Amazon heating up Poland

The construction of a logistics center in Poland
Image : Panattoni Europe

The US giant is building 300,000 sqm of logistics space in Poland, driving up the segment’s demand and development figures

by Beata Socha

In December 2013, 714,000 sqm of industrial space was under construction, the largest volume since 2008. Almost half of that amount is accounted for by Amazon’s new built-to-suit schemes near Wrocław and Poznań, according to a report by Jones Lang LaSalle.
“We are expecting more developments to come as industrial is probably the hottest segment in Poland,” said Soren Rodian Olsen, head of office and industrial investments, capital markets at Cushman and Wakefield. “We have seen substantial investment volume growth during 2011-2012 and again in 2012-2013.” Olsen explained and added that, “we expect continued strong investor appetite and more global capital to be deployed into Polish logistics during 2014.”

Amazon fever
warehouse + stocksDevelopers Goodman and Panattoni are on their way to constructing three built-to-suit logistics centers for Amazon, with a total of 300,000 sqm of space.
The first one, constructed by Goodman and scheduled to open in 2014, will be located near Wrocław. Panattoni Europe will build the second center, near Poznań. It will feature 100,543 sqm, with 91,570 sqm designated for warehouse space. In 2015, the US online retailer’s third center will open near Wrocław, also delivered by Panattoni.
“We are very excited to be investing here in Poland. … We are greatly appreciative of all the support we’ve received from the community to make this multi-hundred million euro investment become a reality,” said Timothy Collins, director of European operations for Amazon.

Five hubs
The southern city of Wrocław has long been one of Poland’s top five logistics hubs, which are located predominantly in western and southern parts of the country. “The hottest locations for warehouse space are Warsaw, central Poland, in particular Stryków, Poznań as well as Upper Silesia, namely Gliwice and Mysłowice,” said Olsen.
At the end of 2013, the total warehouse stock totaled 7.45 million sqm, with 6.88 million sqm of space (92 percent of the total) located within the five largest markets:Warsaw, Upper Silesia, Poznań, central Poland and Wrocław, according to JLL data.

Same but different
quote-olszewskiAlthough almost equally attractive, these regions do have their own defining characteristics that are getting increasingly prominent.
“Upper Silesia is attracting numerous automotive and production companies as well as logistics operators. Poznań and Wrocław are, to a larger degree, becoming near-shoring locations for Western European logistics, and export-bound production,” said Tomasz Olszewski, head of industrial agency in Central and Eastern Europe at JLL.
“The Warsaw region is predominantly focused on catering to the logistics needs of the capital city and the premises of many retail chains. Finally, central Poland, which is increasingly integrating with the Warsaw region, is the main distribution center for companies operating across the country,” Olszewski added.

Hot, getting hotter
These locations are hot, both for developers and investors. Recently, Segro European Logistics Partnership (SELP) quote-olsen2acquired three Polish warehouse assets, located on the outskirts of Warsaw, Łódź and Poznań, for some €100 million.
“Investors are typically looking for large logistics centers, with good tenant covenant, for instance the recently traded H&M Distribution Center in Poznań,” said Olsen and added that, “Moreover, we see operators (i.e. logistics developers) with strong capital resources looking to further build up their respective logistics portfolios in Poland.”
Panattoni has just launched stage four of its Panattoni Park Łódź East, in central Poland, that will add another 8,300 sqm of space to the complex. The new space has already been pre-leased to BPO company CERO International. Together with the 11,000 sqm currently under construction within a built-to-suit project for electronics retailer TERG-Mediaexpert, the new scheme will bring the total area of the logistics center to nearly 163,000 sqm.
Meanwhile, MLP Group is mulling over launching new logistics projects in Wrocław in addition to the five logistics parks it has in its portfolio – two in Pruszków, near Warsaw, one in Poznań and two more in the Silesia region. The developer is also considering expanding its operations into eastern Poland.
“We are considering launching a logistics park near Wrocław as well as in Upper Silesia, which would solidify our position in the region. We are also analyzing a potential expansion in the eastern part of the country, which we believe will become increasingly popular with prospective tenants,” said Radosław Krochta, deputy CEO of MLP Group.

Go east?
Eastern Poland is still virtually non-existent on Poland’s warehouse map, but the strong retail expansion in the area may soon create demand for warehouse space.
“There isn’t much development activity in eastern Poland, however, we may expect that to change over the next three years as this region will become more interesting, with the development of infrastructure. For instance Rzeszów may become important for distribution to and from Ukraine,” said Olsen.

Demand down, but strong
The overall demand for warehouse space could reach 1 million sqm this year, down from 1.26 million sqm in 2013. Even though lower than in 2012, it is still a strong number, especially considering that last year’s result was 66.3 percent higher than net demand for warehouse space in 2012.
“2013 closed with a great result, which could be difficult to repeat despite the current favorable economic conditions,” the JLL report read. “Last year’s figure was strongly defined by Amazon entering the Polish market, and the probability that an investment of a similar magnitude is repeated is rather small. Therefore 1 million sqm is a rather optimistic scenario,” JLL experts explained.


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