The existence of modern automotive sector is one of the key features of all developed economies. Direct investments in car manufacturing plants are much sought after and rivaled for by governments, who often struggle to secure these wins. Car plants not only provide jobs but also stimulate local economies, increase exports and foster general economic growth.
Poland was the main car producer in the CEE still in 2004, but over the course of a decade, it was overtaken by both Czech Republic and Slovakia who managed to attract a number of large foreign automotive investments. In 2013 over 583 thousand automobiles left Polish production lines which ranked the country the EU’s 8th largest car manufacturer.
Car production in Poland is concentrated in major industrial hubs such as Upper Silesia (Fiat, Opel), Poznań (VW), or Wrocław (Volvo). However, the country’s automotive output is much more than just car manufacturing. In fact, the vast majority of automotive production involves parts and components for export. Multiple producers, subcontractors and suppliers operate throughout Poland making the automotive supply chain a compound system.
Poland’s automotive output is set to increase substantially in the next few years with a number of large capacity enhancing investments announced recently. The most notable encompass:
As Poland’s automotive output is likely to find itself on a rising curve, industrial real estate market will be impacted. New production plants and extensions to the existing ones will require a new network of suppliers, who will be seeking industrial facilities across various locations. Some will certainly prefer operating in an owner-occupier buildings, others will have a preference for letting of industrial properties.
Similarly to most manufacturers (excluding light production), automotive companies require facilities which are tailored to their specific needs. Each improvement increases construction costs of these buildings. Buying such a facility often requires a freeze of substantial working capital. Therefore leasing often becomes an option worth considering.
During the past ten years, numerous automotive companies decided to relocate their operations to a commercial building. In particular, this phenomenon has been gathering pace during the last three years. Leasing industrial space, as opposite to owning it, is not only more cost efficient, but is also valued for flexibility as most suppliers collaborate with a manufacturer on a basis of temporary contracts.