the kind of spectacular lease transactions Amazon made in 2013, demand on the warehouse market remained high for the second year running. Lease contracts for a total of 2.06 million sq m of warehouse space were signed, which marked the best-ever result for this segment of the Polish real estate market—6 percent more than in 2013. Significantly, net demand totaled 1.4 million sq m, an increase of 7.5 percent from 2013. According to Tomasz Olszewski, director for warehouse and industrial space in Central and Eastern Europe at JLL, these high figures are due to a booming economy combined with improving road infrastructure and the expansion of e-commerce, retail chains and manufacturing businesses.

The Warsaw region accounted for the largest part of the volume of new contracts last year. The largest contracts in Poland were signed by companies such as Czerwona Torebka (54,000 sq m at MLP Poznań Zachód), ID Logistics (46,000 sq m at Point Park Mszczonów) and GE (45,000 sq m at a built-to-suit project developed by Panattoni in Bielsko-Biała). In terms of renewed contracts, the biggest tenants were Carrefour (46,000 sq m at Distribution Park Będzin) and P&G (38,000 sq m at Prologis Park Sochaczew). As usual, the highest demand for warehouse space was generated by logistics operators, who leased almost 607,000 sq m of space (43 percent of net demand) under new contracts.

Largest projects in region

Poland is still the largest Central and Eastern European market, and at the end of last year the supply of modern warehouse space in Poland totaled 8.54 million sq m, according to JLL data. “In 2014, 1.02 million sq of new space was delivered, which was the third best result in the history of Poland’s warehouse market, marking a clear increase over the 305,000 sq m completed in 2013,” said JLL’s Olszewski. “Most of the new supply, 355,000 sq m, became available on the market in Wrocław where the total warehouse space stock topped 1 million sq m last year.”

The largest projects to hit the market in 2014 were Amazon’s three facilities with a total of 370,000 sq m and developed by the Panattoni and Goodman companies in Wrocław and Poznań. Panattoni was the most active developer last year, with over 462,000 sq m of warehouse space completed, while the runners-up were Goodman (215,000 sq m) and Prologis (85,000 sq m). “The year 2014 is sure to go down in Panattoni’s history,” said Robert Dobrzycki, managing partner at Panattoni Europe. “It was a record year when it came to new transactions and projects we worked on, including two projects we completed for Amazon in record time. We were also successful in our new roles as a general contractor on industrial facilities and developer on new projects designed for multiple tenants.”

Last year was also positive for Prologis CEE, which delivered seven warehouses with a total area of 135,000 sq m in Central and Eastern Europe. The projects include a speculative small-business-unit (SBU) property at Prologis Park Wrocław III that offers warehouses and offices from 650 sq m in size. All the space in the facility has been leased out. Ben Bannatyne, Prologis managing director and regional head for Central and Eastern Europe, says the Wrocław facility is the first SBU in Prologis’ portfolio in Central and Eastern Europe.

Companies active on the Polish market last year also included warehouse owner, developer and manager P3 Logistic Parks. The company finalized the purchase of two logistics parks in Poland, one in Błonie near Warsaw and one near Piotrków Trybunalski, in addition to a logistics park in Romania. All three were bought from CA Immobilien Anlagen AG and have a total leasable area of 467,000 sq m. The transaction doubled the number of P3’s logistics parks in Poland and strengthened the company’s position on the Warsaw market. In total, P3’s asset base comprises 141 warehouses in nine countries, forming a European logistics platform stretching from Madrid to Bucharest. P3 also owns one of Europe’s largest land banks with room for the construction of 1.6 million sq m of logistics and warehouse space across the continent.

Developers are not slowing down this year, with 687,000 sq m under construction in 30 projects. According to JLL, most of the new space is being built in Poznań. Panattoni is the most active developer in terms of new supply, with a total of 252,000 sq m of space under construction, while Goodman comes in second with 212,000 sq m. These two companies also account for the largest amount of speculative space under development.

Prime headline rents in SBU facilities were stable in Warsaw and ŁódĽ, while in Wrocław they dropped slightly to 3.50-4.00 euros per sq m per month. SBUs are frequently located in cities and usually have higher rents than properties in large warehouse parks. When it comes to these, prime headline rents were stable in the Warsaw region (2.70-3.60 euros per sq m per month), Upper Silesia (3.0-3.70 euros per sq m per month) and central Poland (2.60-3.30 euros per sq m per month). A slight downward trend occurred in Wrocław (down to 3.00-3.60 euros per sq m per month), while in Poznań rents decreased more sharply from 3.30-3.80 to 2.90-3.50 euros per sq m per month.

Optimistic forecasts

In the coming quarters, real estate market experts say demand for warehouse space will grow among businesses operating in the e-commerce sector. According to Tomasz Kasperowicz, a partner and Director of Industrial and Logistics Agency at real estate services company Colliers International, new projects are planned, and they will not be purely speculative properties. “Developers will be after lease contracts as they try to secure at least a part of the planned projects,” Kasperowicz says. “New companies, most of them from Germany and Scandinavia, are expected to come to Poland and open their distribution centers here. In the west of the country, producers from Western Europe and the United States will continue to open more factories.”

Modern warehouses are expected to be developed on smaller logistics markets such as Rzeszów, Lublin, Bydgoszcz and Opole, where such facilities are in short supply. “We have also seen a growing interest in sale & leaseback transactions whereby companies sell their warehouses to professional developers and then lease these warehouses from them,” Kasperowicz adds.

JLL studies show that, in light of positive economic forecasts, demand for warehouse and industrial space will remain similar to what it has been over the past two years. “Developer activity will continue to run high and we’re expecting up to 1 million sq m of new supply to hit the market this year,” says JLL’s Olszewski.
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