Warehouse market

The outlook for the Polish warehouse market

Originally Published in March 2018

There are positive signals coming from Poland’s logistics real estate market. The sector’s growth is based on the country’s improved network of highways, which has significantly improved transportation.

New logistics centers and warehouse parks have grown along these roads and next to junctions. The improvements have put the Polish warehouse and logistics sector in a strong position not only for the Polish market as a whole, but also for Central and Eastern Europe (CEE) and, more often, for Western Europe.

The second reason for the sector’s recent growth is the increasing importance of e-commerce, which has brought with it the development of courier and transport services.

Data from the last year confirm that the warehouse and logistics sector is the fastest developing among all of the sectors in the Polish commercial real estate market, with more than 13.5 million square meters of space. Persistently strong demand, the growing popularity of built-to-suit (BTS) projects, a decreasing number of speculative projects and attractive lease conditions have generated a good outlook for the coming quarters.

More than 2.36 million square meters of new warehouse space appeared on the market in 2017, 66 percent of which was completed in the second half of the year. The number of projects completed in 2017 was 77 percent higher than in 2016.

The popularity of BTS projects results from tenants’ growing requirements, as well as the need to explore new regional markets to have guaranteed access to a qualified workforce. Our study from last year clearly showed that Poland’s labor market is now a crucial factor for the logistics market. Companies in the survey indicated that access to a workforce with a variety of skills – along with transport infrastructure and the standard of space – is the most important factor for the pace of the sector’s development in the near future.

Many companies are trying to entice potential employees with additional benefits. About 30 percent of the surveyed employers mentioned that they are taking steps to facilitate recruitment and hiring of immigrants from Eastern Europe.
Players from China are also increasingly appearing in Poland’s logistics and warehouse sector. After monitoring the market and studying development opportunities, they have moved to the project execution stage. At the beginning of the year, we finalized a lease transaction of several thousand square meters for one Chinese logistics firm. I predict that this is just the beginning of the trend. For investors from the eastern markets, the CEE region is exceptionally attractive in terms of the availability of investment land for projects of more than 100,000 square meters.
The regional market around the city of Szczecin turned out to be the dark horse of the Polish warehouse and logistics sector in 2017. New projects with a total area of 315,000 square meters clearly marked its presence on Poland’s logistics map. The region of Western Pomerania, with its strategic location, a record number of facilities under construction and its availability of qualified workers, owes its great result primarily to two significant BTS projects: Panattoni BTS Amazon Szczecin (161,000 square meters) and Goodman BTS Zalando Szczecin (130,000 square meters).

The Warsaw agglomeration, supported by the Central Poland region, will remain the main market in the country. Projects located near Łódź and the junction of the A1 and A2 motorways are aimed at companies with nationwide distribution.

Investors can see untapped potential in the Silesia region, which enjoys the interest of companies operating in CEE markets. Over the next few years, its significance on Poland’s logistics map will increase. The stable climate for investment and high level of tenant and investor activity has raised the profile of smaller regional markets like Bydgoszcz, Toruń, Zielona Góra, Opole and Rzeszów. This is one of the trends that will be observed in the near future. New road infrastructure in these regions will mean they will be taken more seriously.

Comment by Katarzyna Pyś Fabiańczyk
Head of Industrial & Logistics Department Central and Eastern Europe, BNP Paribas Real Estate Poland