According to the “Occupier Insight – Industrial and Warehouse Market in Poland H1 2023”, a report prepared by real estate advisory firm Newmark Polska, in the second quarter of 2023, the total warehouse and industrial stock in Poland surpassed 30 million sqm. Both tenants and developers exhibited caution in decision-making, which resulted in a decline in leasing activity and construction volumes. Meanwhile, warehouse availability in existing facilities increased.
At the end of the second quarter of 2023, Poland’s total warehouse and industrial stock surpassed the 30 million sqm mark - it stood at 30.6 million sqm, an increase of 17.1% on the same time in 2022. New supply for the first six months of the year amounted to almost 2.6 million sqm; of that total, more than 1.9 million sqm, or over 73%, was delivered in the first quarter of 2023. The second quarter of 2023 saw 692,200 sqm come on stream, down by almost 64% quarter-on-quarter and by 40% year-on-year.
“Developers continue to exhibit caution with regard to commencing new warehouse projects. At the end of June 2023, the volume of warehouse and industrial space under construction amounted to 2.13 million sqm, a similar level to that of the previous quarter (-1.3%) but down by over 51% year-on-year,” says Agnieszka Giermakowska, Research & Advisory Director, ESG Lead, Newmark Polska. “With financing costs remaining high, developers will only begin construction once they pre-let at least 50% of the total floorspace of a building and are able to attract tenants before completing a project,” added the expert.
Leasing activity declined for another quarter in a row. Gross take-up for the period April-June 2023 reached 1.04 million sqm, down by more than 13% quarter-on-quarter and by 54% year-on-year. The first half of 2023 saw more than 2.2 million sqm leased, a decrease of 41.5% year-on-year.
“Tenants take longer to make lease decisions due to rising overall warehouse occupancy costs, including service charges, and the need to reconfigure supply chains. Another growing trend is towards consolidation of several locations into a single one closer to the consumer market in an effort to optimize operating costs and reduce carbon footprint,” says Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.
The structure of demand in the first half of 2023 was dominated by new leases (50.5%). Renegotiations accounted for 39.5% of the total take-up, with expansions making up the remaining 10%. It is also worth noting that a total of 113,800 sqm was transacted in that period under shorter leases of up to one year.
The largest transactions of the six months to end-June 2023 included a lease for 56,000 sqm in Panattoni Park Szczecin I renewed by Tyco Electronics Polska (Q1), Shein’s deal for 55,000 sqm in Panattoni Park Wrocław Logistics South Hub (Q1), a 46,000 sqm BTS facility to be delivered for BestSecret by Panattoni in Lubuskie (Q2) and a new lease for 43,300 sqm in 7R Park Wrocław West II signed by a confidential tenant (Q2).
At the end of June 2023, the overall vacancy rate stood at 6.7%, up by 0.3 pp over the quarter and 3.4 pp year-on-year. Vacant stock comprised 2.06 million sqm in existing buildings and 1.3 million sqm in buildings under construction. Protracted decision-making among tenants pushed the average vacancy rate in schemes under construction up to 61% from 48% in the second quarter of 2022.
At the end of the second quarter of 2023, the highest warehouse rents were in Warsaw (zone 1). Looking to the future, rental rates are likely to remain under upward pressure, especially in warehouses meeting the highest standards in both functionality and ESG reporting.
