Built-to-suit future
Robert Dobrzycki: We expect that a slowing of the industrial market will come. The effects of a slowdown are usually postponed [in this sector] by six to eight months in comparison to the residential or office sectors. The main advantage of industrial real estate in the CEE region, which makes it perhaps more resilient, is the constant presence of the so-called shift from the West to the East. We [in CEE] are still less expensive, so despite the economy slowing there is still a will to cut costs and move operations here.
Plus, the citizens of CEE countries have become wealthier and are spending much more money, thus boosting the retail market. And that's linked with the rental of warehouse space. These two factors have combined to delay the slowdown in the region. It will no doubt come, although it will be much more moderate than in Western Europe.
Furthermore, it will be visible in demand, but will be balanced by a slowdown in the pipeline of new projects because of financing issues. Smaller developers will hold up their pipelines, while bigger ones will be more careful with new projects since financing will now be limited.
How is Poland perceived in this sector? What are its strongest assets in terms of resisting the crisis?
Poland is a large, self-sufficient market, independent from Western Europe, to an extent, that any changes taking place there are not affecting demand in Poland as much as in, let's say, the Czech Republic and Slovakia, which are heavily dependent upon the automotive and electronics industries. A slowdown in tenants' demand is already visible there.
But Poland still has a solid economic situation. The future of the country also seems brighter because of the infrastructure, which is currently under construction. This is why Poland is still a great place for investments amid this global climate of uncertainty.
How do you expect rents in the warehouse sector to change in the face of this crisis?
That is a difficult question. It depends on how the crisis will affect the credit side and the demand side. Both sides will be weaker, which indicates that rent levels will remain the same. However, when we talk about financing, rising costs and the drop in liquidity on the market, we could also expect a slight rise in rents, but for a short period of time.
How is Panattoni Europe adjusting to the changing needs of customers?
We see that the maturing Polish industrial real estate market is being divided in half. Small and medium-sized companies are seeking smaller warehouse space of up to 3,000 sqm, while larger tenants are shifting to built-to-suit schemes. In my opinion, the latter [option] will become more and more popular as it's suited to tenants' needs and cheaper to finance.
Panattoni Europe recently acquired two new plots in Łódź. What makes this city so attractive that your company decided to focus on it? How do other regional cities look in terms of their potential?
From our point of view, Łódź and Silesia are key regions in Poland. Łódź is the second-biggest agglomeration in Poland, located in the center and at the intersection of major roadways. Furthermore, the labor supply and cooperation from city authorities make companies want to locate their businesses there. When we combine these factors with the success our projects have had in Łódź, it shows that our strategy has been correct.
