According to the latest report from Cushman & Wakefield, 2023 saw the second-highest supply level and the third-highest take-up figure in the history of the Polish industrial market. The sector continues to enjoy strong fundamentals supporting its steady growth despite the rapidly changing macroeconomic environment.
Demand: Leasing activity gained momentum in h2 2023
Last year’s challenging macroeconomic situation acted as a drag on warehouse demand, especially when compared to the peak years of 2021-2022, says the report from Cushman & Wakefield. Despite this, 2023 was one of the best-performing years in the market’s history.
"Last year’s leasing activity reached nearly 5.6 million sqm - the third highest result since records began. Net take-up comprising new leases and expansions accounted for 60% of the total leasing volume while renewals made up the remaining 40%. Leasing activity accelerated particularly in the second half of 2023, which is positive news and a sign of improving occupier sentiment. Nearly 3.4 million sqm was transacted between July and December, up by more than 50% over the previous six months", comments Damian Kołata, Partner, Head of Industrial & Logistics Agency Poland, Head of E-Commerce CEE, Cushman & Wakefield.
By sector, strong demand continued to come from logistics and courier companies which accounted for 35% of all deals in 2023. Other leading growth sectors were retail including e-retailers, which generated approximately 25% of total take-up, and manufacturing and automotive with a similar share in the leasing volume.
"In times of global turmoil, forecasts and assumptions of any kind are fraught with considerable uncertainty. The industrial sector has been expanding at a double-digit growth rate for the last 10 years, but its growth is likely to tail off in the next decade. It is worth underscoring, however, that it continues to grow, underpinned by Poland’s strong economic fundamentals and global trends of e-commerce expansion, supply chain reorganisation and energy transition, which bodes well for the future", adds Damian Kołata.
Supply: Warehouse availability improved in 2023
As of December 2023, Poland’s total warehouse stock stood at 31.71 million sqm, up by 13% year-on-year.
"New supply for the fourth quarter reached 580,000 sqm, bringing last year’s total to 3.7 million sqm - the second best result in the history of the industrial sector in Poland. High levels of new completions improved warehouse availability which was 2.3 million sqm at the end of last year, double that posted at the same time a year ago", comments Adrian Semaan, Senior Research Consultant, Cushman & Wakefield.
According to data from Cushman & Wakefield, total supply for 2021-2023 reached 11.2 million sqm, accounting for 35% of Poland’s total industrial stock. In addition, in the last quarter of 2023, construction works began on 822,000 sqm of new warehouse space, constituting a healthy level of development activity. At the end of December 2023, there was 2.8 million sqm under construction, of which 50% was in speculative projects.
"In 2024, Poland’s total warehouse stock is expected to surpass the 34 million sqm mark, while Warsaw - with nearly 7 million sqm of warehouse space - will strengthen its position as the leading market and increase its lead over the runner-up Silesia by 20%. Lower Silesia and Łódź are likely to have 5 million sqm each in the near future", adds Adrian Semaan.
Rental and vacancy rates hold firm
Poland’s overall industrial vacancy rate, which had been on an upward trajectory for months, edged down by 0.4 pp over the quarter to 7.4%. Warehouse availability remains at a stable, healthy level in the Warsaw and Poznań regions. Markets experiencing temporary oversupply are Łódzkie, whose vacancy fell in recent months but remains above 10%, and Wrocław, where there is a significant volume of speculative construction underway. Silesia saw its vacancy rate fall to 6.1%, with the lowest rates recorded in Lesser Poland (2.2%), Pomerania (1.7%) and Subcarpathia (1.7%).
Warehouse rents held firm during the fourth quarter of 2023, with developers rather unwilling to negotiate rental rates due to high financing costs. Slight temporary rental corrections are, however, likely in some markets where there is strong competition between developers.
"The still healthy supply-demand balance keeps rental rates stable, further aided by easing inflationary pressure and more predictable construction costs. It is worth noting that developers curtailed speculative activity during the second half of the year, in which they commenced construction work on 580,000 sq m of projects without pre-lets - a 40% decrease compared with the first six months. This is expected to push the average vacancy rate down by the end of this year", concludes Damian Kołata.
