An impressive first half of the year for the warehouse and industrial market

The warehouse and industrial space market in Poland continues to thrive. According to the latest “Occupier Insight H1 2020”, a report prepared by real estate advisory firm Cresa Poland, this sector has come out on top despite the turbulences and current changes caused by the pandemic outbreak.

“In spite of the temporary economy lockdown, we continued to observe a very high level of activity amongst developers and tenants. Throughout the past six months, more than 1 million sqm of warehouse space was delivered in Poland and total stock amounted to 19.6 mn sqm. During that time occupiers leased more than 2.4 million sqm. One of the leases signed was a record-breaking transaction,” says Tom Listowski, Partner, Head of Industrial and Warehouse, Central and Eastern Europe, Cresa.

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The highest level of demand, 550,000 sqm, was observed in the Masovian region, where transaction volume stood at 55% of the annual average in 2015-2019. The average single transaction was equal to 6,900 sqm. In H1 2020 tenants, predominantly from the retail sector, leased an additional 250,000 sqm in the short-term to store unsold in-store inventory as a result of shopping and retail centre closures.

The signing of a lease for 200,400 sqm was a record-breaking transaction signed by a confidential tenant from the e-commerce sector in Panattoni’s park, located in Świebodzin (Lubuskie region). This high activity, which bumped up the average transaction size up by 800 sqm year-on-year, is the result of the dynamic development of the e-commerce and logistic sectors, which is due to boosting interest in online shopping among consumers.

At the end of the first half of 2020, 1.9 million sqm was under construction. Significant development activity is being focused in Silesia (435,000 sqm) and Masovia (417,000 sqm), up by 24% on the previous year. It is worth distinguishing the Lubuskie region, where the amount of sqm under construction was five times more than in 2019.

From January to June, absorption totalled 1 mn sqm, posting a 13% downturn in comparison to the same period in 2019. About 1.4 million sqm in existing buildings remained vacant. In buildings under construction, the share of vacant space was equal to 38%.

“The demand for warehouse and industrial space in Poland is expected to remain healthy right in the coming quarters. We expect that by the end of 2020 nearly 3 mn sqm of new supply will have been delivered, which means more than 1,5 times more than the annual average from the last 5 years. Supply is expected to be above 2 mn sqm in 2021, which is close to 2017 and 2018 records,” says Bolesław Kołodziejczyk, PhD, Head of Research & Advisory, Cresa Poland.

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The vacancy rate at the end of June 2020 dipped to 7%, which is 0.6 pp higher than the average from the previous four quarters. A substantial base effect, healthy demand and a continuous high volume of new supply are expected to result in a stable vacancy rate within the range of 6.7%-10%

In most of the regional markets, headline rents remained unchanged. Only a slight mark-down of 0,3 EUR/sqm/month was noted in Poznań.