Strongly diversified demand, strategic location near key foreign markets, developed infrastructure, and a large market of 4.5 million residents are just a few reasons motivating investors to allocate their capital in Silesia. This is best illustrated by the local industrial and warehouse space market, as summarized in the latest report by the international advisory agency Cushman & Wakefield, “Mines of Business.” According to the report, from 2021 to 2023, no other region in Poland saw as much warehouse development as Silesia, which surpassed the next in line, the Mazowieckie region, by almost 10%. Moreover, this region outperforms leading CEE locations and has an appetite for more.
A Regional Leader
According to Cushman & Wakefield data, the supply of modern warehouse and industrial space in Silesia now reaches nearly 5.5 million square meters, with 32% (1.7 million square meters) added in the past three years.
Silesia is currently the second-largest warehouse market in Poland, trailing only the Mazowieckie region. At the same time, it can be considered the most complex and unique market in the country due to the depth of the sector, the number of available locations, and the diversity of current tenants. Consequently, Silesia, alongside Warsaw, is a leader among local markets in the CEE, offering entrepreneurs the largest industrial space equivalent to about 766 full-size football fields. For comparison, in other significant production and warehouse centers, such as the Budapest or Prague regions, the supply is much lower, each with only around 3.5 million square meters, comments Damian Kołata, Partner, Head of Industrial & Logistics Agency Poland, Head of E-Commerce CEE, Cushman & Wakefield.
The lower supply levels in other CEE locations are also accompanied by much lower vacancy rates, which may cool the enthusiasm of many investors and redirect their attention to more promising markets like Silesia.
At the end of 2023, the vacant warehouse space in Silesia was about 333,000 square meters, surpassing Hungary, the Czech Republic, and Romania. In contrast, in the Prague region, only about 30,000 square meters were available for rent, which is 11 times less than in Silesia. According to the latest Cushman & Wakefield data, the available warehouse space in Silesia increased to over 350,000 square meters at the end of Q1 this year. Additionally, developers are launching and planning new projects, which may encourage many investors to allocate their capital here, comments Adrian Semaan, Senior Research Consultant, Industrial & Logistics Agency.
According to Cushman & Wakefield analyses, at the end of 2023, nearly 280,000 square meters were under construction, over 50% less than the previous year, with only 125,000 square meters not secured by lease agreements. By the end of Q1 this year, developers were working on projects totaling about 220,000 square meters, with only around 63,000 square meters available for lease.
Market Driven by Tenant Diversification and Local Specialization
According to Cushman & Wakefield estimates, the total demand for warehouse space in the region at the end of last year was almost 890,000 square meters, the third-highest in Poland after the Mazowieckie and Dolnośląskie regions. In terms of new lease agreements and expansions, i.e., net demand, nearly 650,000 square meters were leased here, giving Silesia the second-highest result after the Dolnośląskie region.
Silesia’s strength lies in the high diversification of investment locations, as well as the variety of active industries and sources of foreign capital. Over the past few years, the region has developed a local specialization in the automotive industry, as evidenced by the results of the Katowice Special Economic Zone (KSSE). The KSSE hosts over 600 Polish and foreign enterprises, about 40% of which are related to the automotive and metal-machinery industries. Additionally, the zone is active in the food, plastics, chemical, and electrical and electronic sectors. Each investment from these sectors potentially increases the demand for warehouse space in the local market, comments Dr. Rafał Żelazny, President of the Katowice Special Economic Zone SA.
Silesia’s economic diversification translates not only into a variety of tenants in the warehouse market but also changes in demand.
Comparing 2022 and 2023, last year saw a significant increase in the automotive industry’s share from 12% to 23% and the manufacturing sector from 14% to 16%, while the activity of logistics companies decreased from 30% to 21%. However, the lower activity of logisticians is a trend observed in other warehouse locations in Poland as well. This is likely a temporary situation, and the coming quarters may see a revival in this tenant group. This is especially relevant for Silesia, which, due to its strategic location and well-developed infrastructure, is one of the most important markets in the CEE region targeted by TSL (Transport, Spedition, and Logistics) companies, explains Konrad Jacewicz, Associate, Industrial Agency, Cushman & Wakefield.
Further investments may also be encouraged by the rental rates offered by local warehouse projects. Tenants can expect base rates in the range of 4.20-5.50 EUR/square meter, which can be reduced through financial incentives, lower adaptation costs, or rent-free months to an effective rate of 3.00-4.30 EUR/square meter.
For example, in the Czech Republic, in the Prague region, which is the most expensive market in the CEE, base rates range from 6.50-7.75 EUR/square meter, with effective rates reduced through rent-free months and adaptation cost reductions to 6.20-7.50 EUR/square meter. In the Ostrava region, base rates range from 5.20-5.75 EUR/square meter, with effective rates at 4.90-5.50 EUR/square meter. In Slovakia, in the Bratislava region, excluding the urban area which is at least one euro more expensive, base rates range from 4.75-5.60 EUR/square meter, which is often the effective rate due to developers’ limited willingness to negotiate, adds Damian Kołata.
Labor Market Provides Potential for Further Development
According to Randstad data, nearly 4.3 million people live in the Silesian Voivodeship, with almost 59% of them of working age, which is one of the key elements considered in the investment process. The number of people in pre-working age (17%) remains stable. The fact that the median age of workers is 41 years and the largest group of employees is aged 35-44 is also good news for employers. This means that the Silesian labor market offers access to many individuals with several years or even decades of work experience and many years of professional activity ahead.
In the Silesian Voivodeship, the average employment level in the enterprise sector remains at about 784,000 employees. This indicates the maturity of the local labor market and strengthens the position of the Silesian Voivodeship as an attractive investment destination, especially in the areas of new technologies and industry. The Silesian metropolis is developing in many key areas of the economy, providing access to unique competencies in research and development, allowing investors to undertake innovative projects. It is no surprise that in recent years, Katowice and Silesia have become one of the main locations for investors in the shared services, modern technologies, and R&D sectors. Additionally, local government actions consistently improve the quality of life for residents and enhance the region’s brand, which should result in further investments in the near future, summarizes Dagmara Żuromska, Strategic Business Development Senior Manager, Randstad.
