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Polish Warehouse Market Maintains Stable Growth in 2023 Despite Lower Demand

REAL ESTATEPolish Warehouse Market Maintains Stable Growth in 2023 Despite Lower Demand

The warehouse sector ended 2023 with stable results. Warehouse transactions accounted for 47% of the total investment volume. Tenant activity, which stood at 5.6 million square meters, was only outpaced by the results of the two previous years. Developers delivered the second largest volume of warehouse space.

The warehouse market resources increased by 12% in 2023 compared to 2022, reaching an estimated total of over 31.7 million square meters. Developers’ activity was the second largest in terms of realized volume after the record-breaking 2022, with 3.7 million square meters reaching the market.

“The stable growth of the sector, although not as dynamic as during the pandemic, is strongly associated with several factors. The strategic location of Poland in the central part of Europe, as well as competitive wage rates and incentives for potential investors, are attractive features for investing in Poland,” comments Szymon Sobiecki, a market research consultant at Knight Frank.

The largest volume was realized in emerging markets (900,000 m sq), followed by the Warsaw area (700,000 m sq) and Upper Silesia (600,000 m sq). The largest projects released for use were Panattoni BTS Zalando Bydgoszcz (146,000 m sq), Panattoni Park Wrocław Logistics South Hub (125,000 m sq), and DL Invest Psary (120,000 m sq).

“The forecasts for the further growth of the warehouse market are positive. At the end of 2023, 2.8 million sq m of modern logistics space was under construction. In the fourth quarter of 2023, investors started projects with a total area of 830,000 m sq. It is worth adding that half of the construction area is already covered by rental agreements,” comments Szymon Sobiecki.

In the fourth quarter of 2023, tenant activity recorded a 25% increase compared to the third quarter and the same period in 2022.

“The interest of tenants in warehouse and logistics space remains at a stable level. The demand in 2023 reached over 5.6 million m sq, with an impressive result only surpassed by two record years so far in 2021 and 2022. The majority of companies targeted facilities located in key concentration areas: Warsaw, Lower Silesia, and Upper Silesia. These areas accounted for nearly 60% of the total volume,” explains Przemysł Jankowski, director of warehouse and industrial space leasing at Knight Frank.

In the contracts structure on the warehouse market, new deals accounted for half of the rented space. Renegotiations accounted for 40% of the contracts, and expansions accounted for 10% of the total volume.

A lower demand rate in 2023 compared to the previous year and a portion of the speculatively built area that has not yet been commercialized resulted in an increase in the vacancy rate. At the end of December, it reached 7.4%, which was 3.3% higher than in the corresponding period in 2022.

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