Demand for warehouses at 3.15 million sqm and new supply at 1.14 million sqm set new H1 records for the industrial market. Poland registers Europe’s second-highest developer activity with over three million sqm under construction. JLL summarised Poland’s industrial market for H1 2021.
Demand – new records as Poznań comes to the fore
"The Polish industrial market is continuing its high growth rate and is setting new demand records. In the first half of 2021 companies leased 3.15 million sqm, over 40% more than in the same period of 2020. Net take-up, including new leases and expansions, reached 2.3 million sqm – the fourth result in Europe after Germany, UK, and the Netherlands. Interestingly, the average H1 increase in new take-up for Poland was 77% above the 5-year average. In Europe as a whole, this number was 44%", says Tomasz Mika, Head of Industrial Leasing in Poland, JLL.
The ‘Big Five’ markets of Poznań, Upper Silesia, Wrocław, Warsaw and Central Poland accounted for 77% of the newly leased space in the first six months of 2021. Poznań set a spectacular industrial take-up record with 500,000 sqm of new leases and gross take-up of 626,000 sqm. The mature markets outside the ‘Big Five’ – Tri-City, Szczecin, Lubuskie, Kraków and Kujawy – also performed well. Emerging locations were less active, with the best result recorded around Rzeszów (37,000 sqm).
The continued growth of the e-commerce sector is reflected in the interest shown in warehousing space. Logistics operators and couriers (38%) and retail chains (33%) accounted for over 70% of net take-up in the first half of the year – these sectors accounted for 14 of this year's largest new leases totalling an impressive 840,000 sqm. The largest deal was signed by DHL for Zalando (109,000 sqm.). Manufacturing companies were also very active, accounting for 24% of new leases.
Supply – a record 1.14 million sqm. comes onto the market
"The first half of the year was also record-breaking in terms of construction in the pipeline. From January to the end of June, more than 1.14 million sqm was delivered to the market – another record. As a result, the total modern industrial stock in Poland was 21.8 million sqm, maintaining the country’s sixth position in the European Union in terms of market scale", comments Maciej Kotowski, Senior Research Analyst, JLL.
Upper Silesia and Warsaw accounted for most of the new supply (a total of nearly 500,000 sqm). Construction activity remains at a very high level.
"Supply under construction exceeded 3 million sqm for the first time in Poland’s industrial market. Poland currently ranks second in Europe, after Germany, in terms of development activity. Confidence and optimism can also be seen in the share of speculatively built space – approximately 40% of the warehouses under construction are not secured by lease agreements", explains Tomasz Mika, Head of Industrial Leasing in Poland, JLL.
At the end of June, the majority of new warehousing space, totalling more than 2.5 million sqm was under construction in Poznań, Upper Silesia, Wrocław, Lubuskie Voivoidenship, Warsaw and Central Poland. Interestingly, as much as 400,000 sqm will be delivered in Tri-City, Szczecin, and Bydgoszcz.
Stable rents and falling vacancy rates
Rental rates remain stable. Urban locations continue to be the most expensive, with base rents in Warsaw ranging between €4.2 and €5.25 sqm/month. The most attractive financial conditions are offered by big-box facilities located in Central Poland (EUR 2.6-3.5 sqm/month).
Currently, 6.7% of the existing industrial space in Poland remains vacant.
The second best H1 investment performance in the industrial market’s history
"There is still a great deal of investor interest in Poland’s industrial market. From January to the end of June facilities worth a total of €855 million changed hands. This is the second-best H1 result in the market’s history. An interesting phenomenon and a good prognosis for further development of the sector is the emergence of new players who have not previously had any industrial properties in their portfolios", comments Sławomir Jędrzejewski, Head of Industrial Investment, JLL.
The largest industrial investment transaction in the first half of the year was the acquisition of a portfolio of four logistics parks in Wrocław, Poznań, Tri-City and Upper Silesia by the Ares Group from Panattoni. Also of note was the sale of a portfolio of five projects by AEW to a fund created by Reino Capital, IO Asset Management and Grosvenor Group.
Yields for prime multi-let warehouse properties with an average 5-year lease length range from 5.25% - 5.5%. Despite the temporary lack of specific examples, a progressive compression can be observed, even down to around 4.5% in the case of ongoing negotiations in the Warsaw City market. Rates for parks with long leases (10 years) were below 4.5%, while exceptional projects leased for more than 15 years hit 4% with potential for further compression.
