REDD Group has published a report summarizing the state of the warehouse space market at the end of the first half of 2024, as well as providing forecasts for the coming months. The first half of 2024 saw a continuation of trends initiated in the previous year. The market continues to develop, with significant trends in rental rates, new supply, and evolving tenant needs.
“We notice that some processes are characterized by different dynamics compared to the previous period. We still observe rent increases, but they are much smaller than in 2023. The total supply of space continues to grow, which—thanks to the completion of 1.4 million m² in the first half of the year—has reached 32.3 million m². The situation is different for the supply under construction. New buildings continue to be built, but their area in the first six months of the year has decreased to 2 million m². The reason? A reduction in the number of speculative spaces being developed. The market is dominated by Build-to-Suit (BTS) warehouses—custom-built for specific tenants. The warehouse market is dynamic and open to changes, including those aimed at environmental protection, which is why ESG issues are gradually becoming an integral part of this industry,” comments Krzysztof Foks, Head of Research at REDD Group.
Steady Supply Growth, Decline in Speculative Investments
The Polish warehouse market continues to grow, with 1.4 million m² of new space delivered in the first half of 2024, raising the total supply to 32.3 million m². This significant growth is a testament to the sector’s resilience despite challenging economic conditions. However, speculative investments have slowed, and the area under construction has dropped to 2 million m², which is 500,000 m² less compared to the end of 2023. This trend reflects a market increasingly dominated by Build-to-Suit (BTS) projects, which are custom-built for specific tenants rather than speculative developments.
This trend is particularly evident in regions such as Wrocław, Warsaw, Upper Silesia, and Central Poland, where demand for tailor-made facilities remains strong. For example, Wrocław leads with 562,000 m² of new warehouse space under construction, followed by Warsaw with 285,000 m², Upper Silesia with 271,000 m², and Central Poland with 269,000 m².
Rent Stabilization with Regional Differences
While rent increases are still observed, their pace has significantly slowed compared to the rapid rises in 2023. This stabilization is primarily due to the increased availability of space following the supply growth last year. At the end of the first half of 2024, 2.4 million m² of warehouse space was immediately available, an increase of 15,000 m² compared to the end of 2023.
However, regional differences in rental rates have emerged. In key markets such as Warsaw and Wrocław, rents continued to rise, especially in prime urban locations where demand remains high. In more peripheral locations, where vacancy rates are higher, rental declines were noted, particularly in older buildings competing with modern, more environmentally friendly facilities.
Dominik Łoś, Head of Leasing at LCube, comments: “The first half of 2024 brought rent stabilization and a noticeable decline in demand, mainly due to economic factors in Western Europe. Nevertheless, there is cautious optimism, particularly in the retail and e-commerce sectors. Tenants are increasingly focusing on energy efficiency and ESG-compliant buildings, and owners must adapt to these expectations.”
Retail and E-commerce Drive Demand Despite Economic Slowdown
Despite economic challenges that have limited overall demand, particularly from the Transport, Shipping, and Logistics (TSL) and industrial sectors, tenants from the retail and e-commerce sectors have become the main drivers of demand in the first half of 2024. These sectors are benefiting from increasing consumption, supported by falling inflation and rising real incomes.
Trends related to nearshoring and reshoring are also clearly continuing, with companies moving production closer to their supply chains to reduce operational risk. An example of this is the LCube Szczecin-Goleniów project, where space was leased to the Chinese company Copper Joint Electric, which operates in the wind energy sector, among others. The location in the Goleniów Industrial Park, where other companies related to this industry are already operating, played a key role in this decision.
ESG and Energy Efficiency in the Spotlight
ESG is no longer just a buzzword but a key factor influencing tenant decisions, as they increasingly prioritize energy solutions and sustainable building practices.
Tenants not only expect sustainable practices but also long-term commitments from owners to ensure that buildings meet the latest energy efficiency standards and support their ESG goals.
What Does the Future Hold?
The second half of 2024 is expected to bring further stabilization of rental rates. However, there will likely be increased pressure on property owners to introduce more energy-efficient technologies, driven by rising operational costs due to inflation, higher energy prices, and minimum wages.
An increase in the activity of logistics operators and sustained demand from the retail and e-commerce sectors is also anticipated. Additionally, automation and robotics will play an increasingly important role in tenant strategies, particularly in the manufacturing and e-commerce sectors, where companies aim to increase efficiency and reduce dependence on the shrinking labor market.
Source: https://managerplus.pl/rynek-powierzchni-magazynowych-w-polsce-w-i-polroczu-2024-r-69057
