Time for a cooldown

In the first half of 2023, Poland crossed the 30 million mark in total warehousing space and, in doing so, became the third biggest warehouse market in the EU, behind Germany and France.

In the second quarter of 2023, developers added 1 million sqm to the market, and experts expect the figure to go down in the coming months. “Strong inflationary pressure, high financial costs, blended with economic headwinds and the general uncertainty in the market have curbed construction activity, particularly in the sub-sector of speculatively developed space. In 2023, new supply is expected to reach around 3.5 - 3.6 million sqm,” Savills experts said.

Waning demand

With a drop in demand of 39% y/y, Poland seems to be in lockstep with the rest of Europe, where new demand has been down by 37% compared to the first half of 2022. Granted, last year saw a historic record in warehouse takeup. However, even compared to a five-year average, demand for warehouse space in H1 2023 was 18% lower across Europe, according to JLL data.

The subdued demand is largely the product of a slowdown among e-commerce players, who expanded during the pandemic more than any other tenant group. Back in 2021, their share in total warehouse space demand reached 20%. However, in the first half of 2023, it dwindled to a mere 4%.

Strong fundamentals 

But even with disconcerting industrial output figures in recent months (down by 2.7% y/y in July), the sector seems to be on the rise, mainly due to a large number of new manufacturing and high-tech investments coming to Poland.

According to Cushman & Wakefield industrial market experts, “Poland continues to be one of the most attractive industrial and logistics markets for investment. The combined costs of warehouse lease, energy consumption, and labor are among the lowest in Europe -- as much as 34% lower than in the Czech Republic and 62% lower than in Germany.”

Savills analysts agree with the optimistic long-term outlook, pointing to the accelerating trends of nearshoring, reshoring, and friendshoring fueling demand for industrial and logistics space, currently accounting for about 16% of the entire European take up. Poland “has been ranked in the Top 3 for almost a decade. Due to strong market fundamentals and favorable conditions, the demand for industrial and logistics space in Poland is expected to be sustained in the long term.”