Subcarpathia has, until recently, been one of the smallest warehouse markets in Poland. At the end of 2021, its total industrial and warehouse stock stood at just over 300,000 sqm. However, pre-lets for BTS warehouses finalized in that year pushed 2022’s new supply up to more than 142,000 sqm. Another 49,000 sqm of industrial and warehouse space was delivered to the Subcarpathian market in the first three months of this year.

Subcarpathian cities beckon investors

“Improving transport links with Europe and the rest of Poland are a key driver of Subcarpathia’s growth. The region is benefiting from the extension of the international European Via Carpatia route, which at full build-out will connect Lithuania, Poland, Slovakia, Hungary, Romania, Bulgaria and Greece. Subcarpathia is also well-connected thanks to the A4 motorway, running through Poland’s key economic centres, from the border with Germany to the Ukrainian border”, says Janusz Dudek. Another incentive for investors are the region’s two special economic zones (Euro-Park Mielec and Tarnobrzeg Euro-Park Wisłosan), offering investors the highest tax exemptions in Poland.

A high density of blue-collar and technical workers, but fewer managers

Investors are also attracted to Subcarpathia by its growing labour market. “The region offers access to a large pool of workers with technical skills and high quality education. It is worth noting that new projects breaking ground here are being increasingly delivered sustainably with a focus on ensuring high levels of workplace safety, innovative solutions and R&D”, says Natalia Nowakowska, Senior Consultant, Hays Poland.

According to Karolina Szyndler, Senior Director, Hays Poland, unlike in other regions, recruiting blue-collar workers to work in manufacturing and warehousing in Subcarpathia is not too problematic as the availability of candidates for manufacturing positions is relatively high. “It is similar with hiring for technical, or grey-collar, roles that require specialist expertise. Sourcing specialized candidates is easier in several cities where there are already many companies operating in the production and warehousing industries. For example, in Rzeszów, Mielec and Stalowa Wola,” explains Karolina Szyndler. “The Subcarpathian production and warehousing sector is, however, rather young and as such it has not produced a sufficient pool of experts and managerial staff so far. It also lacks managers with relevant experience in greenfield projects. In practice, this means that local employers are increasingly focusing on working out strategies for sourcing and upgrading the skills they require, among other things, by investing in employee training programmes.”

Aviation’s Silicon Valley

The warehouse market in Subcarpathia is largely driven by the manufacturing, pharmaceutical and aviation sectors. Build-to-suit and build-to-own projects are another distinct feature of this market.

“Subcarpathia is said to be the Polish Silicon Valley for aviation. Such is also the history of the place, with Poland’s largest aviation factory operating in Mielec since 1938. The region has seen new manufacturers of aircraft components grow over the years, attracting more investors to the area. In addition to history, Subcarpathia today offers aviation leaders access to well-educated talent and specialist pools”, says Michał Kozar, Newmark Polska. “For example, Boeing already has plants in the Aviation Valley in Rzeszów and wants to grow in that location. It has recently announced the opening of its huge 6,600 sqm office in SkyRes, which will accommodate a few hundred employees who will support the global giant’s aerospace programmes”.

International companies present in the region are growing and reporting increasing requirements for industrial and warehouse space. This was the case, among others, with BorgWarner, an American supplier of drive and exhaust systems solutions to such brands as Mercedes Benz, AMG and Aston Martin. “BorgWarner launched operations in Poland in 2009, but as it continued to grow, it needed more production space. In 2022, it relocated to a dedicated facility with an area of close to 11,300 sqm developed by Panattoni within Panattoni Park Airport II”, says Janusz Dudek.

Subcarpathia sees no change of plans

The war in Ukraine did not deter tenants in Subcarpathia. Despite geopolitical turmoil, fashion retailer LPP completed its new logistics project with the opening of its largest 69,000 sqm warehouse in Poland in January this year. It is dedicated to the fulfilment of online orders from customers in Poland, the Czech Republic, Slovakia, Slovenia, Hungary and Ukraine. The new fulfilment centre was built at Panattoni Park Rzeszów North.

The largest leases in Subcarpathia were signed last year by the region’s largest logistics operator Omega Pilzno (Reino Park Rzeszów, 24,500 sqm) and SaarGummi (DL Invest Park Sędziszów Małopolski, 12,500 sqm). SaarGummi, a supplier of rubber sealing systems and solutions to the automotive and construction industries, launched operations in its new production plant last month (May 2023).

“Despite the ongoing growth of production plants and warehouses in Subcarpathia, this region - just like the whole country and Europe - has also been hit by a slowdown in recent months. Data from Newmark Polska shows that leasing activity for the first quarter of this year plummeted by almost 66 per cent from 30,700 sqm in Q1 2022 to 10,500 sqm in the period January-March 2023”, says Michał Kozar. “However, the muted occupier activity hardly translates into more choice for tenants who remain active seeking new accommodation as the development pipeline has also shrunk, with all the space in projects under construction pre-let in the first quarter of this year. Meanwhile, the vacancy rate reached 3.6 per cent and vacant space was available in two parks only: LCube Logistic Park Rzeszów and Panattoni Park Rzeszów Airport III.”

The future is in Rzeszów

While the industrial sector is adapting to the new reality, investors are making plans for the future, including for Rzeszów and the whole province, which became a leading transhipment hub for cargo transported from the West to the East after the outbreak of war in Ukraine. “For many months we have been seeing heavy traffic here due to the transportation of humanitarian aid. Even today, local logistics providers are receiving lots of enquiries about short-term storage options. When the war is over, Subcarpathia will become the epicentre of transhipment hubs supporting the rebuilding of Ukraine. We are confident that the majority of companies that will be taking part in the rebuilding effort or expanding into the Ukrainian market will initially choose not to build plants in Ukraine, where many roads and buildings have been damaged. They too will want to use the nearby infrastructure in Poland and Subcarpathia”, says Michał Kozar.

Industrial developers and investors came to realise the potential of this location long ago, with the largest companies building warehouses and securing land for future projects in the Rzeszów area. “The highest concentration of development activity in the region is in Rzeszów, Korczowa, Jasionka, Dębica and Chmielów. Three new projects were delivered to the Subcarpathian industrial market in the first quarter of this year: Panattoni Park Rzeszów North (21,500 sqm), LCube Logistic Park Rzeszów (19,600 sqm) and another building of DL Invest Dębica (8,000 sqm). Other owners of production and warehouse buildings and development plots include 7R, CTP, Reino and Waimea Holding”, concludes Janusz Dudek.