Piotr Krawczyk, Director Industrial & Logistics at Walter Herz
The demand for warehouses has increased by a quarter in recent months. Tenants are mostly interested in Greater Poland and Mazovia Provinces. The market is growing on average by 16 per cent per year, while as much as 2.5 million sq m. of warehouse space is under construction.
Changes caused by the pandemic resulted, among others, in a record high demand for warehouse space and apartments in Poland. In the first three months of this year, lease transactions in the warehouse sector amounted to 1.6 million sq m. of space, which brought a new quarterly record in the history of our market. The recorded outcome was as much as 25 per cent higher than the average quarterly volume of lease registered in 2020.
The importance of logistics and storing is increasing in our country as the e-commerce market keeps developing. Last year, there was over 30 per cent increase in sales. Therefore, the natural consequence is the growing demand for warehouses, reported mainly by logistics operators and delivery services, which from January to March 2021, generated almost half of the demand for warehouse space.
In the first quarter of this year, the most popular warehouses were located in Greater Poland Province, where 380 thousand sq m. of space were leased and in Mazovia Province, with transactions concluded for 325 thousand sq m. of space. Also worth mentioning is the very high level of lease in Kuyavia-Pomerania Province, where contracts for nearly 80 thousand sq m. of warehouse space were signed, especially when compared with the amount of local supply.
Warehouses vs. apartments
Apart from the warehouse market, the housing sector is the largest beneficiary of the recent reshuffle on the market. The beginning of this year also brought a quarterly sales record on the primary residential market. However, the year-on-year growth was much lower than in the case of warehouses, as it was only a few per cent. The supply in the residential segment also increased to a similar extent. The production of apartments does not keep up with the high demand, and the market offer is currently the smallest in seven years.
Meanwhile, in terms of supply, the warehouse market is in the phase of exceptionally dynamic development. In the first quarter of this year, 765 thousand sq m warehouse space was delivered. The largest amount, nearly one-third, went on offer in Silesia Province. Mazovia Province gained almost 150 thousand sq m of new space, and Pomerania Province got 137 thousand sq m. In the remaining provinces, the new supply did not exceed 100 thousand sq m.
Almost 2.5 million sq m. of warehouse space is currently under construction in Poland. This is one of the highest results recorded on our market. Almost half of these spaces are implemented in projects that started in the first three months of this year.
Warehouse facilities in Greater Poland, Lodzkie and Mazovia Provinces are growing the fastest
Developers are particularly active in Greater Poland Province, where 430 thousand sq m. of warehouse space is under construction, in Lodzkie Province, where 411 thousand sq m. is being built, Mazovia Province, where 370 thousand sq m. is under construction, and Lubuskie Province with 295 thousand sq m. of space under construction.
In the last 5 years, the warehouse resources in our country have increased by over 120 per cent. Since 2016, the average annual increase in supply in the sector has amounted to over 16 per cent. At the end of Q1, 2021 warehouse stock in Poland reached nearly 21.5 million sq m. of space.
The largest market in the country remains Mazovia Province, which has over 5 million sq m. of space. There is also high warehouse supply in the following provinces: Silesia (3.9 million sq m.), Lodzkie (3.2 million sq m.), Lower Silesia (2.6 million sq m.) and Greater Poland (2.3 million sq m.). The potential of the remaining provinces does not exceed 1 million sq m. of warehouse space. In the upcoming months, this level will be exceeded by Pomerania Province, which offers up to 950 thousand sq m. of space.
In 2020, the warehouse vacancy rate in the country dropped to 6.6 per cent. Asking rents for most big box warehouse facilities range from EUR 2.75 to 3.75/sq m. In the case of city warehouses, such as last mile and SBU, the rates offered are usually much higher, often around EUR 4/sq m., and in Warsaw they can even exceed EUR 5/sq m.
Forecasts for the warehouse sector in the country are very optimistic. High market absorption and investment activity of developers herald the development of this segment of the real estate market in the upcoming years.
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About Walter Herz
Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For eight years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects.
In addition to its headquarters in Warsaw, the company operates in Krakow, Wrocław, the Tri-City and Łódź. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.