Logistical thinking
On the face of it, logistics and warehousing seems a dull topic. But storage and distribution in Poland is getting very excited foreign investors.
The main pros and cons of Polish logistics are plain for most people to see. The country's location makes it a regional hub for distribution, and a gateway to the emerging markets of Russia and other former Soviet states, such as Ukraine. The factors that make Poland attractive to companies in other sectors apply equally here. High unemployment and a relatively well-educated workforce mean finding staff is rarely a problem. The potential in the retail market is also driving logistics upwards. Economic growth is "much higher than most Western European countries," said Michael de Jong-Douglas, director of Central and Eastern Europe with Prologis. He was speaking at a panel discussion on the logistics and warehousing market in Poland at CEPIF 2005.
"You have high economic growth figures and the demographics are much different. Central Europe is dominated by a very young population and young consumers are driving all the retailers. [This] is not something you have in western Europe," he added.
Location, location
Location is everything in real estate and logistics is no exception. "From Warsaw you can cover not only Poland but part of Germany, entire Czech Republic and the Baltic States," says Daniel Franke, a key account and tender manager with Schenker Stinnes Logistics. This offers large companies serious potential for European distribution centers. Poland also tends to be "more flexible [and] much cheaper than other countries" in the region, says Franke.
Regional cities are beginning to show their strength, but the perception that the Warsaw market is in decline is inaccurate, says de Jong-Douglas. "Warsaw is not going down," he asserts. "Other regions are becoming more important, the pie is getting bigger, so the percentage allocated to a certain city is decreasing percentage wise but is not decreasing in terms of price."
Motorway madness
No conversation about the warehouse and logistics market takes place without the mention of the motorway system, and Poland lags behind its European neighbors in this respect. However, according to Franke, developers would do well to look beyond this issue: "I think the importance of motorways has been overestimated. I would say that investors focus too much on the motorways, particularly at the beginning, [and instead] they should focus on the logistics standards we can offer here in Poland."
According to John Palmer, a managing director with CB Richard Ellis Polska, some companies actually want to get away from motorways. "Some tenants don't want to be forced directly onto motorways because then they are forced into paying tolls and their location preference has been access to secondary or main roads and not motorways," he says.
However, it is to road-infrastructure development that many companies will look first when choosing a new logistics base. The development of motorways in Poland has taken something of a surprising turn. "[Although many expect that] the major road between Warsaw and Berlin should be the one that's upgraded first ... it seems to be the route going to Wrocław that is being updated faster," says de Jong-Douglas.
Despite euro-centric thinking, it is the north-south route that seems to be foremost in planners' minds, in particular the potential locked up in the port of Gdańsk.
"A lot of goods shipped overseas are brought into German ports and put onto a truck and then transported, rather than been brought into Polish ports," says de Jong-Douglas. "This raises for me two issues: How fast can the roadway be developed to the north and, secondly, is the development of the port to the north going to have a major impact on logistics?"
Regional strength
The panel viewed Poland as different from the rest of CEE. "The main geographical difference is Slovakia is Bratislava, Hungary is Budapest, Czech Republic is Prague, however Poland is different because it has a very Germanic geographic structure, meaning that you have a strong capital city but you also have extremely strong cities that are markets unto themselves," says de Jong-Douglas. "You have more potential I think in Poland to develop logistics parks, retail and industrial centers than in the Czech Republic, Hungary and Slovakia."
Many users have a preconceived notion of the ideal logistics site. "Near the cities and population bases, they look for sites with prominence that can be seen from main roads in a generic building that are attractive to funds and can accommodate a lot of occupiers," says John Palmer. "The dream lot size is probably between E10 to E50 (zł.42 to zł.209) million of warehousing on green space where there are no contamination issues with very flexible buildings, clear height of nine to 10 meters, good truck circulation space, with everything built by approved contractors to a high standard and ideally a tenant mix with lease lengths of 10 years. What you often have is a fragmented version of this. The smaller developer often looks at exiting straight away even before they have built the building in the short term to fit in with the cycle of their financing."
Total flexibility
"Any good standard warehouse should be available for use to 90 to 95 percent of users, asserts de Jong-Douglas. "The value of a non-generic warehouse is low [in terms of selling on], which means the rent will have to be higher." In the future, he believes agents will have to work more closely with developers and tenants to get the right mix. This means, "not looking at buildings as an asset but offering clients total flexibility and working with them as a partner not just on one building but across a whole portfolio. It is a growing market, it is a tough market, [and there is] a lot of money chasing potential which might not be there."
Logistics and warehousing appears to be an area with tremendous potential in Poland. "Logistic warehousing is very attractive," says Palmer. "Funds that came in to CEE initially targeted the office market and retail but they found logistics warehousing missing from their portfolios so there is a stampede towards it in the short term. In the long term, logistic warehousing parks are very valuable because the possibility of the residual value of the land they sit on may increase, depending on [how the land is used]."
The main pros and cons of Polish logistics are plain for most people to see. The country's location makes it a regional hub for distribution, and a gateway to the emerging markets of Russia and other former Soviet states, such as Ukraine. The factors that make Poland attractive to companies in other sectors apply equally here. High unemployment and a relatively well-educated workforce mean finding staff is rarely a problem. The potential in the retail market is also driving logistics upwards. Economic growth is "much higher than most Western European countries," said Michael de Jong-Douglas, director of Central and Eastern Europe with Prologis. He was speaking at a panel discussion on the logistics and warehousing market in Poland at CEPIF 2005.
"You have high economic growth figures and the demographics are much different. Central Europe is dominated by a very young population and young consumers are driving all the retailers. [This] is not something you have in western Europe," he added.
Location, location
Location is everything in real estate and logistics is no exception. "From Warsaw you can cover not only Poland but part of Germany, entire Czech Republic and the Baltic States," says Daniel Franke, a key account and tender manager with Schenker Stinnes Logistics. This offers large companies serious potential for European distribution centers. Poland also tends to be "more flexible [and] much cheaper than other countries" in the region, says Franke.
Regional cities are beginning to show their strength, but the perception that the Warsaw market is in decline is inaccurate, says de Jong-Douglas. "Warsaw is not going down," he asserts. "Other regions are becoming more important, the pie is getting bigger, so the percentage allocated to a certain city is decreasing percentage wise but is not decreasing in terms of price."
Motorway madness
No conversation about the warehouse and logistics market takes place without the mention of the motorway system, and Poland lags behind its European neighbors in this respect. However, according to Franke, developers would do well to look beyond this issue: "I think the importance of motorways has been overestimated. I would say that investors focus too much on the motorways, particularly at the beginning, [and instead] they should focus on the logistics standards we can offer here in Poland."
According to John Palmer, a managing director with CB Richard Ellis Polska, some companies actually want to get away from motorways. "Some tenants don't want to be forced directly onto motorways because then they are forced into paying tolls and their location preference has been access to secondary or main roads and not motorways," he says.
However, it is to road-infrastructure development that many companies will look first when choosing a new logistics base. The development of motorways in Poland has taken something of a surprising turn. "[Although many expect that] the major road between Warsaw and Berlin should be the one that's upgraded first ... it seems to be the route going to Wrocław that is being updated faster," says de Jong-Douglas.
Despite euro-centric thinking, it is the north-south route that seems to be foremost in planners' minds, in particular the potential locked up in the port of Gdańsk.
"A lot of goods shipped overseas are brought into German ports and put onto a truck and then transported, rather than been brought into Polish ports," says de Jong-Douglas. "This raises for me two issues: How fast can the roadway be developed to the north and, secondly, is the development of the port to the north going to have a major impact on logistics?"
Regional strength
The panel viewed Poland as different from the rest of CEE. "The main geographical difference is Slovakia is Bratislava, Hungary is Budapest, Czech Republic is Prague, however Poland is different because it has a very Germanic geographic structure, meaning that you have a strong capital city but you also have extremely strong cities that are markets unto themselves," says de Jong-Douglas. "You have more potential I think in Poland to develop logistics parks, retail and industrial centers than in the Czech Republic, Hungary and Slovakia."
Many users have a preconceived notion of the ideal logistics site. "Near the cities and population bases, they look for sites with prominence that can be seen from main roads in a generic building that are attractive to funds and can accommodate a lot of occupiers," says John Palmer. "The dream lot size is probably between E10 to E50 (zł.42 to zł.209) million of warehousing on green space where there are no contamination issues with very flexible buildings, clear height of nine to 10 meters, good truck circulation space, with everything built by approved contractors to a high standard and ideally a tenant mix with lease lengths of 10 years. What you often have is a fragmented version of this. The smaller developer often looks at exiting straight away even before they have built the building in the short term to fit in with the cycle of their financing."
Total flexibility
"Any good standard warehouse should be available for use to 90 to 95 percent of users, asserts de Jong-Douglas. "The value of a non-generic warehouse is low [in terms of selling on], which means the rent will have to be higher." In the future, he believes agents will have to work more closely with developers and tenants to get the right mix. This means, "not looking at buildings as an asset but offering clients total flexibility and working with them as a partner not just on one building but across a whole portfolio. It is a growing market, it is a tough market, [and there is] a lot of money chasing potential which might not be there."
Logistics and warehousing appears to be an area with tremendous potential in Poland. "Logistic warehousing is very attractive," says Palmer. "Funds that came in to CEE initially targeted the office market and retail but they found logistics warehousing missing from their portfolios so there is a stampede towards it in the short term. In the long term, logistic warehousing parks are very valuable because the possibility of the residual value of the land they sit on may increase, depending on [how the land is used]."
