Report: The situation in the investment land market in the warehouse and production sector in Poland

“Problems with obtaining financing, buying investment land only for specific BTS or pre-let projects and almost no speculative projects have resulted in a large increase in supply. Investment land is being offered both by private owners and developers. Nationally, the availability of good quality, legally regulated investment plots that are well prepared technically is quite high. Currently, the average price of land for industrial investment is PLN 130-160 per sqm” – says Renata Osiecka, Managing Partner AXI IMMO.

MARKET TRENDS

Consolidation of prices

There has been a progressive increase in supply in this segment since the crisis in 2008. The last few years have seen prices decline slowly, and we are now witnessing their consolidation. The average price per sqm. of land in locations deemed to be good for logistics operations ranges between PLN 130 and PLN 160 depending on the region. The price of land is a component of the cost of real estate development and is reflected in rents, which for a long time have been stable at a low level.

Purchase small plots for specific investments

Currently, we are not seeing large purchases of several dozen hectares. Developers are building projects specifically ordered by clients, and therefore on areas of 5 to 10 hectares. Individual clients who invest for their own use are also interested in the land up to 5 ha.

Better prepared

Most of the land is better prepared in legal and technical terms than a few years ago. In a situation of oversupply, the attractiveness of land is determined not only by its location, but also by its proper preparation. Private owners are facing competition from municipalities, economic zones and institutions, which in the economic downturn are tending to sell their real estate portfolio. It must be said that this applies to parcels up to 10 hectares; above this size and the situation is generally more difficult.

The conditions for the attractiveness of investment plots

A good location and communication links with the plot are necessary conditions for the sale of a plot for a warehouse and logistics project. Only land situated near major transportation hubs, along motorways and dual carriageways have the opportunity to be sold for production and warehouse investments. In addition, another requirement is for good access roads to main roads and to the plot. Today, land for investment, in addition to good price and being fully prepared, should also have an access plan. Without this, a plot has little chance of being sold.

WHERE IS THE HIGHEST AND LOWEST SUPPLY? OVERVIEW OF KEY REGIONS

“If we talk about the main warehouse and logistic regions in Poland high supply is in Wrocław, Poznan and Central Poland. The same situation is around Warsaw, second and third zone. Within the city boundaries, the supply is the lowest in the country. Problems include the use of land, the lack of local development plans for individual districts, forms of ownership often less preferred by buyers, i.e. freehold, and the general disapproval of the authorities to this type of investment in the capital” – comments Renata Osiecka, Managing Partner AXI IMMO.

Warsaw

Within the city boundaries, prices of land for warehouse and logistics projects are the highest in the country, even in industrial areas such as Targowek Przemysłowy, where the price per sqm. is about PLN 350-400 or in Okecie PLN 450-600.

A. Districts of Warsaw on the right bank of the Vistula and the surrounding area

This area has been a big disappointment for the market. Over the years of highest growth, large areas along the S8 highway – next to the Radzymin ring road – had no local zoning plans and it seems to have missed its moment. Today it is a location with high supply, but low interest among buyers due to weak demand from tenants. The location that was to compete with expensive Żerań has not been a success and will probably supply the end user market. The average rate per sqm. of land within a distance up to 25 km from Warsaw in the above area is around PLN 130-170, with actual transactions occurring at even PLN 100-140.

However, within the city boundaries on the right bank of the Vistula, plots in Żerań and Targówek are enjoying interest among buyers as well as the area around Marki, which directly borders the Warsaw agglomeration. However, the supply of land intended for industrial projects in this area is very limited as is the acreage of available land. The prices of plots up to two hectares in these sites reach PLN 400-450 per sqm.

B. Districts of Warsaw on the left bank of the Vistula and surrounding area

Within the city boundaries, the land around Okęcie Airport is enjoying a lot of popularity, but the supply is very low, and the rates are the highest in the city – PLN 450-600 per sqm. Outside the city, in the main warehouse locations such as Błonie, Pruszków and Ożarów Mazowiecki, the supply of plots is relatively high. Currently, the transaction price near Błonie stands at PLN 100-120 per sqm., while in Pruszków the price is PLN 150-180 per sqm.

Upper Silesia

In comparison with other regions, across the Silesian agglomeration, the supply of land with good investment characteristics is quite low. The intensity of building, the exclusion of large areas due to mining damage or contamination from earlier activities such as smelting and the high competitiveness from other property sectors are all factors shaping the low level of supply. The average price per sqm. of land for industrial investment in a good location in Silesia is PLN 120-180 per sqm.

The Upper Silesian industrial market is divided into sub-regions located along the north-south transport axis along the E75-S1, from the north around Czeladź, through Mysłowice, and further south around Tychy and even as far as Bielsko-Biała, and the east-west axis along the A4 highway around Chorzów and Gliwice, where there is also fairly large demand for industrial land. In addition to Chorzów and Gliwice, the greatest interest in land located near the junction of the A1 and A4 is at the Sośnica junction. However, the supply of plots in this location is low due to the large urbanised areas nearby, making it one of the most expensive locations in Silesia. The situation is similar in Mysłowice, where the S1 and A4 intersect. Prices of investment plots at the Sośnica junction and around Mysłowice are in the range PLN 160-180 per square metre.

Central Poland

The main locations for logistics in the region are Łódź, Stryków and Piotrków Trybunalski. In recent years, thanks to its central location at the junction of the A1 and A2, Stryków has come to the fore. The local authority has used its chance and has gradually prepared successive areas for investment. The average price of land in Stryków is in the fairly high range of between PLN 150 and 170 per sqm.

In the Łódź and the surrounding area, there is a lot of supply, and investors have a very wide range of offers, often brownfield sites. Currently, the price of land within the city boundaries, in the historically industrial areas such as Teofilów and Widzew, has dropped slightly and is now in the range of PLN 180-200 per sqm.

The third sub-region is the area around Piotrków Trybunalski, a market that has suffered the same fate as Błonie. Piotrków during times of prosperity attracted several warehouse and manufacturing projects, but now, despite the high supply of land, including land banks, there is a lack of buyers. Today it is a local market, where opportunities for growth come from projects that support local businesses. Investment plots can be purchased here at a price of PLN 50-70 per sqm.

Wroclaw

This is a market with huge potential. In recent years major changes in infrastructure have meant that this is the region most preferred by investors. The proximity of the border with Germany and the Czech Republic, the motorway and the motorway ring road around Wroclaw and the large labour market mean that after a few quiet years investment land has regained its attractiveness. In the region, there is a large supply of land prepared for development, in good locations and with good communication. Over the last few years prices soared and were in the range PLN 180-400. Prices have fallen slightly recently and remain at a level slightly above the national average at PLN 150-200 per sqm.

Poznan

In the Poznan area, as in the Wroclaw area, there is a large supply of high-quality investment plots. Prospective investors are looking mainly at plots at motorway junctions and on the S11 express road. Attractive locations for investment are areas in municipalities adjacent to the A2: Kórnik (Gądki) Komorniki, Niepruszewo and Tarnowo Podgorne. The average transaction price in these locations is around PLN 150-180 per sqm.

Tri-City

In the case of Tri-City, supply is slightly lower, but this is due to the increased interest of buyers and the hilly terrain, which disqualifies a significant portion of land for warehouse and production investments. Moreover, the large investments announced and launched by Goodman in the port area – a target of 40 hectares and a similar scale in Pruszcz by SEGRO – have exhausted demand in the region for now. Currently, the demand is for smaller plots up to 5 ha for BTS projects or end users. Prices are quite high: PLN 180-230 per sqm.

Krakow, Rzeszow and Lublin

In smaller markets, supply is diverse. In the historically most difficult market in terms of supply, Krakow, there are new locations in municipalities adjacent to the ring road, as well as in post-industrial areas of the city. Land prices in these locations, as compared to other regions, are relatively high in the range PLN 160-250 per sqm.

In Rzeszów, the supply of larger plots is limited, there are no local plans and potential areas for investment can be found in the surrounding municipalities. Prices are expensive at around PLN 160-180 per sqm.

Lublin has relatively well-developed urban locations suitable for industrial projects; however, the supply of land is limited and prices are high at PLN 200 per sqm. Chances to change the situation in the region could come with the construction of the ring road, which will increase the competitiveness of areas in the municipalities adjacent to Lublin.

Summary

“Naturally, the market for investment land is closely related to the situation in the economy and the warehouse market. The situation in the warehouse market is quite good with several large projects in progress or at an advanced stage of negotiations. However, most of them are being or will be developed on land previously secured by developers. Therefore, in the coming months, we should not expect a significant increase in demand for investment land in the sector. However, the low vacancy rate in selected regions of the warehouse and logistics market may in the next year lead to new investments. In addition, the relatively high interest among foreign investors in particular areas in southern Poland along the A4 may lead to an increase in demand. Prices are unlikely to fall and shall remain at a similar level as this year” – sums up Renata Osiecka, Managing Partner AXI IMMO.