Industrial market in Poland in 2023

Market performance has improved in the second half of the year

March 05, 2024

The second half of the year witnessed an improvement in the European take-up rate, helping 2023 to almost match the strong pre-pandemic year of 2020. Throughout 2023, occupiers leased 24.5 million m² on European markets, still some 26% below the robust 2022, but now only 12% below the five-year average (2018-2022). Strong overall activity observed in Poland in the second half of the year allowed the market to surpass the historic results from 2020, with a total gross take-up reaching 5.1 million m² in 2023 and exceeding the five-year average by 1.4%. 

The leasing landscape in Poland remained dominated by logistics operators and retail chains, who claimed 37.3% and 36.9% share in net take-up, respectively. Noteworthily, in contrary to the European picture, retail expansion in Poland was strongly driven by the e-commerce segment, which generated almost 600,000 m² of net take-up throughout the year. The Big Five markets again demonstrated their resilience with 2.4 million m² leased - almost 76% share in total new demand. Wrocław stood out as the leading destination, experiencing an exceptional acceleration due to the contracts secured by a prominent e-commerce player. Despite the upward movement observed throughout 2023, the vacancy rate in Poland remained below 8% (7.7%).

Results observed in 2023 supported the cooling down of the markets, albeit at a relatively low pace. New supply delivered during the year amounted to 3.95 million m² and was only some 13% below results of the record-breaking 2022. In December 2023, total existing stock in Poland exceeded 32.87 million m², with 76% of it concentrated within the five largest regions. Unsurprisingly, most of the space delivered in 2023 boosted the stock of the Big Five markets, reaching nearly 2.5 million m². Furthermore, exceptionally strong performance was observed in Lubuskie, where due to the accelerated speculative activity, developers completed almost 670,000 m². As of December 2023, the under-construction pipeline remained close to the 3 million m² threshold (2.78 million m²), whilst in Q4 developers initiated new projects with a combined area close to 700,000 m².  Amount of space being constructed on speculative basis stood at 1.28 million m², now accounting for some 46% of total pipeline.

While the average rental rate growth in Poland was at some 20% during 2022, the 2023 displayed a more stable environment with an average annual growth rate below 5%. Upward adjustments were primarily seen in the new sustainable developments of higher quality. Undoubtedly, the growing focus on ESG compliance will put non-prime space under pressure. In December 2023 rental rates for suburban logistics parks within the Big Five markets ranged from 3.5 to 5.5 euro/m²/month. City locations maintained higher rates, with maximum values reaching 8.5 euro/m²/month in the Warsaw Inner City area.

Cap rates have continued their upward movement, which is expected to decelerate during first months of 2024 as a result of lower interest rate volatility and a narrowing bid-ask spread.

At the end of December 2023, prime warehouse yields for multi-tenant schemes with five-year lease agreements were estimated to be at 6.50% - 6.75%. Warsaw prime projects were expected to be at 6.25% - 6.50%.

More details in the latest report.

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