Positive sentiment persists in Polish industrial and warehouse market

Poland

Gross industrial and warehouse take-up in Poland climbed to 1.6 million sq m in the first quarter of this year, representing an increase of 51per compared to the first three months of last year, according to “Occupier Insight – Industrial and Warehouse Market Q1 2021”, a report prepared by real estate advisory firm Cresa. 

This result accounts for 46 per cent of the annual average for the last five years and marks a record quarter in terms of leasing activity.

Poland’s industrial and warehouse stock reached 21.5 million sq m in Q1 2021, representing a 12.9 per cent increase over the same period last year. New warehouse supply hit 766 200 sq m, the third highest figure on record and up by 79 per cent on the same period last year. The largest volumes of new space were delivered in Upper Silesia (249 300 sq m) and Masovia (149 300 sq m). Close to 80 per cent of Poland’s warehouse and industrial space is concentrated in five provinces: Masovia, Upper Silesia, Łódzkie, Lower Silesia and Greater Poland. 

“At the end of March 2021, Poland’s development pipeline stood at more than 2.5 million sq m, 72.3 per cent of which has been secured under pre-lets. This is confirmation of the continued positive sentiment among both developers and tenants. The highest concentration of development activity is in Greater Poland and Łódzkie,” says Tom Listowski, Partner, Head of Industrial & Warehouse Department for Central and Eastern Europe at Cresa.

A total of 1.6 million sq m (excluding short-term leases) was transacted in the first three months of this year, up by 50.8 per cent on the same period last year. This result accounts for 46 per cent of the annual average for the last five years and marks a record quarter in terms of leasing activity. New leases made up 66 per cent of the leasing volume, followed by renegotiations (29 per cent) and expansions (5 per cent). The strongest leasing activity was in Greater Poland (382,300 sq m) and Masovia (326,600 sq m). 

The overall vacancy rate was down by 0.3 pp compared to the previous quarter at 6.6 per cent, its lowest since the second quarter of 2019, which translates into 1.4 million sq m of vacant warehouse and industrial space. The percentage of unoccupied space remains stable despite strong supply levels, with absorption at 776,900 sq m. The highest vacancy rates were in Świętokrzyskie (18.9 per cent) and Upper Silesia (9.7 per cent), while the Białystok and Lublin regions reported no vacant space.

“Recent industrial investment transactions have traded around 5.5-6 per cent and even sharper (sub 5 per cent) for long lease terms (10 years +) and single occupancy assets with strong covenants. In multi-tenant buildings with shorter leases in core locations yields have been compressing and we expect sub 5 per cent to be achievable in 2021 in locations such as Warsaw,” says Iga Kraśniewska, Research Manager at Cresa Poland.