News Article industrial nearshoring Newmark PAIH Poland warehouse
by Property Forum | Industrial

Real estate advisory firms and the Polish Investment and Trade Agency (PAIH) expect Poland to relocate substantial manufacturing operations from Asia. Many nearshoring projects have already been launched, but such processes are very time-consuming and require complex preparations.

Due to the changing geopolitical environment and the need to ensure fast and efficient deliveries, businesses look at several key factors when choosing sites for new factories and warehouses. Location, access to main transport corridors and intermodality are among the top selection criteria.

Jakub Kurek, Head of Industrial and Warehouse at Newmark Polska, says: “In the wake of pandemic-induced supply chain issues which have been further exacerbated by the war in Ukraine, companies are expanding their manufacturing and warehousing capabilities across Europe, with Poland being one of the main beneficiaries of their decisions. We are also receiving more and more inquiries from companies seeking to relocate production from Asia to Poland.”

More variables in global economies

Investors need to consider several other variables in addition to base criteria such as access to a skilled workforce, infrastructure and labour costs, cultural compatibility and a stable economy, which are crucial competitive factors for cities, technological parks and industrial zones.

According to Karol Rybaczuk, Global Strategy Consultant at Newmark, global trends impacting foreign direct investment in the world include more investment by Asian companies aiming to produce in Europe.

“This is exemplified by the EV sector and newly built and planned electric vehicle battery factories, including those in Hungary (Samsung, CATL, EVE, Sunwoda), Slovakia (Gotion, together with InoBat) and in France (ProLogium). And this is only the beginning. Next to each factory, there will be a supplier park with component manufacturing plants, and eventually, facilities for recycling used batteries.” Another notable change is the development of the European value chain in the semiconductor industry and Intel’s multimillion investments in Europe in response to trade tensions between the US and China.

“The new situation is causing investors to analyze risks more thoroughly, delaying decision-making, and putting more projects on hold. This has resulted in the increased importance of advisory in searching for new locations. In such a multidimensional process, experience and external expertise will help make the right choice,” explains Rybaczuk.

Poland: location, workforce and modern infrastructure

The transfer of production from Asia closer to consumer markets has long been said to be a likely important driver of the Polish economy and the industrial and warehouse market. According to a Reuters report “A generational shift in sourcing”, Poland is expected to be one of the key beneficiaries of nearshoring and friendshoring which are likely to gain further momentum in the coming years.

Robert Zając, an expert from the Polish Investment and Trade Agency, says: “Poland is internationally known as a stable and trustworthy partner, valued by investors looking for potential business locations mainly for its strategic geographical position, skilled labour and rapid economic growth. Poland also stands out with its strong road and railway network and further infrastructure improvements. It is worth emphasising that the country’s commercial network of connections is being continually adapted to market expectations. For example, growing economic cooperation between Poland and South Korea has resulted in an increase in direct flights between the two countries; in November this year a new connection was opened between Seoul and Lower Silesia, the region with the largest concentration of Korean investments; and the opening of a new sea freight line between Seoul and the Polish port of Gdansk are all examples this trend.”

Significant changes taking place in the Polish labour market are also an important incentive for overseas investors. Poland is no longer competing with other countries exclusively on labour costs. New investments increasingly require high-quality talent and skill honing, especially for opening R&D centres in Poland.

Developers: land banks and experience

According to PAIH experts, given the pace of Poland’s economic growth in recent years, overseas investors are likely to see their stereotypical image of the country challenged during their first visits. “Poland has grown to become one of the largest EU economies. Modern Polish cities have world-class business centres, and the largest recent investments in Poland align with global trends,” says Robert Zając, an expert from the Polish Investment and Trade Agency.

Poland’s road infrastructure and modern industrial and warehouse stock ensure an excellent business environment for manufacturers. “The Polish warehouse market has recently surpassed the 31 million sqm mark and is on track to set new records. Compared with the rest of Europe, Poland continues to offer competitive warehouse rents and energy prices which are critical in manufacturing. And Poland’s seaports, which are being continually expanded, are emerging as major competitors to Rotterdam and Hamburg,” says Jakub Kurek.

Kurek says Poland has great strengths and is likely to see more relocations in the coming years, “Manufacturers continue to expand into the Polish industrial and warehouse market, accounting for about 20 per cent of total Polish take-up in the Q3 2023. Headline deals include Intel’s project near Wrocław and a lease for nearly 40,000 sqm of production space for an automotive company in Upper Silesia, brokered by Newmark Polska advisers for an automotive company,” concludes Jakub Kurek, Head of Industrial and Warehouse at Newmark Polska.