Supply: speculative development still popular

In Q2 2023, new warehouse supply reached almost 710,000 sqm, 35% of which was available for lease. This resulted in a further increase of vacant space, reaching a total of 2.03 million sqm.

“The vacancy rate hit 7.6%, an increase of 3.4 pp y-o-y and 0.3 pp q-o-q, the highest level since December 2020. As of the end of Q2 2023, the total warehouse stock in Poland stood at 30.66 million sqm, up by 19% y-o-y”, says Adrian Semaan, Senior Research Consultant, Industrial & Logistics Agency, Cushman & Wakefield.

In Q2, the construction of 670,000 sqm of warehouse space was commenced, with the majority of these projects (480,000 sqm) being built speculatively.

“At the end of June 2023, a total of 2.1 million sqm of warehouse space was under construction, 61% of which was available for lease - mainly in Mazovia (327,000 sqm), Łódzkie (240,000 sqm) and Lower Silesia (227,000 sqm). Development activity is likely to be driven by higher rents incentivizing investors to launch new industrial projects. The growing volume of warehouse space has seen Poland join the three largest industrial markets of the European Union with more than 30 million sqm of warehouse stock each. Poland has overtaken the Netherlands, claiming third place behind Germany and France”, adds Damian Kołata, Partner, Head of Industrial & Logistics Agency Poland, Head of E-Commerce CEE, Cushman & Wakefield.

Demand: leasing activity lower than a year ago but stable compared to q1 2023

Industrial gross take-up reached 1.04 million sqm in the second quarter of 2023 with 66% leased under new transactions and the remaining 34% renegotiated. The largest transactions signed in Q2 were concluded by BestSecret with their expansion in the Lubuskie region (46,000 sqm), a logistics provider in the Lower Silesia region (43,000 sqm) and the Fortaco Group as they signed an agreement for a BTS project in Silesia (35,000 sqm).

At the end of the first half of the year, there was more than 2.2 million sqm of leased warehouse space (-39% y/y) and net take-up was at 1.3 million sqm (-49% y/y).

“The decrease in leasing volumes has been accompanied by a comparable downturn in development activity, which should keep the industrial market relatively stable in the short term. The outlook for demand in the medium term, however, remains optimistic thanks to the anticipated recovery in consumer sentiment, further growth in the logistics industry servicing e-commerce; and the increasing trend towards nearshoring”, says Damian Kołata, Partner, Head of Industrial & Logistics Agency Poland, Head of E-Commerce CEE, Cushman & Wakefield.

Rents remain stable in most regional markets

Warehouse rents remained stable in most regional markets in Q2 2023. Only for Katowice and Łódź was there noted prime rent growth by 8% q-o-q. Despite the fact that general construction costs decreased in 2023, warehouse rents are unlikely to change significantly over the near-term, as a result of the continued higher costs of development financing.

Headline rents for big-box projects are in the range of €3.60-6.50/sqm/month, however, rents for SBU/City Logistics projects are higher - €5.00-7.50/sqm/month. With financial incentives such as rent-free periods or space adaptation offered to tenants, effective rents are only lower than headline rental rates by a maximum of 15-20%.