Warehouse Market in Poland in Q1-Q3 2024

The Polish industrial and logistics real estate market maintained its stability during the first three quarters of 2024. During this period, 2.1 million sqm of new warehouse space was put into use, allowing the total resources of the sector to increase to nearly 34 million sqm (+9% YoY). Currently, there is 1.9 million sqm under construction (-22% YoY), marking the second lowest level of developer activity since the beginning of 2018. Despite challenges, the rental market remained stable (3.8 million sqm), with a vacancy rate of 8.0% (+0.3 pp YoY) by the end of September 2024. AXI IMMO, the largest Polish advisory firm in the commercial real estate market, presents the latest report “Warehouse Market in Poland in Q1-Q3 2024”.

In Q1-Q3 2024, the total transaction value in the warehouse sector on the investment market was 738 million EUR (-12% YoY), accounting for 27% of the total volume of real estate investments in Poland. The third quarter, however, brought significant improvement – the transaction value amounted to 445 million EUR, accounting for 46% of the total volume. The market revitalized thanks to portfolio transactions, such as the acquisition of three Diamond Parks by the American investor Greykite from AIG/White Star and the acquisition of a 65% stake in DL Invest by Emira Property Fund.

Grzegorz Chmielak, Head of Valuation and Capital Markets Department, AXI IMMO, comments: “In recent months, the Polish investment sector in commercial real estate shows signs of stabilization and refreshment. The warehouse sector stands out positively, which has regained its dynamics after a difficult start of the year. There is a growing interest of investors in portfolios of industrial and logistics properties, which is reflected in a larger number of open transaction processes. Fully commercialized warehouse assets in the largest markets with established positions remain traditionally hottest.”

At the end of September 2024, Poland’s modern warehouse space resources reached the level of 34 million sqm (+9% YoY). The activity of developers in the first three quarters amounted to 2.1 million sqm (-33% YoY), delivering 454,000 sqm in Q3 alone. Most new space was delivered in Lower Silesia, Mazovia, and Lodz provinces from January to the end of September. Currently, 1.9 million sqm is under construction (-22% YoY) experiencing the second-lowest level since 2018. A noticeable decrease in the volume of new projects started, which amounted to 1.2 million sqm (-49% YoY) from Q1 to Q3 2024, is also apparent. In terms of provinces, the most construction activity is in Lower Silesia (571,000 sqm), Mazovia (331,000 sqm), and Silesia (295,000 sqm). Developer activity in smaller markets fell.

At the end of September 2024, the vacancy rate in the warehouse market was stable at 8.0% (-0.3 pp QoQ and +0.2 pp YoY). The highest availability of space occurred in Lubuskie, Swietokrzyskie and Lubelskie provinces, respectively at 20%, 16.1%, and 12.9%. Among the big five markets, the highest vacancy rate was recorded in Lodz province (11.2%) where 539,000 sqm was available. The average vacancy coefficient for the five largest markets was 7.9%, nearing the national average.

Anna Głowacz, Director of Industrial and Logistics Spaces Department, AXI IMMO, indicates: “The Polish warehouse market is entering a phase of stabilization, with lower developer activity and a greater emphasis on projects tailored to tenants’ needs. Supply is adjusting to tenant activity, leading to more balanced development. The volume of lease transactions remains high, but a significant part of it consists of renegotiations.”

Gross demand for production and logistic spaces in Poland in Q1-Q3 2024 was 3.8 million sqm (+ 2.5% YoY). New contracts and expansions dominated in the lease structure, accounting for 61% of the volume of all transactions. The largest demand for warehouse space in Q1-Q3 2024 was recorded in Mazovia, Lower Silesia, and Lodz provinces. On the other hand, among the largest lease transactions concluded in Q3, the following should be mentioned:

1. CTPark Warsaw West (Wiskitki), 63,000 sqm, tenant from the trade sector (new contract);
2. Prologis Park Łódź, 41,500 sqm, a tenant from the electronics/appliances sector (new contract);
3. GLP Poznań Airport Logistics Centre, 28,800 sqm, a tenant from the FMCG sector (extension).

Base rental rates remained stable, with a slightly upward trend in new and planned investments. They currently range between 3.7 and 5.5 EUR/sqm for big-boxes, with the lowest rates available in locations with repeated commercialization. Effective rent rates are about 20% lower than base rates, due to the level of vacancies and conditions negotiated in long-term contracts.

Renata Osiecka, Managing Partner, AXI IMMO, summarizes: “The Polish market for industrial and logistics real estate in 2024 shows signs of stability, despite a decrease in developer activity and a more challenging macroeconomic situation. Investors and tenants still see potential in key regions such as Warsaw, Lodz, Upper Silesia, and Lower Silesia, which helps keep rental rates stable and prospects for further market development. However, with regard to demand, we expect high activity from companies in Q4, which is typically the best throughout the year”.