At the end of the first quarter of 2024, Poland’s total warehouse and industrial stock surpassed 32.7 million sqm, a 9.5% rise on the same time last year.

“As expected, the pace of the warehouse and industrial market’s growth fell below 10% from the annual average of nearly 16% seen in the last 10 years. In January-March 2024, just over 852,000 sqm of new space was delivered, up by 47% over the quarter but down by more than 55% year-on-year. A revival in warehouse development and speculative projects in particular is, however, likely to be sparked by long-awaited cuts to interest rates that would help bring project financing costs down”, says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.

At the end of March 2024, the volume of warehouse and industrial space in the pipeline amounted to more than 2.3 million sqm, down by 17.6% from the fourth quarter of 2023 but up by more than 9% year-on-year. Development activity has remained at approximately 2.4 million sqm for several quarters and focused on Poland’s six largest industrial markets (Warsaw and its suburbs, Upper Silesia, Central Poland, Lower Silesia, Greater Poland and Tricity). A leading province for construction is also Lesser Poland, where almost 152,000 sqm is underway.

Total take-up for the first quarter of 2024 reached nearly 872,000 sqm, a decrease of more than 25.9% year-on-year and 54% quarter-on-quarter. This represents the lowest leasing activity in Poland since the third quarter of 2017 and a figure below 1 million sqm for the first time in 17 quarters, i.e. since the fourth quarter of 2019.

“However, with the annual take-up averaging more than 4.6 million sqm since 2016, this year’s industrial and warehouse leasing volume in Poland is also expected to surpass 4 million sqm”, adds Jakub Kurek.

The structure of demand in the first quarter of 2024 was dominated by new leases which accounted for 58% of total take-up, followed by renewals and expansions which made up 36% and 6% respectively. It is also worth adding that a total of 58,900 sqm was transacted in the first three months of the year under shorter leases of up to one year.

“The provinces with the highest leasing activity were Mazovia, Łódzkie and Greater Poland, which accounted for 23.8%, 20.4% and 19.0% of the total take-up respectively. Occupiers’ interest focused firmly on warehouses featuring energy-saving and sustainable solutions and providing an enhanced employee experience”, says Agnieszka Giermakowska, Research & Advisory Director, ESG Lead, Newmark Polska.

The largest lettings of the three months to end-March 2024 included a confidential retailer’s lease for 62,000 sqm in Hillwood Łódź II and a new contract for 60,000 sqm in Panattoni Park Poznań A2 signed by an e-commerce company. Another large new lease saw ID Logistics take 49,800 sqm in Panattoni Park Poznań West Gate II.

At the end of March 2024, the overall vacancy rate stood at 8.2%, an increase of 0.8 pp over the quarter and 1.7 pp year-on-year. Nearly 2.7 million sqm remained vacant in standing buildings, signifying a steady increase in vacancies, compared to 1.13 million sqm in the pipeline.

“Prime industrial and warehouse rents hold rather firm on the core markets. Locations experiencing relatively high vacancy rates tend to offer more attractive rental rates and lease incentive packages. At the end of the first quarter of 2024, the highest rents were in Warsaw (zone 1), but recent newcomers to the list of Poland’s top three most expensive industrial markets are Pomerania and Lesser Poland”, says Urszula Sobczyk, Head of Valuation, Newmark Polska.