The importance of new locations on the industrial real estate market in Poland looks set to rapidly grow - this is the conclusion that can be drawn from the “Small town, big deal” report prepared by JLL in cooperation with Hillwood Poland and ManpowerGroup. The so-called Big Five still remain the growth engine and continuously attract the majority of investments. However, cities such as Konin, Kielce and Częstochowa are the rising stars of the Polish industrial market.
Poland’s industrial market once again proved to be strong and buoyant. Total demand of 960,000 m² transacted on in Q4 boosted the annual volume of leased floor-space to 3.7 million m². Results were very close to last year’s record figures, making 2018 the second best year in the history of the market.
The outstanding market performance seen in 2017 maintained its strength in the first quarter of this year. The continuous activity by occupiers has driven the gross take-up to rise to an unprecedented high of 1.1 million m² and helped to boost Q1 volumes by double digits as compared to the corresponding period from last year. Such a beginning of the year gives plenty reasons for us to be as optimistic as ever.
The spectacular, record-setting results from 2017, which exceeded the expectations of most market players, allow one to go into 2018 with widespread optimism. Total space leased under new agreements and extensions in 2017 exceeded 3.1 million m², which is nearly 1 million m² more than in 2016. When lease renewals are added the gross take-up rises to more than 3.9 million m². In Q4 2017 alone, net take-up was more than 1.3 million m², slightly more than the figure for all of H1 2017 period. But what is behind those great numbers?
The half-way point in 2017 sees Poland’s industrial market closer to another record-breaking year. The excellent momentum seen in Q1 was even more pronounced in Q2, with gross take-up reaching 864,000 m² in that quarter alone, resulting in a total of 1.72 million m² being leased in the first six months of this year.
In Q1 2017, gross demand on the industrial space market in Poland was a record-breaking 855,000 sq m. In addition, the market gained 538,000 sq m of newly developed space. This constitutes the strongest opening to a year in the market’s history.
Following the best ever quarterly result in terms of gross take-up (904,000 m²) in Q3 2016, with just months until the end of the year the volume leased is already just below the 2.24 million m² which was transacted on in the whole of 2015.
1,312,000 sq m of warehouse space was leased in H1 2016. This is the best half-yearly result in the market’s history. 742,000 sq m remains under construction, of which 51% is being developed on a speculative basis. The vacancy rate reached an historically low level – only 6.1% of existing warehouse supply is available for lease.
In Q1 2016, total demand, measured by gross take-up, reached 680,000 m², which was the best result for all of the first quarters for the last decade and an excellent sign for the remainder of the year. However, the share of net demand in total take-up (55%) remains in the lower level of the comparable quarters over the last two very busy years, when it typically ranged between 50% and 75%.
Strong economic fundamentals and a qualified talent pool are factors that sway manufacturing companies' decisions in favour of investing in Poland. Such conclusions can be drawn from the Made in Poland. An Investment Guide for Manufacturing Sector Companies report, prepared jointly by the Polish Information and Foreign Investment Agency (PAIiIZ), JLL, EY and Hays Poland.
The 10 million m² threshold was nearly crossed, with new completions at slightly below 1 million m² in 2015. Gross take-up was at a historical high, for the third consecutive year, following strong development activity dominated by a few major developers.
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.
Despite a slight drop in demand in Q3 Poland’s industrial market remains robust and in the whole year will most likely register record breaking demand for the third consecutive year. Development activity in Poland remains high.
Industrial market records very strong demand for warehouse space. Still the dominating tenant is logistics sector before retailers and automotive industry. New markets are growing. The lowest vacancy rate since 2007.