Industrial market - still on the up

We have just closed the best start to the year for the Polish industrial market with demand hitting around 1.1 million sq m. Furthermore, 1.8 million sq m of warehouse space is currently under construction

May 24, 2018

Advisory firm JLL summarizes the condition of the industrial and warehouse market in Poland at the end of Q1 2018.

“The industrial market in Poland maintained its outstanding performance from 2017 into the first quarter of this year. Activity amongst tenants has driven the gross take-up to an unprecedented 1.1 million sq m. Such a beginning to 2018 gives us a reason to look forward to the rest of the year”, says Tomasz Mika, Head of Industrial, JLL Poland. 

Central Poland was once again the most favored industrial location among tenants, with agreements for more than 205,000 sq m of space. 

On the other hand, net demand was 897,000 sq m (of which the logistics and retail sectors' share stood at a remarkable 75%). 

Supply In Q1 2018, the industrial market in Poland saw the completion of 268,000 sq m. The highest volume - 176,000 sq m - was completed in Central Poland, and as a result it made Central Poland, leaving Poznań in its wake, as the third largest market, stock-wise, in the country. 

“At the end of Q1 2018, an impressive 1.8 million sq m remained under construction in Poland. The majority of this was found in the areas of Warsaw Suburbs, Upper Silesia, Central Poland, Poznań and Wrocław. Furthermore, the expected improvements in transport infrastructure have not gone unnoticed by developers: they have begun significant construction in emerging markets totalling almost 500,000 sq m in total” ,says Jan Jakub Zombirt, Associate Director, Strategic Consulting, JLL. 

Vacancy rate and rents Thriving demand combined with relatively low development activity pushed the vacancy rate in Poland at the end of Q1 to its lowest level ever, a mere 5.6%. In addition, reductions were seen across almost every region. The highest vacancy rates are found in Warsaw Inner City and Kraków (10.7% and 12.6% respectively), while the lowest are in Central Poland (2.8%) and most of the emerging markets.  

The industrial market in Poland did not see any major changes in the level of rents during Q1 2018. The highest prices for warehouse space were in Warsaw Inner City and Kraków, where headline rents ranged from €4.1 to €5.1 / sq m / month and €3.8 to €4.5 / sq m / month, respectively. The most attractive rents for big box units were found in Central Poland (€2.6 to €3.2 / sq m / month), Upper Silesia (€2.8 to €3.6 / sq m / month) and Poznań (€2.8 to €3.5 / sq m / month) 

Investment market

"The volume of three industrial investment transactions concluded in Poland in Q1 was approximately €100 million. Prologis sold part of its European portfolio (including one asset located in Sochaczew) to ARES; Ideal Idea Formad sold Ideal Idea IV SBU (Small Business Unit) park located in Warsaw to Segro, while Real Management sold Good Point Puławska II to Hillwood. Prime warehouse yields remain at 6.50% with exceptional, long leased assets trading well below 6.00%” comments Tomasz Puch, Head of Office and Industrial Investment, JLL.