In 2024, warehouse take-up in Warsaw’s suburbs, or Zone 2, reached nearly 1.2 million sqm, second only to 2023’s total of 1.277 million sqm. However, to launch projects on a larger scale, investors demand stronger commitments from tenants who remain cautious about signing leases for developments that exist only on paper.

Warsaw Zone 2 is defined by the area outside Warsaw’s administrative borders, within a 60 km radius from the city centre. Its total modern warehouse stock stands at over 5.9 million sqm, with the highest concentration of development activity in recent years recorded in locations such as Błonie, Mszczonów, Pruszków, Nadarzyn, Janki, Raszyn, Nowy Konik, Piaseczno, Góra Kalwaria, Ożarów Mazowiecki, Grodzisk Mazowiecki, Czosnów, and Radzymin. This area attracts the strongest interest from FMCG, e-commerce and logistics tenants, with the largest warehouses leased since January last year by H&M at CTPark Warsaw West in Wiskitki (63,000 sqm), PepsiCo at Logicor Mszczonów (58,300 sqm), Rohlig Suus at P3 Warsaw I – Lesznowola (50,200 sqm), Douglas at CTPark Warsaw South in Mszczonów (46,300 sqm) and Auchan at Logicor Mszczonów (46,200 sqm).

From Zone 1 to Zone 2

“The growth of logistics in locations near Warsaw has been strongly driven by further road improvements, including the construction of Warsaw’s ring road and new sections of the A2 motorway and S8 expressway. Benefiting from these developments, warehouses in Zone 2 enjoy significantly improved connectivity to key consumer markets across Poland and Central and Eastern Europe,” says Janusz Dudek, Senior Associate, Industrial and Warehouse Department, Newmark Polska.

Katarzyna Adamska, Advisor, Industrial and Warehouse Department at Newmark Polska is confident that Zone 2 is an excellent alternative to warehouses in the capital, particularly for tenants who need not be so close to end consumers and who prioritise easy access to fast roads and want to avoid traffic jams typically seen on exit roads from the city. “Additionally, rent disparities between Zone 1 and 2 are quite significant. For example, asking rents in Warsaw’s Targówek district stand at €5.00-8.50, while headline rental rates in Marki, Kobyłka, and Radzymin start at €4.00. While the differences for medium-sized and large leases could be enormous, Marki and Targówek are less than a 15-minute drive apart. As a result, many companies start out, for instance as start-ups, in Zone 1. As they grow, they often relocate outside the city several years later,  where they can lease larger warehouses for the same rent,” explains the expert.

Caught in an impasse between supply and demand

Despite the many advantages of Warsaw Zone 2, the number of new leases signed in 2024 fell short of the expectations of developers seeking to launch new projects in the area. Many companies whose leases were due to expire chose to remain in their current locations, with renegotiations accounting for 41 per cent of last year’s total take-up, down from 62 per cent in 2023, according to data from Newmark Polska.

“The low number of new leases can be attributed to several factors. Above all, tenants have limited choice due to few construction completions. In addition, the rental gap between the primary and secondary markets continues to widen. In the final quarter of last year, headline rents in Zone 2 stood at €4.00-7.50, with newly built space commanding higher rents than older warehouses due to the continuously rising prices of energy and building materials, as well as minimum wage increases,” comments Janusz Dudek. “Most tenants currently operate in warehouses that are several years old, featuring technologies similar to those in the latest developments, along with green solutions and environmental certifications. As a result, they prefer to stay rather than relocate to newer, more expensive facilities. Most have put decisions on hold, waiting for better offers and a wider range of options.”

According to market analysts, one of the reasons for lengthy leasing processes in the region could be inflexibility during negotiations regarding both lease incentives such as rent-free periods and technical adaptations of space. “It’s mainly about the possibility of dividing vacant warehouses into separate units. Even if the layout of a warehouse allows for such divisions, they will require additional adaptations, including new installations. These modifications generate extra costs which landlords are reluctant to incur and instead prefer to wait for a tenant willing to lease the entire space. Previously, such divisions were less of a problem,” says Janusz Dudek.

Engineers and warehouse staff wanted

The rapid growth of logistics and warehouse facilities on the outskirts of Warsaw, including in the vicinity of Pruszków, Błonie, and Grodzisk Mazowiecki, has boosted demand for warehouse employees. Analysis by Randstad shows that the shortages of blue-collar workers are primarily due to high employee turnover and wage pressure. To attract and retain staff, companies are increasingly opting to offer higher wages and fringe benefits such as employer-paid travel expenses and to hire workers from Ukraine, Georgia, Moldova and other countries.

The record-low unemployment rate in the region presents a significant challenge. “The most acute shortages are among warehouse workers, forklift operators, picking and packing staff, and drivers with category B and C licences. As a result, companies are increasingly investing in automation and logistics improvements to mitigate labour shortages,” explains Małgorzata Mudyna, Regional Manager, Randstad.

At the same time, the proximity of Warsaw naturally attracts logistics providers and supports the rapid development of new technologies whose implementation requires experienced professionals in charge of warehouse optimisation. “This is where Warsaw’s technical universities such as the Warsaw University of Technology play a critical role by turning out skilled graduates. Today’s labour market absorbs them almost immediately upon graduation as expertise in logistics automation is in high demand. This is especially true for logistics process engineers who play a key role in optimising goods flow and implementing automation,” explains the expert from Randstad.

Contracts first - before construction starts

At the end of the fourth quarter of 2024, total warehouse stock in Warsaw Zone 2 reached more than 5.9 million square metres. “Last year, warehouse development activity in locations around Warsaw slowed down significantly, with just over 366,000 sqm of new completions by the end of December. By comparison, 2023 saw more than 632,000 sqm delivered to the market,” says Katarzyna Adamska. The largest projects completed since January 2024 include CTPark Warsaw West in Wiskitki (over 110,000 sqm), CTPark Warsaw South in Mszczonów (67,400 sqm), P3 Warsaw I in Lesznowola (50,200 sqm) and MLP Pruszków II (33,200 sqm).

The warehouse development pipeline currently stands at just under 182,000 sqm, half of last year’s total completions. Projects scheduled for delivery in 2025 include Hillwood Grodzisk Mazowiecki (51,400 sqm), GLP Warsaw VI Logistics Centre (37,400 sqm), Panattoni BTS Auchan (19,800 sqm), Panattoni Park Warsaw West in Błonie (16,500 sqm) and a warehouse extension at MLP Pruszków II (15,700 sqm).

“This slowdown in new construction is due to high financing costs and geopolitical uncertainty. As a result, developers are more risk-averse and reluctant to commit to speculative developments. A few years ago, locations such as Janki and Ożarów saw projects break ground with only 20-30 per cent of space pre-leased. Following the outbreak of the war in Ukraine, investors have increased their pre-let requirements to at least 50 per cent,” says Katarzyna Adamska, Advisor, Newmark Polska.

Early signs of change near Warsaw

Despite a temporary decline in new supply, Warsaw Zone 2 remains one of Poland’s key logistics markets. “The unique potential of this location has been recognised by CTP, which has taken the risk of launching two developments without pre-lets. This spring will see construction work begin on the developer’s first warehouse in Nowy Konik. At full build-out, the development will consist of four warehouses with a combined area of 76,300 sqm. Meanwhile, CTP has also begun earthworks on its project in Janki, where seven facilities totalling 45,500 sqm are to be constructed. Another developer, Peakside, is also planning to deliver buildings with SBUs this year, starting from around 600 square metres. While other developers remain cautious about launching new projects, they keep a finger on the pulse of market trends, with more and more signs of further land acquisitions in the area,” concludes Janusz Dudek.