{"id":387,"date":"2017-09-11T09:48:37","date_gmt":"2017-09-11T09:48:37","guid":{"rendered":"http:\/\/ceo.com.pl\/en\/?p=387"},"modified":"2017-09-11T09:48:37","modified_gmt":"2017-09-11T09:48:37","slug":"occupier-developer-activity-sets-new-high-polish-industrial-market-50591","status":"publish","type":"post","link":"https:\/\/ceo.com.pl\/en\/occupier-developer-activity-sets-new-high-polish-industrial-market-50591\/","title":{"rendered":"Occupier and developer activity sets a new high on the Polish industrial market"},"content":{"rendered":"

Tenant demand for modern logistics and manufacturing space in Poland is growing at a rapid pace. In H1 2017, warehouse supply totalled 707,000 sq m while take-up hit a record high of 1,786,000 sq m, as revealed in Cushman & Wakefield\u2019s report \u201cMARKETBEAT: Polish Industrial Market in H1 2017\u201d.<\/strong><\/p>\n

At the end of June 2017, Poland\u2019s total warehouse stock stood at nearly 11.8 million sq m. Most of the 707,000 sq m supply was delivered in Bydgoszcz-Toru\u0144 (113,000 sq m), Pozna\u0144 (112,000 sq m) and Central Poland (91,000 sq m). There is currently 1,665,000 sq m under construction, of which 77% is secured with pre-lets. Nearly half of that volume or approximately 800,000 sq m will be delivered in BTS (Build-to-Suit) schemes. The highest concentration of development activity is in Warsaw\u2019s suburbs (approximately 375,000 sq m), Szczecin (293,000 sq m) and Upper Silesia (282,000 sq m).<\/p>\n

Despite the high supply level, the vacancy rate stood at 5.4% at the end of June 2017, equating to 634,000 sq m of vacant warehouse space. Vacancy rates edged up in Pozna\u0144 (8.3%) and Wroc\u0142aw (7.3%), and decreased again in Warsaw\u2019s inner city (6.9%) and its suburbs (5.7%). Robust developer activity pushed vacancies up in Krakow (12.7% or 38,000 sq m), Szczecin (8.8% or 19,000 sq m) and Lublin (13.9% or 18,000 sq m). The lowest warehouse vacancy rate of 0.3% was in Central Poland.<\/p>\n

\"Adrian
Adrian Semaan, report author and Consultant, Industrial and Logistics Agency, Cushman & Wakefield<\/figcaption><\/figure>\n

\u201cSeveral factors have contributed to the outstanding performance of the Polish logistics market, including Poland\u2019s strong economic growth, rising retail sales, competitive labour market, the expansion of the country\u2019s road network and the large availability of development sites. New infrastructure improvements are paving the way for the warehouse market to expand beyond the core agglomerations, best illustrated by the growing developer activity in Szczecin, Bydgoszcz-Toru\u0144, western Poland, Lublin and Rzesz\u00f3w. In addition, new warehouse locations have recently appeared on Poland\u2019s industrial map along expressways: S3 (Zielona G\u00f3ra), S8 (Bia\u0142ystok) and S7 (Kielce),\u201d said Adrian Semaan, report author and Consultant, Industrial and Logistics Agency, Cushman & Wakefield.<\/p>\n

In H1 2017, warehouse take-up rose to a record 1,786,000 sq m. The largest leasing volumes were recorded in Central Poland (423,000 sq m), Upper Silesia (414,000 sq m) and in the Warsaw region (367,000 sq m, of which 333,000 sq m was transacted in Warsaw\u2019s suburbs). New lease agreements accounted for 67% of the total leasing volume with lease renewals and expansions making up 24% and 9%, respectively. Take-up was largely driven by logistics operators (32%), retailers (20%), light manufacturing (10%), e-commerce (9%), the automotive sector (7%) and household appliances (6%).<\/p>\n

\"Joanna
Joanna Sinkiewicz, Partner, Head of Industrial and Logistics Agency, Cushman & Wakefield<\/figcaption><\/figure>\n

\u201cThe record performance of the Polish warehouse market is underpinned, among other things, by the growing demand reported by e-commerce. Poland is extremely attractive to this sector due to its geographic location, strong labour market, large consumer market with growing retail sales, and low leasing costs,\u201d said Joanna Sinkiewicz, Partner, Head of Industrial and Logistics Agency, Cushman & Wakefield.<\/p>\n

Headline rents remained flat on the Polish industrial market. At the end of June 2017, the highest were in Warsaw\u2019s inner city (EUR 4.00\u20135.25\/sq m\/month) and Krakow (EUR 3.50\u20134.50\/sq m\/month) while the lowest were in Central Poland (EUR 2.40\u20133.60\/sq m\/month) and Warsaw\u2019s suburbs (EUR 2.50\u20133.60\/sq m\/month). Effective rents tend to be lower due to financial incentives conceded to tenants and range between EUR 1.90\u20133.20\/sq m\/month. Higher effective rents are in Warsaw\u2019s inner city (EUR 3.50\u20134.60\/sq m\/month) and Krakow (approximately EUR 2.80\u20133.60\/sq m\/month).<\/p>\n

\u201cIn H1 2017, rents remained low, indicating a balanced market where developers are able to accommodate the growing demand for logistics space. Intense competition has given a stronger bargaining power to tenants, particularly those leasing modules of over 5,000 sq m, accounting for approximately 80% of the total take-up recorded in the first six months. The downside risks to the occupier market include rising development costs due to rising prices of building materials and services, which is likely to push rents up,\u201d said Joanna Sinkiewicz.<\/p>\n

Outlook<\/h2>\n

The Polish industrial market is the fastest growing commercial real estate sector in Poland. Tenant demand is expected to remain robust, underpinned by optimistic growth forecasts for the country\u2019s GDP, consumption and retail sales in 2017, further improvements in the road infrastructure and the increasing impact of e-commerce. With the development pipeline standing at 1.67 million sq m, this year\u2019s total supply is likely to surpass the 1.2 million sq m mark recorded in 2016. Cushman & Wakefield\u2019s analysts do not expect any substantial changes in vacancy rates or rental costs.<\/p>\n