Despite the pandemic, the warehouse market in Poland remains in very good shape. In 2020, the stock of modern warehouse space increased by more than 2 million sq m. Thus, the total supply reached 20.6 million sqm in Poland. Compared to 2019, this is an increase of more than 10%. Colliers experts forecast that the high level of supply will also be maintained in 2021.
Warsaw with the largest increase in supply
98% of the total supply of modern warehouse space in Poland is located in 11 major markets. Last year, the largest increase in new space compared to 2019 was recorded in Warsaw (566 thousand sq m within three zones), Upper Silesia (438 thousand sq m) and Wrocław (360 thousand sq m).
— The intensive development of the warehouse market in the Warsaw agglomeration shows that last mile logistics and small city warehouses (SBU) serving customers from the e-commerce sector are gaining importance. In order to minimize the potential risk of losing liquidity in the flow of goods, companies see the need to reorganize and shorten the existing supply chain, hence their interest in warehouses located in cities. These are the products that developers operating in the market are betting on today. We predict that in 2021 the trend for renting smaller modules in urban areas will continue — predicts Jan Barbasiewicz, partner, Industrial and Logistics Agency at Colliers.
Despite the unusual situation caused by the pandemic, most of the projects in the construction phase were completed on schedule. The largest projects delivered in 2020 include: A2 Warsaw Park by Panattoni in Grodzisk (103.7 thousand sq m), Hillwood Wrocław Wschód II (63.9 thousand sq m), the next phase of Elite Mszczonów Logistic Park/d. P3 Mszczonów/ (58.5 thousand sq m), Panattoni Park Ruda Śląska II (56 thousand sq m), Hillwood Oleśnica (53 thousand sq m), and 7R Park Gdańsk II (51.8 thousand sq m). In addition, logistics centers of two giants of e-commerce sector were commissioned - Amazon opened its biggest, eighth center in Poland in Gliwice, while Zalando opened its third location in the country (in Głuchów near Łódź).
— Since the beginning of 2020, we have observed an upward trend in the amount of new space delivered to the Polish warehouse market. While 455,000 sq m was delivered in Q1, it was already 622,000 sq m in Q2 and 671,000 sq m in Q3. The fourth quarter saw a slowdown and new supply reached 301,000 sqm. At the end of the year, a further 2 million sq m was under construction. Developers from other sectors are also noticing the potential of the warehouse market, which, thanks to the intense development of e-commerce and the courier industry, is becoming an attractive form of capital investment — says Maciej Chmielewski, senior partner, director of the Industrial and Logistics Agency at Colliers.
— Just as in the case of office properties, developers in the warehouse market are paying more and more attention to the application of ecological solutions consistent with the concept of sustainable development. The market is also moving towards warehouse automation and providing non-standard, flexible solutions that offer the possibility of standing out and increasing the attractiveness of space. We expect that the warehouse space to be delivered to the market in the coming years will be of an increasingly higher standard — adds Jan Barabsiewicz.
Record demand
Tenants showed record activity in 2020, with annual demand reaching 5.4 million sqm. In comparison, in 2019 the total volume of leased space amounted to 4.3 million sq m, which is an increase of nearly 26% y/y.
The most popular locations for tenants were Warsaw (1.2 million sq m leased across three warehouse zones) and Upper Silesia (1.07 million sq m), which saw demand levels rise by 79% compared to 2019. These two markets alone accounted for nearly half (42%) of all warehouse space leased in Poland in 2020. Locations located in Western Poland have also gained in popularity, with 265 thousand sq. m. leased (40 thousand sq. m. in Western Poland). (40 thousand sq m in 2019), Bydgoszcz/Toruń (139 thousand sq m vs. 55 thousand sq m) and Kraków (150 thousand sq m vs. 77 thousand sq m).
— Such a high rate of demand for warehouses shows us where the market is heading - companies are developing online sales channels and, to this end, are increasing their warehouse facilities. This is an additional motivation for investors or investment funds to expand their investment portfolio with this type of space. With the exceptionally intensive development of the e-commerce sector, the challenge in the nearest future may be to ensure a sufficient number of facilities providing large spaces of the order of 20-40 thousand sq m. As a result, tenants who need to lease additional space quickly will have to wait for it. This situation will give advantage to companies, which are ready in time — predicts Maciej Chmielewski.
2020 abounded in significant transactions. The top five deals include Amazon, which started construction of a logistics center in Świebodzin (200.4 thousand sq m) under a BTS agreement and in Hillwood Łódź Górna (67.5 thousand sq m) under a new agreement. Other noteworthy leases include Euro-net's lease of 73.4 thousand sq.m in Prologis Park Janki (new agreement), Żabka's BTS facility in Radzymin (67.5 thousand sq.m) and a BTS transaction concluded by 4F for a warehouse in Czeladź (67 thousand sq.m). Tenants were dominated by representatives of the 3PL sector (32% of transaction volume) and the retail sector (24%).
Many new contracts, rents unchanged.
The highest base rental rates were recorded in Warsaw zone I - on average they amounted to EUR 4-5 sq.m per month. In other zones and other regional markets base rental rates ranged between EUR 2.7-3.8 sq.m/month.
— Despite the high demand rate, rental rates in the major warehouse markets in Poland remained stable. We noted a large share of new agreements in the lease structure - they accounted for over half of the total volume (54%). In particular, in the first months after the announcement of the pandemic, tenants showed a significant increase in their interest in concluding short-term leases - the share of space covered by this type of transactions increased by as much as nearly 85% compared to 2019 — says Agnieszka Bogucka, analyst in the Advisory and Market Research Department at Colliers.
Vacancy rate declined
— Although a high supply of new space often goes hand in hand with an increase in vacancy rates, this year in the warehouse market we are not experiencing such a correlation. On the contrary, high tenant interest translated into a decrease in the vacancy rate, which stood at 6.6% at the end of the year, 0.4% less than in the corresponding period of 2019— Agnieszka Bogucka reports.
The lowest vacancy rate again, as in 2019, can be boasted by Szczecin (0.2%) and the eastern regions of Poland (0.3%). On the other hand, the highest available space was in Silesia (8.9%) and Central Poland (8.3%), which could be influenced by the delivery of a large number of new warehouses in these areas.
— 2020 was a very good year for warehouses. Taking into account the amount of space currently under construction and the demand for it among tenants, we can predict that 2021 will not lag behind. Both in terms of supply, demand and vacancy rates, we are in for another promising year — concludes Jan Barbasiewicz.
Source: www.colliers.com