Industrial market in Poland in 2023
Market performance has improved in the second half of the year
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.