Comments by Jan Barbasiewicz, Partner, Industrial and Logistics Department, Colliers

Many industries are painfully affected by the COVID-19 pandemic, which has lasted for almost a year now. The warehouse and industrial sector was one of the few to record significant growth during that time. According to estimates by Colliers, in 2020 the demand for warehouse space, compared to the previous year and depending on the local market, increased in Poland by 20-30%. However, this is not only the result of a pandemic. For many years, forecasts have heralded the strong development of this sector.

Eager to expand

Several industries are seeing a trend of increasing the number of sq m of already leased warehouse space. One such industry is retail. The experience of the last few months has made retail chains notice the need to stock more than in recent years - the amount of goods stored in warehouses and ready for distribution has nearly doubled. The manufacturing sector, including automotive, is also developing intensively. Many companies in this sector are now interested in leasing manufacturing space to supply components for Tesla's new factory near Berlin. A third industry expanding its portfolio of leased warehouse space is the broadly defined construction industry and the furniture and home furnishings industry. Due to many restrictions on access to services and entertainment, Poles have taken to renovating their homes and making minor home repairs during the pandemic, which has contributed to an increase in demand for building materials and home furnishings.

The potential of warehouses has also been noticed by investors from outside the warehouse market. We observe an increased interest among them in expanding their operations in this sector.

Of course, there are also industries operating in the warehouse market which have been negatively affected by the pandemic. These are mainly companies dependent on the service sector, e.g. those supplying the HoReCa sector. We note, however, that even those tenants are adapting to the new situation quite quickly and are also investing in warehouse space, looking for savings in logistics. Additional costs related to the creation of new logistic centers or branches result in savings. We may therefore expect that these sectors will also eventually generate new demand for warehouse space.

"Nearshoring" and last mile logistics

Another trend that will shape the warehouse market in 2021 is the so-called "nearshoring". Companies have realized that locating production centers mainly in Asian regions, in a situation like the one we have today, results in a disruption of supply fluidity. More and more companies decide to move production closer to the sales market, i.e. to Europe.

The intensive development of the warehousing market within the Warsaw agglomeration, where twice as much new space is being built now as a year ago, shows that the so-called last mile logistics, i.e. urban warehouses servicing e-commerce, is gaining in importance. We predict that it will shape the warehouse space market in the coming years.

Forecasts and challenges for 2021.

Nearly 5.4 million sq m of warehouses were leased in 2020, which is a record in the history of the Polish warehouse market. We can forecast that the market will not slow down in 2021 either, given the number of transactions expected to close in the first half of this year.

On the other hand, administrative procedures may pose a challenge - suspended work of public authorities or issues related to space acceptance may cause doubts and uncertainty among investors as to the completion of investments within the planned timeframe. The demand for warehouses is currently very high and facilities providing large areas of 20,000-40,000 sq.m are slowly becoming scarce. As a result, tenants who need to lease additional space quickly will have to wait for it. This situation will give an advantage to companies, which have prepared for this circumstance in advance. The challenge for 2021 will therefore be to bring additional warehouse space to the market.

Source: www.colliers.com