In a video interview recorded at CEE Property Forum in Vienna, Martin Polák, Managing Director CEE at GARBE Industrial Real Estate, shares his outlook for the year ahead. He reflects on market conditions, leasing dynamics, financing availability and the company’s priorities across Central and Eastern Europe. His perspective offers a grounded view on how occupiers are behaving and why the logistics sector may be entering a more active phase than many expect.
What are your expectations for the logistics market next year? Are you considering any new countries or opportunities?
I think we just want to focus on what we have, where we are, and on the pipeline and other plans that we have. So that’s Poland, the Czech Republic, Slovakia and Romania. We want to continue building our position in the Polish and Romanian markets, and continue building on the track record we already have in the Czechoslovak markets as a developer.
We had a very active year on the capital market. We created a lot of JVs, we disposed of a lot of assets, and we have nothing to sell next year. So we’re going to be focusing more on development and on leasing. Many of our sites were permitted recently, and we are in talks with potential occupiers and potential tenants, and that’s where our focus is going to be.
We will also be more active with the banks. Across our markets and across the countries where we operate, we don’t see any issue with the willingness to finance logistics. Everything seems to be pretty stable for us for next year, and we also expect that, slowly but surely, the leasing demand will come back.
What are the factors that are feeding the logistics market right now? Some players expect the area to slow down — what is your outlook?
I think many people, when they make these statements, are referring to what is already happening or has happened. We’ve seen a slowdown in leasing activity over the last three to four quarters, and I think that’s behind us. I think the bottom was somewhere in the third quarter this year, and I think it’s going to pick up.
Not every country will pick up in the same way. Slowly, tenants and occupiers are being pushed to make moves and make decisions. It’s similar to real estate in general: if there have been difficult times for real estate investors or developers, many take the strategy of doing nothing and waiting, and with tenants and occupiers, it’s the same. When there is uncertainty or a difficult geopolitical situation, occupiers also prefer doing nothing. But they eventually come to the point where they have to make changes.
Logistics is not about the status quo or doing the same thing for as long as possible. It’s about seeking more efficient operations, looking for changes and opportunities. Not everyone in real estate realises that occupiers have to change. They have to change their business models, they have to change geographies, they have to relocate, they have to move. They have to expand, they enter new tenders, they have to grow their business, and they are active.
Temporarily, they might be affected by changes in the market and in their businesses, which makes them unable to make decisions for a certain period of time. But they will always eventually be forced to make a move.
Do you expect getting financing for new projects to be easier or harder next year, and why so?
I think we proved our business model to the banks where we have operated longer. From the very beginning, we said we were going to develop, we were going to finance the development with them, and then we were going to sell. And then we would see whether they would be able to stay on the asset or not, depending on the new buyer.
All our financing partners stayed on the assets after our disposals, after the exit. Basically, we have almost no debt at the moment, and that’s for the Central European countries. All the financing and potential financing partners and banks are willing to look at new projects with us.
So I think that with our track record, with the understanding of our business model, and with them seeing our leasing performance, banks are becoming more comfortable. And I think the numbers have stabilised a bit as well. On the cost side, we see that construction costs have also stabilised. So the spread between exit yield and yield on cost is more stable and proven by a lot of comparables and a lot of transactions on the market. And banks basically continue to be comfortable with logistics.
