AXI IMMO presents data summarizing Q1 2023 in the industrial and logistics market in the report “Polish Warehouse Market in Q1 2023.”

The condition of the warehouse market in Poland remains stable. Between January and March 2023, tenants leased 1.2m sqm (-22% y/y), and in the same period, developers delivered 1.9m sqm (+55% y/y) of new supply. 2.1m sqm remains under construction (-55% y/y), more than half of which is speculatively built space. The market is showing the first signs of stabilization in average rents. 

The waiting period on the Polish investment market

At the end of March 2023, the total volume of transactions in the investment market amounted to about EUR 650m. With a result of EUR 401m and a 62% share, the warehousing sector again came out on top of the list. Invariably, the most important factors affecting investor sentiment remain inflation, the high cost of investment financing, and the discrepancy between the expectations of sellers and buyers. The quarter’s largest transaction was the sale of the Panattoni Wrocław Campus project (about 185,000 sqm) to P3. The podium was rounded out in turn by DWS Group’s purchase of a park owned by 7R (7R Park Poznań East II, 51,500 sqm) and the acquisition of Panattoni City Logistics Wrocław II (38,000 sqm) by Trigea Nemovitostni.

Grzegorz Chmielak, Head of Valuation and Capital Markets, AXI IMMO, points out: “In contrast to previous quarters, the first three months of 2023 were dominated by transactions related to the sale of single projects rather than warehouse and logistics portfolios. In turn, the investors from the Central and Eastern European region and the United States remain among the most active players.”

Stable demand during unfavorable macroeconomic environment

In Q1 2023, gross demand on the Polish warehouse market reached 1.2m sqm (-22% y/y), of which 661,000 sqm (-42% y/y) were signed under new leases. Renegotiations, which accounted for more than 45% of the total transaction volume, are becoming increasingly important. In the analyzed period from January to March 2023, the most space was leased in the voivodeships of Mazowieckie (202,000 sqm), Łódzkie (195,000 sqm), and Śląskie (191,000 sqm). Noteworthy results were also achieved in the Pomeranian and Lesser Poland Voivodeships, where transaction volumes amounted to 108,000 sqm and 105,000 sqm, respectively. Among the largest lease transactions were:

  • a contract extension by electronic components manufacturer Tyco Electronics Polska at Panattoni Park Szczecin I (56,000 sqm);
  • a new deal at Panattoni Park Wrocław Logistics South Hub by global online retailer Shein (55,000 sqm);
  • a record deal from Malopolska, where logistics company MCG EastBridge (Maszoński Logistics Group) leased 36,700 sqm at GLP Krakow Logistics Centre III.

Anna Głowacz, Head of Industrial Agency, AXI IMMO, convinces: “Looking ahead to the next few months, we can expect a slowdown in demand. Some of the transactions from the first quarter of 2023 result from prolonged negotiations from last year. High inflation, utility costs, and higher financing costs lead companies to opt for savings rather than new investments.”

“On the other side are companies that see their opportunity in developing trends related to moving production lines closer to output markets. Currently, we are not witnessing many transactions within the framework of the so-called nearshoring, while one can point to several processes in progress or at the preparation stage,” adds Anna Głowacz.

High new supply, with a decrease in projects under construction

In the first three months of 2023, developers delivered nearly 1.9m sqm (+55% y/y), which increased the total stock of industrial and logistics space in Poland to 29.9m sqm (+21% y/y). The most new supplies came in the Mazowieckie Voivodeship (367,000 sqm), the Silesian Voivodeship (256,000 sqm), and the Lower Silesian Voivodeship (242,000 sqm). Also noteworthy is Lubuskie Voivodeship, where warehouse stock increased by 230,000 sqm. At the end of March 2023, 2.1m sqm remained under construction (-55% y/y) of modern warehouse space, of which nearly 55% are speculative projects. A gentle slowdown is expected on the market due to the high cost of financing and the requirement for a high share of pre-let transactions before development starts. Nevertheless, in the first months of 2023, analysts at AXI IMMO observed an increase in the vacancy rate to 6.4% (+3.1 bps y/y), resulting from the delivery of many projects launched in 2022. The largest amount of vacant space remains in the Mazowieckie Voivodeship (399,000 sqm), the Silesian Voivodeship (333,000 sqm), and the Lower Silesian Voivodeship (304,000 sqm). In percentage terms, the highest vacancy rates are in the Świętokrzyskie (12.9%) and West Pomeranian (10.6%) voivodeships.

Slow stabilization in rents

New supply, as well as an increase in the vacancy rate, slightly affected on expected rental rates. However, at the same time, the Polish warehouse market has seen the first signs of stabilization in this area. Current owners’ expectations for space in big-box projects are at EUR 4.0 – 4.5/sqm/month. Traditionally, Warsaw City remains the most expensive, with new development rates reaching above EUR 6.5 – 7.0 sqm/month, while rents in older projects remain above EUR 5.0 sqm/month.

Renata Osiecka, Managing Partner, AXI IMMO, concludes: “In the coming months in the warehouse sector, we expect a gentle slowdown due to the slowing economy and the moment in the overall market cycle. However, the sector’s fundamentals – demand and supply – remain strong. We all expect the trends of nearshoring and friendshoring to develop, in which we see great opportunities related to tenant activity. On the supply side, on the other hand, investment financing issues may temporarily limit the development of speculatively built projects, excluding those with their funds.”

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