Polish warehouse market rebounding
According to CBRE, the global property adviser, the Polish warehouse market is on the path to recovery in 2012, based on Q1 2012 new deliveries volume of 215,000 sq m, which totals 60% of all 2011 completions.
“We can see the Polish warehouse and logistics market gradually picking up following weaker 2010 and 2011. This is due to Poland’s strong underlying fundamentals with GDP growth of 4.3% in 2011 and a forecasted 2.6% in 2012. Also, intense infrastructure investment prior to the UEFA CUP 2012 has had a positive side effect of creating many new locations desired by warehouse developers”, said Patrick Kurowski, Director, Industrial & Logistics at CBRE Poland.
Supply of new warehouse space slowly regaining dynamics
The entire warehouse stock in Poland now amounts to nearly 7.2 million sq m. In Q1 2012 completions reached about 215,000 sq m of new warehouse space, which is approximately 60% of completions for the entire 2011.
Limited new supply in 2010 and 2011 had a positive impact on the vacancy rate. The market has slowly started to absorb vacant space, but with over 0.8 million sq m ready to be leased (about 11.4%), it will be a gradual process. Out of the total 228,600 sq m new space under construction, about 70% (ca. 156,000 sq m) has been preleased. In the future, CBRE does not expect vacancy rates to increase significantly in Poland. In 2012-2013, the current vacant space should gradually become occupied.
The supply of modern industrial properties in Poland is controlled by a limited number of developers. The largest are Prologis, Panattoni and Segro. There are also a few newcomers, like Point Park Properties and Goodman, who have already started their operations in Poland.
Leasing activity growing
The total leasing activity in Q1 2012 amounted to about 478,000 sq m, which is a 10% increase in comparison to the previous quarter, and over twice the amount of space newly delivered in the same quarter. In terms of the take-up structure in Q1 2012, the share of new deals amounted to over 68%, renegotiations to about 25%, while expansions attained 7% of total leasing activity.
One of the largest new leasing deals was the contract signed recently (April ’12) for 33,800 sq m at Prologis Park Dąbrowa with DHL Exel Supply Chain, part of the world’s leading mail and logistics group. Prologis Park Dąbrowa is a modern distribution centre consisting of ten warehouses and office buildings totalling 144,000 sq m, located in the Silesia region, with excellent road, rail and air connections to southern Poland and neighbouring countries.
CBRE’s analysis of occupiers shows that demand for warehouse space has been generated by companies operating in sectors less vulnerable to the overall economic situation, such as FMCG, food, pharmaceuticals, etc. Logistic operators, retailers and manufacturers still remain the major tenants, however. Tapping into road improvements in Poland as well as introducing internal optimization, many of them decided to centralize a number of warehouses up till now located across the country. CBRE also expects new entries to the market based on the level of foreign direct investment in many manufacturing segments.
Regional markets increasingly popular thanks to infrastructure investments
Sector I, up to 15 km away from the centre of Warsaw, offers 616,000 sq m of commercial warehouse and logistics projects. The tenants’ profiles within this sector show a predominance of high value consumer goods, producers and distributors, as well as local market suppliers. The majority of new occupiers are high value product distributors, such as pharmaceuticals, manufacturing related goods, food and beverage and automotive parts distributors.
Sector II, between 15 and 80 km away from the centre of Warsaw, includes large scale distribution centres targeted at large-scale logistics operators. It has a total of around 2.06 million sq m.
Around 50% of existing space in the whole Warsaw region (Sector I and II) is not more than 5 years old. The amount of warehouse space currently under construction totals nearly 80,000 sq m in four projects located in Warsaw and the region (Sector I and II).
Next to Warsaw, four main logistics hubs have emerged thus far: Silesia conglomeration (an estimated 1,340,000 sq m of warehouse space, with additional development of around 430,000 sq m planned), central Poland (17 logistics parks with a total area of 940,000 sq m and development of another 600,000 sq m planned), Poznań region (888,000 sq m in 20 parks, with around 50,000 sq m under construction in three projects, and development of another 740,000 sq m planned), and Wrocław region (17 logistics parks with a total area of 755,000 sq m operating, with development of another 840,000 sq m planned, and two projects of 17,000 sq m combined currently under construction). Other emerging warehouse and logistics markets include the Kraków, North with Tri-City, Szczecin and East regions.
“In the last few years, industrial developers have stopped focusing only on Warsaw and have expanded to other metropolitan areas in Poland, basically following the arrival and the rapid expansion of retail chains in these markets. The highways planned and delivered throughout the country have largely determined the location of logistics hubs in Poland”, explained Patrick Kurowski, Director, Industrial & Logistics at CBRE Poland.
According to CBRE data, the vacancy rate in warehouses and logistics centres in Poland was 11.4% at the end of Q1 2012. In Sector I, the vacancy rate amounts to 13% and is constantly decreasing. The vacancy rate in Sector II in Q1 2012 amounted to over 19%. In Sector III, it fell slightly compared to previous quarters and currently stands at 7.6%. The lowest vacancy rates are in Silesia (3.3%), Poznań (5.6%), Wrocław (7.5%) and Kraków (8.5%).
Rents still under downward pressure
Currently prime rents in Warsaw (Sector I) range from EUR 4.50 to EUR 5.00/sq m/month. Prime rents in the Warsaw region (Sector II) range between EUR 2.80 and EUR 3.50 /sq m/month. In Sector III, prime rents range between EUR 3.00 and EUR 3.50 /sq m/month. According to CBRE, in the next quarters rents should remain stable, still under downward pressure, however, especially in regions with relatively high vacancy rates (Warsaw region Sector II – 19.2%, Szczecin – 19.8%).
Warehouse investment market emerging, with logistics yields higher than office and retail
The industrial investment market in Poland is still at an early stage of development, with the number of warehouse transactions generally low. In 2010, nine transactions were closed, totalling over EUR 240 million. In 2011, six transactions were closed with a total value of over
EUR 130 million. In the first quarter of 2012, one investment transaction was recorded in the warehouse sector – Hines purchased a portfolio of Prologis projects for EUR 96 million.
In general, investment funds consider the industrial property sector to be an attractive option to diversify their portfolios. Warehouses could become more popular, particularly in view of the UEFA CUP in 2012, with new highways developed between major cities in Poland creating attractive locations for new investments.
Logistics yields in Poland remain slightly higher than office and retail yields. Prime yields for the best warehouse buildings have recently shrunk to the current level of about 7.75% for large lot sizes purchased by large international investment funds.
Leave a Reply
€ Exchange Rates