In 2018, Poland’s total warehouse and industrial stock stood at more than 15.9 million sqm, of which last year’s supply amounted to as much as 2.2 million sqm. Nearly 2 million sqm is currently under construction. Occupier demand remains robust with 4 million sqm transacted in 2018.
E-commerce, logistics, light manufacturing and retailers continued to account for the largest share of total take-up. 2018’s two biggest transactions were Leroy Merlin’s 124,000 sqm lease with Panattoni at Stryków and Zalando’s 121,000 sqm lease with Hillwood in Olsztynek – both for BTS schemes. The market’s growth is fuelled by technological and structural changes in retailing with retailers increasing going online, leading to a steady increase in demand for warehouse space required for efficient supply chains. The expansion of e-commerce is also bolstered by high consumption which is also expected to grow in 2019. At the same time, the overall vacancy rate has stood at around 5% for over a year, which is a confirmation of a healthy demand and supply balance.
Additionally, the Polish market’s growth is further driven by investor demand for income producing warehouse and industrial properties which in 2018 amounted to EUR 1.85bn, accounting for nearly 26% of Poland’s total investment volume which hit a record high of EUR 7.2bn.
Outlook for the coming years
According to Tom Listowski, Poland’s outstanding performance, however, should not overshadow challenges stemming from the risk of a downturn in the global economy, with which Poland is relatively strongly linked. China’s economic slowdown from 6.6% in 2018 to the forecasted 5.8% in 2022 and the apparent decline in industrial production in Germany may be the first signs of a potential downturn. Despite this, with strong domestic demand and structural changes, the Polish economy should prove more resilient to external shocks, including tariff wars, than other CEE countries.
Meanwhile, as the official Brexit date nears, some UK-based companies are planning to transfer production to other countries. As a result, thanks to Poland’s strategic location in Europe, the Polish warehouse and industrial market is likely to benefit from these developments.
“Locally, rising construction costs and the tight labour market with rising wages could be challenges for the market in the coming quarters. In this context, it is important that Poland effects internal structural changes required to maintain stability,” says Tom Listowski.
“Occupier demand for warehouse and industrial space is expected to remain healthy in Poland in 2019-2020. More than 2.5 million sqm is likely to be delivered to the market this year (up by around 16% on last year’s supply and nearly 1.7 times the annual average for the last five years). In 2020, new supply is anticipated to hit slightly more than 2 million sqm,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland. “By the end of 2019, Poland’s vacancy rate will edge down further to 4.5% as most of the warehouse and industrial space under construction has already been pre-let. Due to a substantial base effect, stable demand and a large supply volume, the share of unoccupied space in the nation’s total stock is likely to remain in 2020 at its current level.”
* according to the FTSE Russell index