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Occupier and developer activity sets a new high on the polish industrial market

Joanna Sinkiewicz, Partner, Head of Industrial and Logistics Agency, Cushman & Wakefield

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’s report “MARKETBEAT: Polish Industrial Market in H1 2017”.

At the end of June 2017, Poland’s total warehouse stock stood at nearly 11.8 million sq m. Most of the 707,000 sq m supply was delivered in Bydgoszcz-Toruń (113,000 sq m), Poznań (112,000 sq m) and Central Poland (91,000 sq m). There is currently 1,665,000 sq m under construction, of which 77 pct 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’s suburbs (approximately 375,000 sq m), Szczecin (293,000 sq m) and Upper Silesia (282,000 sq m).

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 Poznań (8.3 pct) and Wrocław (7.3 pct), and decreased again in Warsaw’s inner city (6.9%) and its suburbs (5.7 pct). Robust developer activity pushed vacancies up in Krakow (12.7 pct or 38,000 sq m), Szczecin (8.8 pct or 19,000 sq m) and Lublin (13.9 pct or 18,000 sq m). The lowest warehouse vacancy rate of 0.3 pct was in Central Poland.

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’s suburbs). New lease agreements accounted for 67 pct of the total leasing volume with lease renewals and expansions making up 24% and 9 pct, respectively. Take-up was largely driven by logistics operators (32 pct), retailers (20 pct), light manufacturing (10 pct), e-commerce (9 pct), the automotive sector (7 pct) and household appliances (6 pct).

Headline rents remained flat on the Polish industrial market. At the end of June 2017, the highest were in Warsaw’s inner city (EUR 4.00–5.25/sq m/month) and Krakow (EUR 3.50–4.50/sq m/month) while the lowest were in Central Poland (EUR 2.40–3.60/sq m/month) and Warsaw’s suburbs (EUR 2.50–3.60/sq m/month). Effective rents tend to be lower due to financial incentives conceded to tenants and range between EUR 1.90–3.20/sq m/month. Higher effective rents are in Warsaw’s inner city (EUR 3.50–4.60/sq m/month) and Krakow (approximately EUR 2.80–3.60/sq m/month).

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