Every billion zloty spent online generates a demand for 18.5 thousand sqm of warehouse space. A report prepared by Prologis and the advisory firm JLL states that by 2020, new lease agreements concluded by e-commerce companies could total up to 700 thousand sqm.
For several years now, the amount of money spent online in Poland has been growing at double digits. As the report shows, online purchases accounted for 3.9 percent of the total retail sales in the country in 2014. Most of the purchases are products that have to go through modern distribution or warehouse centers. By 2020, the share of e-commerce in the total retail sales will reach as much as 10 percent. This will result in a significant increase in the impact of e-commerce on supply chains and the logistics property market, as well as greater demand for modern warehouse facilities.
The high demand from the e-commerce industry in Poland began in 2013. At that time, it was a result of three large transactions by Amazon. The company has three logistics centres in Poland – two of them are in Bielany Wrocławskie, while the third one is located in Sady near Poznań. JLL’s analysis shows that the share of e-commerce tenants in the gross demand amounted to 5.8 percent in 2014. Additionally, 70 percent of the surveyed logistics service providers anticipate a significant increase in demand for logistics services. As a result, we will see an increase in demand for warehouse space driven by sales of products such as clothing and accessories, household goods, cosmetics, electronics, multimedia and food. “In recent years, every billion zloty spent online has generated a demand for 18.5 thousand sqm of warehouse space. According to preliminary estimates, assuming that the growth rate remains at this level in the years to come and the e-commerce market grows at about 15 percent a year, the e-commerce industry should generate a demand of 700,000 sqm by 2020,” says Jan Zombirt, Director of Market Research and Consulting Department, JLL.
“Currently, the total supply of modern warehouse space in Poland amounts to more than 9.7 million sqm. It consists of projects which largely meet the expectations of e-commerce tenants. It is quite common that developers adapt their existing projects to the specific needs of customers, adding mezzanines or increasing the efficiency of power systems at the request of the tenant. Tailor-made developments, such as BTS buildings, are also possible,” explains Paweł Sapek, Head of Prologis in Poland.
The types of warehouses used by the e-commerce industry operating in developed markets include e-fulfillment centres, parcel hubs, sortation centres, urban logistics depots, return processing centres and warehouses for online food fulfillment. “The results of the survey in which JLL interviewed logistics service providers and retail chains operating in Poland show that these specific warehouse functions will become more common in Poland. For example, over the next five years, 71 percent of the surveyed providers are going to need return processing centres,” says Jan Zombirt, JLL.
According to the surveyed logistics service providers, the most important characteristics of an e-commerce warehouse are: flexibility to expand or contract leased space, additional space, e.g. in the form of mezzanines, high security level, additional ancillary space, more power, more efficient HVAC systems and extensive parking space for employees. When it comes to location, the key factors are availability of labour, good road infrastructure and proximity to customers. Poland remains an attractive location for foreign companies, partly due to the lower costs of leasing warehouse space. “We expect that more e-commerce companies will move to Western Poland, as it enables them to establish cost-effective e-fulfillment and distribution centres for the German market and others. On the other hand, the central regions are well-suited for handling domestic distribution,” says Paweł Sapek, Head of Prologis Polska.
“In the next six months, nearly 50 large warehouse modules will become available for lease in Poland. As of now, 271 thousand sqm of warehouse space is under construction on a speculative basis, that is without a guarantee in the form of lease agreements,” says Jan Zombirt, JLL. Such an extensive supply of warehouse space shows that the Polish market is well prepared for the dynamic growth of e-commerce.
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