E-commerce – Polish warehouse market ready for sector boom

The boom in the e-commerce segment has resulted in an increase in demand for warehouse space. New lease agreements signed by e-commerce firms on track to hit 700,000 sq m by 2020. Access to HR pool, attractive labour costs, and relatively low overheads of leasing industrial properties give Poland a golden opportunity to attract new players from the e-commerce market. Underpinning this is the strong presence of companies already operating here and the dynamic organic growth of online sales.


The boom in the e-commerce segment has resulted in an increase in demand for warehouse space. New lease agreements signed by e-commerce firms on track to hit 700,000 sq m by 2020. Access to HR pool, attractive labour costs, and relatively low overheads of leasing industrial properties give Poland a golden opportunity to attract new players from the e-commerce market. Underpinning this is the strong presence of companies already operating here and the dynamic organic growth of online sales.

Prologis, the the global leader in industrial real estate, and JLL, the international advisory company, present a joint research initiative Destination: Poland. Blazing a trail for e-commerce logistics. The report analyzes how the development of e-commerce in Poland affects the strategies of retailers and logistics operators in adjusting their supply chain to market requirements and, as a result, generate changes to the warehouse market. The report includes results from a survey conducted among companies from the e-commerce sector.

Online spending in Poland has experienced double-digit growth over the last couple of years and -according to PMR - in 2014 it accounted for 3.9% of total retail sales. Most of these goods must transit through a modern warehouse / distribution centre. Moreover, PMR anticipates that online spending will increase to 10% of retail sales by 2020, resulting in an even more pronounced impact on both the supply chain and the logistics real estate as well as an increase in demand for warehouse projects.

The major differences between traditional logistics and e-commerce are: fast deliveries, various collection points (BTC instead of B2B) – which often extends the time and increases the cost of such deliveries, and high seasonality that requires flexible warehouse capacity. Moreover, delivery becomes a part of brand marketing, and merchandise ordered online includes fast-moving goods as well as slow-moving products (retail chains usually have both types of goods in stock).

The dynamic development of the e-commerce segment creates new challenges for logistics operators working on behalf of retailers. According to the logistics operators surveyed, the main challenges fore-commerce in the next five years include: same day delivery (100%), handling returns (60%), cross-border (40%), security (20%), increasing labour cost (20%), short- term contracts vs long- term leases (20%) and sourcing appropriate warehouse space (10%).

Warehouse space for e-commerce tenants – Poland offers an attractive supply base

E-commerce warehouse formats available on developed markets feature certain specializations including: a dedicated e-fulfillment center, parcel hub/sorting center, parcel delivery center and urban logistics depot, returns processing center, and a Dot.com warehouse for online food fulfillment. A survey conducted by JLL among third party logistic providers (3PLs) and retailers show that some warehouse functions will be increasingly sought in Poland. For example, according to the research, in the next five years, 71% of 3PLs will express demand for return processing centers.

According to the surveyed logistic operators, the most important features of an e-commerce warehouse in terms of specification include: flexibility to expand or contract leased space, mezzanine levels, a high security level, more power, intensive HVAC, and an abundance of parking lots for employees. In terms of location, the key factor is availability and access to staff, access to an extensive road network, and proximity to the end-customer.

Developers operating on the Polish market are aware of these specific requirements of companies from the e-commerce segment with relation to logistics real estate. .

- The existing modern warehouse space stock in Poland is currently 9.6 million sq m. Most of the projects meet the requirements of e-commerce tenants. In addition, developers can adjust their investments to tenant needs, for example by adding mezzanine space or increasing power. There is also a possibility to launch build-to-suit-projects - explains Paweł Sapek.

Take-up continues apace – new agreements on 700,000 sq m by 2020

2013’s sky-high numbers were attributable to Amazon's three large transactions. In 2014, e-commerce tenants accounted for 5.8% of gross demand for industrial space. 70% of the surveyed 3PLs forecast a further increase in demand for logistics services. This will result in increasing demand for warehouse space - generated by the sales of products such as clothes and accessories, household equipment, cosmetics, electronics, multimedia, and food.

- E-commerce is likely to become the key driver in the growth of demand for logistics space in the next few years. Assuming stable growth rate of e-commerce at 15% per annum and potential for its further development, we forecast that by 2020 companies from this segment will lease up to 700,000 sq m of warehouse space. The demand will stem from both international newcomers commencing operations in Poland and the organic growth of the domestic market. This take-up will be sourced from three types of lease agreements, direct leases of pure-play online stores and e-fulfillment centers by traditional retailers, 3PL leases where a logistics operator fulfills online orders on behalf of a retailer, and omni-channel leases, where only part of the floor space is dedicated to e-commerce - Jan Zombirt adds.

Poland remains an attractive location for foreign companies as rents are markedly lower.

- We will therefore see more foreign e-commerce firms relocating to Western Poland, the location that enables cost-effective handling of e-fulfillment operations in, for example, Germany. On the other hand, regions located more centrally are well-suited for handling nationwide distribution - adds Paweł Sapek.

The growing demand will also involve specialized projects (for example cross-dock) located closer to urban areas and enable efficient deliveries within cities.

- Suburban parks will remain the locations most suitable for distribution hubs. Furthermore, Small Business Units and logistics centers within cities will also gradually gain higher recognition among tenants - Paweł Sapek summarized.


Jan Zombirt