Currently, in Poland, there is almost 3.5 million sqm of logistics space under construction, of which over 1.2 million sqm are speculative developments without secured leases. With the dwindling vacancy, developers shouldn`t be afraid of the lack of tenants in the nearest future?

The warehouse market in Poland is in excellent condition, and it results from the high activity of occupiers and developers. By the end of 2021, we are also close to approaching or exceeding last year's 5.2 million sqm of leased space. The excellent results are reflected in strong tenant activity, which is mainly driven by the growth of e-commerce and the industries supporting this sector, as well as logistics operators and retail chains. The future of take-up in Poland is bright due to two rising phenomena -  nearshoring and cross-border e-commerce (CBEC). Both are related to the greater regionalization of supply chains and building distribution centres in Poland. In both the first and the second instances, the key factor will be the location enabling the free planning of logistics processes towards the southern and western parts of Europe.

Which industry segment, besides e-commerce, will increase demand for warehouses?

Based on our analyses, it appears that besides e-commerce, the second-best developing group of occupiers are logistics operators. It refers to the change in Poles shopping habits and the growing share of online trade. Nevertheless, even before the pandemic, we observe the development of various companies offering logistics services, so the significant share in demand of this group of tenants should not come as a surprise.

Moreover, we expect the growing segment of courier services, the CEP industry (courier, express and parcel market), to stimulate demand by developing the "same-day delivery" service. Currently, the standard in Poland is to deliver shipments on the next working day. At the same time, deployment of smaller distribution centres should shorten that time and enable same-day delivery.

Renata Osiecka

Managing Partner
AXI IMMO

Renata has many years of experience in real estate management, especially in the warehouse and industrial sectors. In 2009 she created a strong and reliable advisory agency, that has grown into today’s Axi Immo. Renata gained her experience working for developers and international real estate agencies. Renata is a member of the RICS and Past President of the European Chapter in SIOR organization where she’s currently holding the position of Chair of Diversity & Inclusion Committee. Together with her team she advised and represented clients in leasing, disposal and acquisition of commercial facilities. She has an MA from Warsaw University and a post-graduate degree in Management & Valuation from Sheffield University in the UK. More »

Prime location warehouse projects are currently extremely popular among investors. Can we expect their divorce from retail and office markets and subsequently a lasting, loving marriage with warehouse & logistics assets for many years to come?

The investment market is based on planning and is considered in long-term categories. Today's interest in the warehouse sector is increasing, especially when during the pandemic industrial and logistics facilities proved to be the most stable and secure asset type. Its advantage was good statistics on both the demand and supply sides. For example, today, investors build their property portfolios based on large multi-tenant fully leased warehouse hubs in good logistics locations. It gives them the guarantee of a good return on investment. Another interesting asset class is the urban logistics segment, which has become very important due to growing e-commerce. The third group remains BTS or BTO projects, thanks to the long-term availability of tenants. However, the slightly lower interest in the office and retail sectors does not mean that investors in the long term will not look for some opportunities to buy those assets.

For the future of the investment market, two phenomena will be of great importance. Firstly, the falling impact of the COVID-19 pandemic on commercial sectors, and secondly, the growing trend to build property portfolios based on assets that meet the ESG standards.

Can the skyrocketing land prices limit the market supply in the coming years?

The high level of inflation observed in 2021 causes the average increase of a plot price by several dozen zlotys (PLN) per sqm. This means that the acquisition of investment land will not always be profitable for many developers, and the too-high initial land price will result in withdrawal from such investments. Another option, which developers may consider, is to shift their interest to the brownfields, i.e. post-industrial areas within or on the outskirts of cities. However, investors have the so-called land banks with secured plots in the best locations. The start of subsequent projects depends on finding a tenant who can wait for new space.

What about the container crisis in the Far East? How can the Polish warehouse market benefit of the progressing change of global supply chains?

Poland will look for its chance to benefit from greater regionalisation of supply chains, and we see the opportunity for the Tri-City warehouse market. Currently, the Port of Gdansk manages approx. two million containers annually, classifying it as the leader in the Baltic Sea basin. However, in the coming years, the Port authorities intend to expand the deepwater terminal DCT Gdansk infrastructure with the third berth Baltic Hub 3 and use the potential of intermodal connections to find an efficient corridor between the Baltic and the Black Sea - significantly shortening the transportation time. Both investments are intended to help compete with much larger ports in Western Europe. The Tricity warehouse market may have a chance to become a crucial pan-European distribution location that will optimise supply chains. 

Do warehouse developers face any challenges when it comes to financing new investments?

The challenge related to financing new investments was seen in 2020 when most developers were much more cautious in building new assets than in previous quarters. Such policy was influenced mainly by the uncertain market situation and the banks' stricter credit policy, i.e. min. 50% own contribution. At that time, the critical factors for investors and developers were which industry the tenant represented and how it performed during the pandemic. Nobody wanted to make rush decisions. The result was a declining level of speculatively built space, which stood at around 24% at the end of 2020. Currently, buildings without secured leases account for 35% of the total new supply. We expect developers to become increasingly willing to develop speculative projects in the most mature regional markets with the current strong demand.

Nearshoring in Poland – distant future or is it already happening?

As a result of the pandemic and the dependence on Asian producers, many companies are increasingly aware that delays in one part of the supply chain will have a knock-on effect and make it impossible to deliver the final product to the market. For this reason, Poland is already being considered as one of the key locations to accommodate new tenants interested in the greater regionalisation of their supply chains. Poland benefits are favourable conditions for business development, such as tax allowances, experienced and qualified staff, road infrastructure, location on the map and EU membership. Moreover, for many years Poland has been considered as a location for international companies as an ideal location for distribution centres to service the whole of Europe