According to the “Industrial & Warehouse Market in Poland”, a report prepared by real estate advisory firm Newmark Polska, total take-up volume in 2021 hit a record high of 7.35 million sqm, up by 41% on the previous year and 175% of the annual average from 2016-2020.
“Last year saw unprecedented levels of developer and occupier activity in the Polish warehouse and industrial market, with take-up, new supply and the development pipeline reaching all-time highs. Meanwhile, warehouse availability shrank at a rapid pace, placing upward pressure on rents throughout Poland,” says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.
Poland’s total warehouse and industrial stock stood at 23.8 million sqm at the end of 2021, up by 15.1% over the year. New supply hit an all-time high of around 3.1 million sqm. Most of the new supply was delivered in Silesia and Mazovia, accounting for 618,100 sqm and 426,100 sqm respectively.
The volume of the commenced warehouse and industrial space hit an all-time high at the end of December 2021 with close to 4.65 million sqm underway, up by 131% on the same time in 2020. The largest volumes of new developments were underway in Central Poland (848,400 sqm), Lower Silesia (814,600 sqm) and Upper Silesia (701,900 sqm). Panattoni continued to lead the way in the market with more than 2.6 million sqm under construction, which accounted for 56% of the total development pipeline.
Total take-up set a new high of 7.35 million sqm transacted in 2021 (excluding short-term leases), a 41% increase compared with the previous year and 175% of the annual average for 2016-2020. The provinces with highest leasing activity were Mazovia, Silesia and Greater Poland, which accounted for 17.1%, 15.7% and 14.8% of the total take-up, respectively.
New lease agreements accounted for 60% of the total take-up, followed by renewals (22%), BTS leases (14%) and expansions (5%). 2021 saw an increased number of shorter leases of up to one year with approximately 437,500 sqm transacted.
E-commerce accounted for a rapidly growing proportion of leasing activity. 2021 also witnessed an increased demand reported by 3PL operators, courier companies, e-retailers and light manufacturing.
Last year’s largest transactions included Panattoni’s completion of a 146,000 sqm BTS facility for Zalando in Bydgoszcz, a 109,000 sqm BTS warehouse for DHL Supply Chain in Panattoni Park Poznań XI and a 104,400 sqm BTS scheme in Hillwood Bydgoszcz for Zalando.
The overall vacancy rate stood at 3.7% at the end of Q4 2021, down by 3.2 pp year-on-year. Vacant stock comprised 877,300 sqm in existing warehouses and 2,152,200 sqm in buildings under construction. The highest vacancy rates were in Upper Silesia (7.8%), Lubelskie (6.2%) and Mazovia (4.2%), while Białystok, Olsztyn and Lesser Poland reported limited or no vacant warehouse space at all.
The total investment volume in the warehouse and industrial sector in 2021 was at a record high and amounted to nearly EUR 3 billion, up by 8% in comparison to the previous year. With strong investor demand for industrial properties, especially those let to e-commerce tenants, yields compressed throughout 2021.
FORECAST
“It’s hard to assess the impact of Russia’s invasion of Ukraine on the Polish warehouse market. We are seeing increased demand for warehouse space, but disruptions to supplies of construction materials, including steel, are likely to become even more serious, leading to longer delivery times for new warehouse projects. Some tenants are already experiencing challenges, with rising fuel prices and the expensive euro impacting their operations,” says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.
The Polish industrial and warehouse market is expected to maintain its growth momentum in 2022, with its total stock anticipated to reach 30 million sqm. In addition to the big five (Mazovia, Upper Silesia, Central Poland, Lower Silesia and Greater Poland), other well-connected locations will also experience faster rates of growth, such as Western Poland, particularly Lubuskie, Western Pomerania and Kuyavia-Pomerania. Tricity is also gaining in importance, and so are other regions. The total stock in Podlaskie, Subcarpathia, Świętokrzyskie and Lubelskie amounts to close to 800,000 sqm of warehouse space.
“Development activity is expected to remain relatively robust, driven by strong demand reported by 3PL operators, parcel delivery companies and retailers on the back of the continued expansion of e-commerce. Looking ahead, warehouse tenants and developers will be increasingly motivated to implement ESG solutions and advanced technologies by the rising prices of building materials and warehouse operation costs,” says Agnieszka Giermakowska, Research & Advisory Director, Newmark Polska.
