Upon analyzing data contained in the report entitled “At a Glance, Q4 2023, the industrial-logistics area sector in Poland”, prepared by BNP Paribas Real Estate Poland, demand and supply have seen a slowdown, but are still at a good level. At the end of 2023, an increase in the vacancy rates and rents was observed. Urban warehouses and custom-tailored facilities will continue to gain popularity.
At the end of December 2023, the gross demand for warehouse space was 5.6 million sqm, representing a 15% year on year decrease. This lower tenant activity stems from a high base value, as the industrial-logistics space market attracted the highest interest in history in 2021-2022. In the final quarter of the year, contracts were signed for 1.9 million sqm.
As for supply, in Q4 2023 alone, warehouse developers delivered nearly 580,000 sqm of warehouse space to the market, and over 3.7 million sqm in the entire 2023.
“In 2023, the industrial-logistic area sector in Poland witnessed a slowdown, but all signs point to a rebound in 2024. The results achieved in 2023 in terms of demand, supply, or started investments can be considered very good, given the macroeconomic conditions. It is also encouraging that the volume of space under construction, which at the end of the year was 2.8 million sqm, is increasing. In 2024, market resources should clearly exceed the level of 34 million sqm, and the Warsaw market (Warsaw zone I & II) will strengthen its leading position, where the total supply of industrial-logistic spaces will approach the 7 million sqm mark,” says Tomasz Arent, Director of Industrial and Logistic Spaces, BNP Paribas Real Estate Poland.
In the period October-December 2023, the highest amount of warehouse space under construction was found in the Lower Silesia (729,400 sqm), Central Poland (402,900 sqm) and Warsaw II (376,800 sqm) zones. Meanwhile, the most new warehouse space in Q4 was delivered in the Upper Silesia (127,500 sqm), Warsaw II (125,900 sqm) and Central Poland (86,800 sqm) zones. Major developments in this period included the expansion of the P3 Wrocław park with buildings 1 and 3 (over 200,000 sqm of additional space) and the new Panattoni Park Wrocław Logistics South Hub (90,000 sqm) investment. It is worth noting that the occupancy rate of projects under construction reached around 51%, showing a rising trend, when comparing the last two quarters of 2023.
The past year was characterized by an increase in the vacancy rate. This indicator reached 7.4% in Q4 2023, a decrease of 0.4 percentage points, compared to the previous quarter. The annual view of the vacancy rate indicates a rise of 3.2 pp, however, according to BNP Paribas Real Estate Poland analysts, a curb on this upward trend is expected in the coming quarters. On the other hand, the current level of vacancies undoubtedly increases the competitiveness of the industrial-logistics space market and makes it easier for tenants to find suitable space.
BNP Paribas Real Estate Poland experts who prepared the Q4 2023 report point out the high share of renegotiations in the contract structure – they made up 40% of all transactions concluded. A noticeable trend is the extension of decision-making processes concerning leased spaces. The largest transactions in the last quarter of 2023 included two transactions at P3 Wrocław, where an e-commerce operator rented a total of over 220,000 sqm, and the extension of the lease of GLP Poznań II Logistics Centre warehouse space (over 80,000 sqm) by the Musketeers Group.
From the start of 2023, an increase in both base rates and rents for industrial-logistic spaces has also been observed. Higher fees resulted, among other things, from rising fuel and construction material prices, higher project financing costs, and a worsening of investment fund sentiment. As BNP Paribas Real Estate Poland analysts point out, the relatively large availability of existing industrial-logistic spaces may result in a slight pressure on prevailing rates in 2024, which may lead to a halt in the upward trend, and in some cases even a reduction in rents.
The report by BNP Paribas Real Estate Poland analysts also indicates the growing popularity of urban warehouses. As the name suggests, these are set up within the bounds of urban agglomerations and even in strict city centres. They are small facilities that respond to the rapid development and growing demands of the e-commerce industry.
“Urban warehouses are one attempt to solve the problem of rising order service costs in online retail. Moving logistics to city centres may improve the organisation of the process and the pace of the final delivery stage directly to the consumer’s door. Last-mile logistics, on the other hand, generate high costs and pose the greatest risk of delays, errors, or even loss of shipments. Small urban warehouses help shorten the distance between the central warehouse and the final recipient,” says Piotr Załęski, Deputy Director, Industrial and Logistic Spaces, BNP Paribas Real Estate Poland.
Various sectors have been attracted to this solution – from logistics, e-commerce, and manufacturing to service providers and laboratories. The cost of leasing warehouse space in an urban warehouse depends mainly on location. In the Warsaw I zone, the price for such a warehouse can go as high as EUR 9.75 per sqm per month.
Industry-specific projects, also known as built-to-suit (BTS), have become more appealing, the report suggests. This business model involves the developer undertaking to construct a facility according to the client’s specifications and personal needs, creating production, warehouse, or office spaces tailored to the requirements of a particular company.
As technology advances, traditional industrial buildings may not meet the advanced demands of production processes, thus generating a necessity for modern and efficient industrial spaces. BTS projects offer an opportunity to integrate the latest technologies, energy-saving systems, and automation. They are also designed with long-term use in mind, for 10 to 25 years, ensuring continuity and security of production for the tenant.
Many companies are leaning towards transferring production and logistics operations to locations geographically close to their markets, following the trend of nearshoring. This phenomenon is accelerating the building of BTS facilities. These are often intelligent buildings, fully automated in terms of access security, energy saving, production optimisation, and carbon footprint minimisation.
