Warehouse market awaits the EU
Those in the know say that now is the time to snap up some top-quality warehousing. Particularly if you're renting, European Union accession is likely to herald a shift in current trends. While not necessarily pushing rentals back up, EU membership is expected to halt the current decline.
Currently, the cost of renting class A warehouse space is at a record low. In Warsaw, for example, there has been a dramatic fall over recent years, from €9.3 to €7.5 per square metre a month, down to between €5 and €4. Outside the capital rental charges have declined from between €6.5 and €6 to between €4 and €3.5.
A key reason for the sharp decrease is the heavy investment in class A warehousing over the past couple of years. As the total space available has grown, so market forces have pushed prices down. However, this trend is likely to be brought to a halt, since few projects are currently underway.
"Renting class A space could actually work out cheaper than an old warehouse," said Bartosz Szewczyk, industrial development manger from AIG Lincoln. He pointed out that new facilities offer two additional metres of height (eight compared to six metres), and are equipped with modern installations that facilitate cost cutting. "The developers are also becoming more flexible in negotiations, for example, you may get the heating for free," he added.
The trend towards outsourcing is another factor serving to bring rental charges down. Companies that previously warehoused their own goods are turning increasingly to logistics companies to provide storage.
"This is a clear sign that the Polish market is becoming more mature," said Paulina Górska, marketing and research specialist at CB Richard Ellis, who explained that our warehouse space prices are among the highest in Europe.
The fact that logistics companies make use of their own warehouse space has an impact on the vacancy rate elsewhere. But if they are leasing a large amount of space, the impact is mainly on the price. According to Górska, international logistics companies will probably be major customers for leasing warehouse space in the future.
The latest figures for the warehouse vacancy rate in Warsaw, compiled at the end of last year, show that a massive 16.6 % of its warehouse stock lies idle. Outside the capital the rate is significantly lower, with an average vacancy rate of only 5%. The figures are indicative of another trend, of companies moving away from the major cities to such locations as Teresin, Błonie and Mszczonów.
"One reason for the logistics companies to make the move is to establish their own transport terminals as a way of cutting costs," confirmed Marek Wachowski, head of warehouse agency at CB Richard Ellis.
Accession to the EU will certainly have an impact on the consumption level in Poland, resulting in increased imports and hence in the demand for warehousing.
"But the effect is often overestimated and should not influence market trends," said Górska. She explained that the potential growth of demand will not be linked directly to EU accession, but rather to the economic development that it will encourage, as demonstrated by the examples of Greece and Spain.
The impact of EU membership on the warehousing market should not be overestimated largely due to the state of the country's roads. The Polish frontier will form the EU's eastern border, but Wojciech Gšsiorowski, marketing director with FM Polska, pointed out that modern logistics companies are not concerned by the distance that separates them from the border. They can operate directly, for example, from Germany to Russia and will have no interest in setting up transit bases in Poland, partly because of the underdeveloped transport infrastructure. An exception would probably be made in the case of warehouses equipped with railway sidings.
The anticipated road improvement that will come with EU membership will herald the emergence of creating more centralised warehousing. "When the road network is not satisfactory, they do not want to take the risk of being late with the merchandise," explained Bartosz Szewczyk. Currently, therefore, logistics companies are establishing several warehouses in various parts of the country. But as the roads improve, these are likely to be closed down in favour of bigger facilities located in the geographical heart of the country.
The process is likely to take time. As CB Richard Ellis's Paulina Górska pointed out, "To build a warehouse, it takes six months, an expressway - ten years."
Currently, the cost of renting class A warehouse space is at a record low. In Warsaw, for example, there has been a dramatic fall over recent years, from €9.3 to €7.5 per square metre a month, down to between €5 and €4. Outside the capital rental charges have declined from between €6.5 and €6 to between €4 and €3.5.
A key reason for the sharp decrease is the heavy investment in class A warehousing over the past couple of years. As the total space available has grown, so market forces have pushed prices down. However, this trend is likely to be brought to a halt, since few projects are currently underway.
"Renting class A space could actually work out cheaper than an old warehouse," said Bartosz Szewczyk, industrial development manger from AIG Lincoln. He pointed out that new facilities offer two additional metres of height (eight compared to six metres), and are equipped with modern installations that facilitate cost cutting. "The developers are also becoming more flexible in negotiations, for example, you may get the heating for free," he added.
The trend towards outsourcing is another factor serving to bring rental charges down. Companies that previously warehoused their own goods are turning increasingly to logistics companies to provide storage.
"This is a clear sign that the Polish market is becoming more mature," said Paulina Górska, marketing and research specialist at CB Richard Ellis, who explained that our warehouse space prices are among the highest in Europe.
The fact that logistics companies make use of their own warehouse space has an impact on the vacancy rate elsewhere. But if they are leasing a large amount of space, the impact is mainly on the price. According to Górska, international logistics companies will probably be major customers for leasing warehouse space in the future.
The latest figures for the warehouse vacancy rate in Warsaw, compiled at the end of last year, show that a massive 16.6 % of its warehouse stock lies idle. Outside the capital the rate is significantly lower, with an average vacancy rate of only 5%. The figures are indicative of another trend, of companies moving away from the major cities to such locations as Teresin, Błonie and Mszczonów.
"One reason for the logistics companies to make the move is to establish their own transport terminals as a way of cutting costs," confirmed Marek Wachowski, head of warehouse agency at CB Richard Ellis.
Accession to the EU will certainly have an impact on the consumption level in Poland, resulting in increased imports and hence in the demand for warehousing.
"But the effect is often overestimated and should not influence market trends," said Górska. She explained that the potential growth of demand will not be linked directly to EU accession, but rather to the economic development that it will encourage, as demonstrated by the examples of Greece and Spain.
The impact of EU membership on the warehousing market should not be overestimated largely due to the state of the country's roads. The Polish frontier will form the EU's eastern border, but Wojciech Gšsiorowski, marketing director with FM Polska, pointed out that modern logistics companies are not concerned by the distance that separates them from the border. They can operate directly, for example, from Germany to Russia and will have no interest in setting up transit bases in Poland, partly because of the underdeveloped transport infrastructure. An exception would probably be made in the case of warehouses equipped with railway sidings.
The anticipated road improvement that will come with EU membership will herald the emergence of creating more centralised warehousing. "When the road network is not satisfactory, they do not want to take the risk of being late with the merchandise," explained Bartosz Szewczyk. Currently, therefore, logistics companies are establishing several warehouses in various parts of the country. But as the roads improve, these are likely to be closed down in favour of bigger facilities located in the geographical heart of the country.
The process is likely to take time. As CB Richard Ellis's Paulina Górska pointed out, "To build a warehouse, it takes six months, an expressway - ten years."
