“In our sector, it is clearly visible that the industrial and logistics real estate market has been seeing high rates of growth for a few years now. Over the past five years, the supply of modern industrial and logistics space has nearly doubled, and from the beginning of 2017 to the end of the first half of 2018, i.e. in merely a year and a half, an astounding 3.3 million sqm of new space hit the market. In our view, this trend will not be slowing down in the immediate future. As of the end of the first half of 2018, more than 2.26 million sqm of modern logistics space was under construction. This is 45% more than in the same period last year and the highest number ever when it comes to the amount of space under development,” says Beata Hryniewska, Head of Industrial and Logistic Department CBRE.

 

 

The Logistics and Supply Confidence Index in Poland 2018/2019 came in at 57.4 pts, down 3.3 pts from 2017, according to the “Confidence Index 2018/2019” report by CBRE and Panattoni Europe. Despite the slight drop year-on-year, this score indicates a positive look ahead – a Confidence Index in excess of 50 points corresponds to expectations of improvement, and under 50 pts – of changes for the worse. The further the score from the midpoint of 50 pts, the stronger the prognosis for change over time. The index takes into account the respondents’ views on the current market situation in Poland and their expectations for the future regarding changes in revenue, profitability, capital expenditure related to logistics and supply chains, as well as predictions regarding employment.

 

Interestingly, compared to last year’s survey of attitudes in the logistics sector, the level of confidence in logistics companies has gone up (from 62.1 to 64.1 pts), whereas among manufacturers and traders it has fallen (from 59.1 to 50.4 pts). This reveals a growing disparity in the perception of the market by the two groups. According to Marek Dobrzycki, Managing Director Panattoni Europe, the difference may result from the change in cooperation models between the two sectors. “We are observing a trend among manufacturing and trading companies to outsource all processes related to planning, execution and control over the flow of raw materials or finished products. This is without a doubt the effect of shortages of qualified workers. Additionally, the growth in e-commerce in European markets means that the logistics sector can maintain a more optimistic view of the market and prospects of growing their business”. He then adds: “on the other hand, manufacturers and traders focus on expansion – conquering new markets, especially exports, and introducing new products to their portfolios to open up new market segments”.

 

 

CBRE and Panattoni Europe also asked how the respondents (logistics companies plus manufacturers and traders) view the current market situation compared to the past 12 months. Only 15% of all respondents described it as more favourable than a year ago. On the other hand, 7 out of 10 said things were more difficult now. Complaints came primarily from the representatives of manufacturing and trading businesses, among whom as many as 81% described the market situation as less favourable.

 

Also when asked about the coming 12 months, the majority (62% of respondents) revealed they were anticipating more challenges, with one in five respondents not expecting any changes, and only 17% predicting things to get better. Here, too, there are more pessimists among manufacturers and traders – for 69% among them the outlook for the coming year is not bright.

 

 

A strong majority of respondents of the “Confidence Index 2018/2019” survey predict growth in revenues for their businesses in the coming year (79%). One in three expect strong revenue growth in excess of 8% YoY, another 26% of survey participants anticipate a moderate growth rate of 2-5% per year. Interestingly, logistics companies as a respondent group stand out for really high optimism – as many as 93% expect revenues to go up in the coming year.

 

Optimism in terms of revenue growth corresponds with positive expectations regarding profitability. Almost 2 out of 3 companies expect profitability to grow in the next 12 months, one in four does not expect change, and 13% believe that profits may drop.

 

When it comes to capital expenditure, as many as 87% respondents want to invest in logistics and supply chains in the coming year. Both respondent groups, logistics companies on the one hand, and traders with manufacturers on the other are open to expenditure in this area.

 

 

The demand for labour is currently reaching historic highs in many sectors of the Polish economy, and it is no different in logistics. More than half of respondents (59%) reported they expected to increase the headcount in their businesses in the next 12 months. Only 7% predicted the number of employees to drop in the coming year. The results of the survey in this area are different for logistics companies compared to manufacturers and traders. Logistics businesses experience a higher demand for workers than the manufacturing and trade sector – respectively 78% and 38% of logistics businesses vs. manufacturing and trading businesses have plans to hire.

 

“Taking into account the record low unemployment rates visible across the country and practically in all business sectors – according to the data from the Ministry of Labour, Family and Social Policy in September 2018 the unemployment rate reached 5.8% – the need to increase the number of employees is likely to pose a serious challenge. Organisations are experiencing shortages of skilled human resources and competing for new staff. The labour market is currently struggling with the problem of constantly growing expectations in terms of remuneration and working conditions which employers cannot ignore,” adds Beata Hryniewska from CBRE.