“Leasing and development activity remained relatively strong in the Polish warehouse and industrial market throughout the first quarter of 2022. Availability shrank significantly for another consecutive quarter, with rising labour and construction costs as well as supply chain disruptions pushing rental rates up. Looking ahead, we expect developers will remain more cautious about starting new projects,” says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.

Close to 1.3 million sqm of modern warehouse and industrial space was delivered to the Polish market in Q1 2022. The most active development regions were Greater Poland and Lower Silesia, which saw 281 400 sqm and 216 950 sqm built, respectively.

At the end of March 2022, the volume of warehouse and industrial space under construction amounted to over 4.82 million sqm, up by nearly 4% on the fourth quarter of 2021 and up by over 105% year-on-year. The largest volumes of new developments were underway in Central Poland (778,200 sqm), Upper Silesia (751,700 sqm) and Mazovia (645,200 sqm). However, ongoing global supply chain issues and the shortages and rising prices of building materials are likely to gradually limit new supply coming on stream and extend the construction time of warehouse facilities.

Total leasing activity in the first quarter of 2022 amounted to close to 1.6 million sqm, down by 2% year-on-year and 36% over the quarter. Net warehouse and industrial take-up came to 1.17 million sqm, accounting for nearly 74% of gross take-up. The provinces with the highest leasing activity were Upper Silesia, Mazovia and Łódzkie, which accounted for 24.2%, 18.6% and 14.8% of the total take-up, respectively. New lease agreements accounted for 67% of the total take-up in the first quarter of 2022, followed by renewals and expansions which made up 26% and 7%, respectively. It is also worth noting that a total of 91,800 sqm was transacted in the first three months of the year under shorter leases of up to one year.

The largest deals of the first quarter of 2022 included Exeter’s BTS facility of a 100,000 sqm in Świebodzin for a confidential retailer, a 66,300 sqm lease renewal and expansion by a confidential tenant from the retail sector in SEGRO Logistics Park Gliwice, and a lease for 47,700 sqm in Hillwood Łowicz Południe signed by Dealz.

At the end of March this year, the overall vacancy rate stood at 3.0%, representing a decrease of 0.7 pp over the quarter and 3.3 pp year-on-year. Vacant stock comprised 762,200 sqm in existing buildings and 2,278,500 sqm in buildings under construction.

“The highest vacancy rates were in Lubelskie and Opolskie (6.1% each) and in Upper Silesia (5.6%), while there was no vacant warehouse space in Lubuskie, Subcarpathia, Podlaskie and Warmia-Masuria,” says Agnieszka Giermakowska, Research & Advisory Director, Newmark Polska.

Most warehouse locations across Poland are seeing some rental growth amid rising construction and operation costs of warehouse and industrial facilities. At the end of the first quarter of 2022, the highest rents were in Warsaw (zone 1).

In the first quarter of 2022, the volume of investment into Polish commercial real estate reached €1.66 billion, up by around 18% on the same period last year (the industrial sector accounted for €191 million). This strong result demonstrates the resilience of the Polish market to the recent turmoil in our region: the war in Ukraine, rising construction costs, further interest rate hikes and high inflation. Investor interest continued to focus on safe and low-risk properties among other logistics and warehouse parks. Prime yields for multi-let industrial parks with long leases currently stand at 4.75%–5.25%.