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Poland Leads CEE-13 Industrial and Logistics Market Despite 2023 Demand Dip

REAL ESTATEPoland Leads CEE-13 Industrial and Logistics Market Despite 2023 Demand Dip

The total supply of modern industrial and logistics space in the region of 13 Central and Eastern European (CEE-13) countries amounts to over 67 million square meters. According to the latest Colliers report titled “ExCEEding Borders: Navigating the Industrial Landscape and Workforce in CEE-13,” Poland remains the largest industrial and logistics market in the entire CEE-13 region, with a total supply of over 31 million square meters, accounting for 45% of the region’s total stock.

The total supply of modern industrial and logistics space in capital markets in the CEE-13 region amounts to nearly 25 million square meters and over 67 million square meters at the national level. Despite differences in vacancy rates between CEE-13 countries (the lowest vacancy rates were recorded in Albania (0%) and the Czech Republic (1.8%), while the highest was in Montenegro – 9%), demand for industrial and logistics space has been high in recent years. Poland boasts the highest gross demand – in 2023, it amounted to 5.7 million square meters, driven mainly by sectors such as freight forwarding, retail, and distribution. However, most countries experienced a decline in demand in 2023, attributed in part to economic and geopolitical factors.

“Despite the decline in demand and space under construction in 2023, the industrial and logistics space market in Poland remains in very good condition. Poland’s competitive advantages on the European stage include a skilled workforce that is cheaper than in Western Europe and some of the lowest rental rates for industrial and logistics space in the Central and Eastern European region. In Poland, base rental rates range from 3.4 to 7 EUR per square meter per month, compared to 7.5-7.7 EUR per square meter in the Czech Republic,” explains Maciej Chmielewski, Senior Partner, Industrial and Logistics Agency at Colliers.

Warehouses Top Investment Purchases

The industrial and logistics sector remains a key investment target in the Central and Eastern European region – at the end of 2023, the share of warehouses in the investment volume in Poland was approximately 50%, while in the Czech Republic and Slovakia, it was below 20%.

“We are observing significant interest in industrial and logistics assets. Investors are looking for various opportunities, such as acquiring land, single assets, large portfolios, or sale and leaseback agreements that provide long-term income. However, this sector is not immune to economic and geopolitical factors, including higher financing costs, price expectation discrepancies between buyers and sellers, and limited product availability,” points out Dominika Jędrak, Director of Advisory and Market Research in Poland and Central and Eastern Europe at Colliers.

Green Warehouses in CEE-6

CEE-6 countries have long been implementing green solutions in buildings, resulting in a growing number of facilities with BREEAM or LEED certifications, also at the highest levels (an example is Panattoni’s industrial and logistics project in Poland, which in 2023 was the first to receive the highest BREEAM certification level – Outstanding).

“Sustainability initiatives in the CEE-6 region cover a significant portion of the total stock of modern industrial and logistics space. Progress in meeting ESG requirements varies among CEE-6 countries, but in this regard, it is the most developed group of countries among the entire CEE-13 group,” explains Silviu Pop, Director of Research for Central and Eastern Europe and Romania.

Labor Market Dynamics in the CEE-13 Region

In the labor market of the CEE-13 region, particularly in the manufacturing and logistics sectors, significant wage increases have been observed in the CEE-6 group despite considerable differences in wage levels between countries. This has been driven by the nearshoring trend (relocating production to neighboring countries) in logistics and the automation of production processes. While the manufacturing sector is experiencing significant year-on-year growth, the logistics sector is growing at a more modest pace. Increasing demand for skilled personnel in logistics and manufacturing areas is prompting companies to expand and develop in the Central European region.

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