Industrial market analysis
The industrial real estate market in Poland has, so far, been rather resistant to market fluctuations. The market will continue to grow, but not as quickly as it has in recent years. The boom period is behind us.
Moreover, the structure of demand for warehouse space is evolving. We expect that the number of tenants from the retail segment will grow as demand from the production segment diminishes. This will be a result of the diminishing wage-gap between Eastern and Western Europe.
In addition, due to the strong position of the Polish currency, the Poland is becoming less competitive and, as a result, we export less. Fewer companies are willing to relocate production lines to Central Europe. On the other hand, the affluence of Polish society is growing proportionally along with the retail industry, which has given the logistics sector a boost.
Stabilizing consumption
Over the last three years, figures on warehouse leasing have rocketed by double-digits each year. It is thus natural that real estate leasing dynamics will decline and the market will stabilize. Diminishing market supply is unavoidable and this trend is closely related to problems in the global financial markets. Small business entities will find it increasingly difficult to invest in real property.
At the same time, the position of major market players seems unlikely to change. It is worth stressing that Poland presents a vast geographical potential and offers highly advantageous warehouse locations as compared to the other countries of Central and Eastern Europe.
Poland's market share in the region currently amounts to 50 percent. Silesia and Central Poland are excellent locations for investment and the areas around Warsaw, Poznań and Wrocław are still attracting a lot of developers. Other important directions for potential expansion include the north and the Małopolska region. New logistics parks are being constructed in those areas, near Gdańsk and Kraków.
Rents on the rise
Rent prices vary from region to region, according to location. Today, tenants pay the highest prices (reaching €5.5 per sqm) for warehouses located near Warsaw's city limits (the first zone of the capital). Rent prices have grown this year by about 10-15 percent, depending on the rented space and location of the park.
Although the price depends on location, on average corporate tenants pay from €3.7-5 per sqm. Taking into account the declining rate of consumption and still strong demand for modern warehouse space, further price growth seems probable.
Individual approach
The character of warehouse space on offer will undoubtedly change. An increasing amout of space will be developed according to individual client's requirements, at the expense of the speculative market. Players in the market need to thoroughly analyze all indicators and incorporate them into their development plans. They also need to be flexible in tailoring offers to clients' needs, according to the specifics of their businesses.
A growing number of clients expect a customized, special approach, and this is especially true among the biggest tenants. In order to respond to their evolving expectations, firms need to take on built-to-suit projects. These industrial objects are dedicated to those clients who have to implement non-standard solutions as early as possible in the design stage. What really counts in implementation of such tailor-made investments is the developer's experience, as they have to demonstrate high responsiveness and general expertise throughout all phases of project development.
Robert Dobrzycki is the managing partner of Panattoni for Central and Eastern Europe
