Occupier and developer activity gathers pace

In the second quarter of 2024, industrial and logistics take-up in Poland hit a record 1.76 million sqm, representing one of the best results for the three months to June in Europe. What makes this figure even more impressive is that large leases for 20,000-130,000 sqm accounted for as much as 56% of the total leasing volume. Total gross demand in Q2 was dominated by new leases and expansions accounting for 60% of all deals. The first half of 2024 ended with the combined gross take-up at nearly 2.7 million sqm, marking a 23% increase year-on-year.

The largest lettings of the second quarter saw LPP take 103,000 sqm in Bydgoszcz Białe Błota Logistics Centre and a confidential tenant lease 91,000 sqm in Panattoni Park Wrocław Logistics South Hub. In another major transaction, LX Pantos renewed its 72,000 sqm lease in Prime Logistics Wrocław.

Developers also stepped up construction activity.

“New supply for the first six months of 2024 reached 1.64 million sqm, with a similar volume scheduled for completion in the second half of the year. At the end of June 2024, Poland’s total industrial and logistics stock was 33.52 million sqm, up by 9% year-on-year. Given projects in the pipeline, it is on course to soon surpass the 35 million sqm mark”, comments Martyna Kajka, Director, Industrial and Logistics, BNP Paribas Real Estate Poland.

At the end of the second quarter of 2024, there was more than 1.98 million sqm of industrial and logistics space under construction. The highest concentration of big-box facilities underway was in Lower Silesia, where projects in the pipeline included buildings 1 and 3 of P3 Wrocław totalling 130,000 sqm and 92,000 sqm respectively and ECE Kąty Wrocławskie with an area of 79,000 sqm.

Projects under construction had an average pre-let rate of nearly 55%, up by 3.6 pp from the previous quarter.

Kraków’s industrial and logistics stock exceeds 1 million sqm

At the end of the second quarter of 2024, Kraków’s total industrial and logistics stock surpassed 1 million sqm, bringing Poland’s tally of one million sqm zones to 10. Despite its continued rapid growth, the Kraków market is facing a number of challenges, including land constraints and fragmentation, as well as competition from the larger Upper Silesian market.

The Kraków industrial and logistics market has doubled in size in the last five years and has for years enjoyed one of the lowest vacancy rates in Poland, standing at 6.4% at the end of the second quarter of 2024 compared to the national average of 8.3%. 2023’s total leasing volume in the Lesser Poland region reached 232,000 sqm, marking a 4% increase on 2022’s level. By comparison, the first half of 2024 saw only 43,000 sqm of leases due to low availability of vacant space.

Key growth drivers of the Kraków market include good transport infrastructure, availability of development land and access to skilled labour. In addition, the completion of the S7 expressway is expected to boost the growth potential of this region’s northern areas.

Vacancies and take-up by transaction type

At the end of the second quarter of 2024, the overall vacancy rate stood at 8.3%, up by 0.1 pp over the quarter and 1.5 pp year-on-year. The highest industrial and logistics vacancy rates were recorded in the West (21.8%), Warsaw I (12.3%) and Central Poland (10.8%), while the lowest were in Opole (2.6%), Szczecin (4.0%) and the East (5.2%).

Leasing activity in the second quarter of 2024 was dominated by new leases accounting for 54% of the total industrial and logistics take-up, followed by renewals and expansions which made up 39% and 7% respectively. By gross take-up, the strongest occupier activity in the three months to June was in Lower Silesia (450,000 sqm), Warsaw II (268,000 sqm) and Upper Silesia (250 k sqm).

The evolution of the industrial and logistics market

The Polish warehouse market has long been perceived as a market of simple, big-box facilities for e-commerce, retail, and logistics. It has now become far more diversified.

“Demand reported for both large and smaller customised grade A buildings has led to the success of the concept of industrial and logistics parks offering units in various sizes, as well as production space. Both developers and tenants are increasingly recognising the benefits of deploying modern and sustainable solutions to ensure energy security,” says Robert Pawłowski, Director, Industrial and Logistics, BNP Paribas Real Estate Poland.

A few years ago, key warehouse location drivers were the proximity of motorways, road infrastructure quality and business-friendly local authorities. Today, warehouse parks are being built in areas with access to a better-skilled workforce, particularly for the production sector, while factors relevant to job seekers include proximity to public transport and availability of cycle lanes. Warehouse landlords and managers are also taking measures to provide an enhanced work environment - these may include improving heating and thermal comfort, installing air conditioning and humidifying systems and building canteens or break-out zones.

The industrial and logistics sector in Poland is growing at pace. This is borne out by recent projects, including the opening of Notino’s first warehouse in Poland - its modern warehouse facility in Głuchów will ship orders to customers in Poland and abroad. In another move to continue its expansion, Amazon has announced multi-billion projects and plans to create thousands of new jobs across Europe. The e-commerce giant has now turned its focus to logistics, cloud infrastructure and R&D, and is planning to invest in wind power projects in Poland. Another major development has been the completion of City Logistics Poznań III - the largest City Logistics warehouse in Poland. Spanning nearly 44,000 sqm, it is the largest complex for last-mile logistics in the country.