The warehouse market in Poland has been highly volatile over the past few years, from a surge in demand for logistics halls during the pandemic, to declines in the last 18 months due to the weakening economy, political uncertainty related to the war in Ukraine, energy price rises and high inflation. Today, the situation in the warehouse space market seems to be stabilising and the outlook for both warehouse tenants, developers and general contractors is optimistic.
Despite the weaker last few months, Poland is still one of the largest warehouse markets in Europe. Our country’s very favourable location, well-educated staff or the relatively low cost of building a warehouse facility mean that foreign investors will continue to choose our country for their logistics operations. According to analysts’ forecasts, logistics in Poland has nothing to fear and the stabilisation of the economic market should have a positive impact on increasing investor activity.
Warehouse space market in figures
2023 was a difficult year for the warehouse space market, although there was a breath of optimism in the last quarter. New supply reached almost 4 million m2 and was only 13% lower than in the record year 2022. However, this is the result of pent-up demand and the finalisation of construction projects started earlier. At the end of December 2023, the total stock of warehousing and industrial space in Poland exceeded 32.9 million m2. The majority (76%) are located in the five leading regions: Warsaw and surroundings, Łódź, Upper Silesia, Greater Poland and Lower Silesia.
Lowering demand from tenants, coupled with the still large number of warehouse and logistics centres under construction, resulted in an upward trend in vacancy rates last year. At 7.7% in Q3 2023, the vacancy rate reached its highest value over the past three years. However, it is worth noting that around 70% of the vacant space is in buildings completed after 2021, i.e. those completed more recently.
Rental rates – what is in store for us in 2024?
As far as rents are concerned, the past year has seen an average increase of 5%, which, with 20-30% increases from 2022, does not seem like much. The increases related primarily to new logistics hall projects which are distinguished by their technical sophistication and energy efficiency. In the current year, analysts do not anticipate significant changes – the stabilisation of construction costs and project financing, as well as the relatively high availability of already built industrial and warehouse space, are the basis for a further slowdown in rental growth, or even a reduction in existing rates in some locations.
Warehouse market – what are the trends?
ESG. The year 2024 will certainly be marked by the further development of ESG strategies in companies, with a particular focus on environmental aspects. Green warehouse centres are slowly becoming the standard. This is demanded by tenants, well aware of the benefits they can achieve by choosing energy-efficient, low-emission buildings, designed for the comfort of their employees and with concern for the environment. But ESG is not just about financial or image benefits – more and more banks are taking steps to integrate climate and environmental risks into their lending processes. This sends a clear signal to entrepreneurs that, in order to obtain financing for their project, they need to present a design for a hall whose construction and subsequent operation will demonstrate concern for the environment and take into account the reduction of the carbon footprint throughout the building’s life cycle.
Nearshoring and production development. Warehouse market analysts point out that in the long term, Poland will play a significant role in trends such as nearshoring, i.e. moving production closer to target markets. Our country is already one of Europe’s largest producers of white goods, and we also play an important role in the automotive sector, with a particular focus on electromobility. New production facilities, but also the expansion of existing factories, will require new warehouses – both for the storage of components and finished products. With facilities organised in this way, businesses will significantly reduce the risk of disrupting supply chains, reduce transport costs, but will also be able to afford to fulfil orders more quickly. There is no doubt, therefore, that in the coming years not only will new logistics centres be built in our country, but also storage halls for the needs of manufacturing companies.
Development of the Baltic regions. The development of transport infrastructure is one of the driving forces for the industrial-logistics market. It is therefore worth highlighting here the growing maritime transport in our country and several economically important projects. An example is the ongoing construction of another deep-water quay at the Baltic Hub container terminal in Gdansk, which is expected to be completed this year. At the end of last year, the expansion of the port in Świnoujście was also confirmed, while in Gdynia the construction of an external port to handle container ships is to be completed. Analysts are already observing an increased number of logistical projects and thus a growing number of warehouse centres and high-storage warehouses in the Szczecin and Tricity region, which are certain to gain in importance in the coming years.
Forecasts for 2024 for the warehouse space market are moderately optimistic. The economic stabilisation may stimulate the demand for new space, which has been declining over the past year, and the new developments will certainly help revitalise less depleted regions of the country. However, developers as well as general contractors of warehouses need to be very vigilant, as construction experts are predicting a ‘crop failure’ for the industry. The influx of new EU funds (NIP and EU budget 2021-27), and the consequent record accumulation of projects in areas such as roads, energy and housing, can very quickly lead to new, yet well-known, problems to the industry from previous years. We are talking about another wave of price increases in construction materials and wage pressures due to a shortage of labour.
