The warehouse sector in the CEE region, although experiencing temporary problems, retains its attractiveness. The directions of its further development may vary depending on the location - this is how the panel discussion „Full speed ahead – What's driving logistics developments?” could be summarised in brief. It was a part of the CEE Property Forum 2023 conference, which was held in September in Vienna by Property Forum.
soAs the panel moderator Przemysław Piętak, Supply Chain Advisory Director Poland & CEE at CBRE, pointed out at the outset, the situation in the various warehousing markets in the CEE countries is not uniform. Ivan Pastier, Senior Business Development Manager at CTP ensured that the Slovakian market is still performing very well and attracting new tenants. „The demand is strong. The nearshoring is not just a buzzword – it's a real thing in Slovakia. We see a lot of companies coming from China or other continents because COVID exposed the vulnerabilities in supply chains and companies would like to be sure it will not happen again. We are starting the speculative development in Slovakia at the moment. We will finish the constructions in six months and the complex is already fully leased”, said Pastier.
However, other countries in the region are unfortunately facing more or less signs of a slowdown. Grzegorz Chmielak, Head of Valuation & Capital Markets at AXI IMMO Group cited data clearly showing lower activity from tenants, developers and investors in Poland. From January to June, the total volume of lease transactions amounted to 2.24 million sqm. (-39% year-on-year). Lower occupier activity was reflected in development activity. Despite completing 2.6 million sqm. (+9% y-o-y) and an increase in total sector stock to 30.6 million sqm in the first half of the year, only 2.13 million sqm is under construction. (-50% y-o-y, figures at the end of June this year). The relatively high new supply in the first months of the year boosted the availability of vacant space, which stood at 6.7% at the end of June 2023. The first half of 2023 also saw a significant slowdown in the warehouse investment market in Poland. Transaction volumes fell by more than 30% compared to the first half of 2022, amounting to around €440 million (with a 54% share of the warehouse sector).
James Fitzgerald, Director, Head of Industrial Agency at iO Partners commented: „We were spoiled in the last three or four years when it came to the industrial sector. It shouldn't be easy to raise such cheap money, it shouldn't be easy to just sign the tenants with so little effort. I think we're now getting back to a period of stabilization and value-added things like production. I believe it will be one of the main directions of the market development in the coming years”. According to Fitzgerald, the downturn in the larger markets may be an opportunity for smaller players who are only just putting their mark on the region's warehousing map. „I'm really interested in the Croatia. I know it's a very small market at the moment. But in the last 12 months, there have been some significant deals done there, particularly by German logistics companies. They've realized that there's a port there, that there is a euro, and it's in the Schengen zone now. And the infrastructure is amazing. I firmly believe that Southeastern Europe will be a region to do business pretty soon”, he added.
What other factors are likely to have a significant impact on the dynamics of the markets in the near future? In the opinion of Peter Solt, Partner, Head of Real Estate Austria at Taylor Wessing, skilful PR and cooperation with local communities will gain importance. „Nowadays, the warehouse is just a huge box with 20 people working inside, the rest are the machines. Such investments are not very attractive for the communities. You have to start proving to the local authorities and community that your project will fit in even before the stage of acquiring all the permissions. Running your PR properly during the whole development process will be more and more important”, he said.
According to Andreas Kozma, Founder & CEO of iREMS International AG, the proper data management and automation of the data gathering can be a factor that, in more difficult economic conditions, will determine the success of the warehouse project. „We're seeing that manual processing of the data, just with the Excel sheets, just with a few errors can be a source of serious problems in large-scale warehouse projects with tens of tenants. That actually could now become a differentiating factor, because the room for error today is becoming smaller and smaller”, said Kozma.
