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News Release

Warsaw

Another quarter of dynamic development on Poland's industrial  market, with speculative activity on the rise

Tenant demand remains strong with 1 million of net take- up expected for 2014 and speculative developments are again on the rise, an analysis of the industrial market in Q3 2014 shows


International advisory company JLL presents Q3 summary and the key trends in the coming months for Poland's industrial market.

Tomasz Mika, Head of Industrial Poland, JLL, said: “The industrial market is in very good shape. Overall market sentiment remains positive as demand for warehouse floorspace displayed a y-o-y increase for the fourth consecutive quarter. Total demand registered in Q3 2014 stood at 343,000 sq m, with new agreements and extensions accounting for 261,000 sq m, and the remainder - 82,000 sq m - being attributable to renewals. Importantly, the net take -up from the beginning of the year totals 787 000 sq m and is expected to hit 1 million sq m by the end of the 2014. Gross demand since the beginning of the year is over 1.2 million sq m, so the total tenant activity will exceed 1.5 million sq m by the of the year. Logistics operators still constitute the key occupier group”.

Thanks to one large and a number of smaller leasing deals Upper Silesian was the region, which witnessed the strongest occupier interest in Q3 – 87,000 sq m, with the Warsaw Suburbs, Poznań and Wrocław completing the top four. Since the beginning of the year, the highest interest in industrial space was recorded in the Warsaw Suburbs Zone (313,000 sq m), followed by Upper Silesia (255,000 sq m), which both happen to be, stock-wise, the largest warehousing regions. Boosted by last-year’s most prominent transactions by Amazon, the regions of Poznań and Wrocław also sustained strong demand.

Logistics operators remained the key occupier group during Q3 accounting for 35% of new demand. The second largest share in net demand, 28% ,was attributable to retailers, followed by automotive companies, who represented 17% of Q3's net demand.

Supply
Jan Jakub Zombirt, Senior Research Analyst, JLL, explained: “At the end of Q3 2014, the entire modern industrial stock in Poland reached 8.2 million sq m, recording an increase of 436,000 sq m on Q2. The largest stock increases were registered in Wrocław and Poznań, where most notable completions involved two of the three Amazon buildings. After these spectacular completions 539,000 sq m of industrial space is still under construction. Again Poznań and Wrocław have the highest developer activity with a combined total of 55% of Poland's industrial stock in the pipeline”.

Importantly, speculative developments are again on the rise. As of the end of Q3 they accounted for 24% of the stock under construction, well above the 9.6% registered in the previous quarter. The largest projects of this type include the extension to the North-West Logistic Park in Szczecin (42,500 sq m – all speculative ), Panattoni Park Ożarów II (20,000 sq m, of which 16,400 sq m is speculative ) and Panattoni Park Poznań IV (35,000 sq m, of which 15,000 sq m is speculative). 

Vacancy rate
The overall vacancy rate in Q3 was 9.3%, significantly below the 10.5% registered in the previous quarter. Among the main submarkets, the highest share of unleased space was found in Warsaw Inner City (15.6%) and Central Poland (15.0%), and the lowest in Poznań (3.7%) and Wrocław (5.4%).

Rents
Industrial rents are relatively stable in most regional markets. The only change to rents was observed in Poznań – a decrease from €2.25-3.15 in Q2 to €2.25-3.00/ sq m/ month in Q3 2014.