Warehouses sprouting nationwide
Warehouse space, used mainly as storage and distribution centers, has grown most significantly in Warsaw over recent years. But developers follow their main clients, logistic and distribution companies, and these firms have begun expanding their presence nationwide with Katowice, lodz and Poznan highlighted as the most attractive targets for new warehouse space, developers said.
That doesn't mean Warsaw, with its industry and high-purchasing power attracting retailers, is being ignored. In fact, the capital city is likely a benchmark of development nationwide. From 1994 to 1998, 141,750 square meters of new warehouse space came onto the Warsaw market, according to figures from Henry Butcher real estate agency. New projects this year are expected to double this space to almost 300,000 square meters, according to Henry Butcher.
But Warsaw is no longer the only hub of activity. As economic growth broadens countrywide, demand for storage and distribution services, and thus warehouse space, is spawning regional hubs. Silesia's developed roads, large population base and burgeoning manufacturing sector make it a sought after center for storage and distribution services. lodz and Poznan are also prized locations.
Silesia has a population of four million, and its gradually increasing spending power and well-developed infrastructure make it a natural location for logistics companies, said Marek Wachowski, Katowice office manager at property agent Henry Butcher.
Demand for new warehouse space in Silesia already exceeds supply. "Silesia offers a wealth of old warehouses and production holes that don't meet the requirements of modern companies and hypermarkets," Wachowski said.
Silesia has only 40,000 square meters of 'class A' warehouse space. Class-A refers to space with, for example, state-of-the-art telecom systems, floor space and temperature-controlled rooms. As a benchmark for demand, Warsaw, with only half the population base, today has more than four times Silesia's modern storage space, which will climb to eight times the space by year's end.
The southwestern region has 33 large transport, forwarding and logistics firms, and many are forced to use old rented premises, Wachowski said. The majority of existing warehouse space was built in the 1960s and 1970s to serve the region's heavy industrial sector. Refurbishment is expensive, and it's generally better to knock down outdated warehouses and start fresh, he said.
And some distributors and logistics firms are acquiring land and building their own modern warehouse space, Wachowski said.
Distributor Zywiec Trade, for example, has just constructed an estimated 10,000 square-meter warehouse to provide distribution for its mother company, Zywiec brewery, owned by Heineken, he said. Another logistics firm, French-owned FM Logistic Polska, has developed two centers, one in Mszczonow, midway between Warsaw and lodz, and another in Tychy with 10,000 square meters that services Kraft Jacobs Suchard and Danone. A third project is underway in Tomaszow Mazowiecki, east of lodz, which will eventually consist of 60,000 square meters of warehouse space.
But financing land purchase and warehouse construction is expensive, and the majority of warehouse space is leased with projects underway by developers specializing in warehouse construction, said Brian Patterson, managing director of AIG/Lincoln, a U.S.-based company developing warehouses in Poland. "There are probably 100 Western and major Polish logistics companies, but of these, there are only a handful who own their own facilities," he said.
Demand for warehouses is not only being fueled by the growing number of logistics and distribution firms. In Silesia, for example, production and manufacturing firms account for a significant amount of the client base, and with production facilities developing the area shows great potential for warehouses, developers said.
"Of the light industrial and warehouse sector in Katowice, 75% is slanted toward light manufacturing and production," said Patterson. "The further south you go the more emphasis on production."
Tax breaks associated with Katowice's Special Economic Zone has attracted numerous investments by major international firms, notably in the automobile manufacturing sector. General Motors kicked off development in 1996 with a production facility in Gliwice. Several other multinationals followed suit, among them, the Lear Corporation and Delphi Automotive Systems Poland, both of which are GM suppliers. "There will be more suppliers," said Wachowski of Henry Butcher. "Suppliers have to have their warehouses close to the mother company,"
Development of warehouse space in Silesia faces competition with other business operations such as retailers and that is forcing land prices upward, developers said. In Katowice, for example, a 7-15 hectare location with utilities can cost up to $20-$40 per square meter, Wachowski said.
Although Silesia shows promise, the real jewel is lodz, said Patterson. "lodz is one of the best kept secrets in Poland. We take clients there and they say they didn't realize it, we usually need to suggest it to them," said Patterson. AIG/Lincoln is developing a warehousing project in lodz. lodz is ideal because it is in the dead center of Poland. Here distribution firms can service the whole country from one depot, Patterson said. Furthermore, lodz is a cheaper investment than Silesia and offers massively beneficial terms for production companies wishing to lower their labor costs, he said. The city offers around 15-25% cheaper rental rates than Warsaw for new projects, but "it can cost about half or even less (than Warsaw) to get hold of high quality managers and really good quality senior people," Patterson said. Furthermore, recruiting hassles are limited due to a sizeable influx of graduates emerging from the city's technical university, he said.
But other companies see Poznan as showing greater promise. "Poznan is the one most likely to develop due to its geographical position," said Mariusz Krzysztof Trzesniewski, president of Promexim, a forwarding company which has just opened a 6,000 square meter warehouse there. "It is becoming the hub for distribution nationwide," he said.
Not only is the city close to the German border and hence a prime location for trade with Western Europe, but monthly rents come in at around $6 per square meter, compared to around $10 in Warsaw. Older warehouses, not tailored to modern forwarding needs, are priced at only $2-$3 a square meter, he said.
Other locations around Poland don't have large-scale demand for warehousing services yet, industry sources said. Promexim, which operated in Gdansk for two years, said that despite the area's size, its logistics requirements are as yet undeveloped and there are few large customers hunting for the service there, Trzesniewski said.
That doesn't mean Warsaw, with its industry and high-purchasing power attracting retailers, is being ignored. In fact, the capital city is likely a benchmark of development nationwide. From 1994 to 1998, 141,750 square meters of new warehouse space came onto the Warsaw market, according to figures from Henry Butcher real estate agency. New projects this year are expected to double this space to almost 300,000 square meters, according to Henry Butcher.
But Warsaw is no longer the only hub of activity. As economic growth broadens countrywide, demand for storage and distribution services, and thus warehouse space, is spawning regional hubs. Silesia's developed roads, large population base and burgeoning manufacturing sector make it a sought after center for storage and distribution services. lodz and Poznan are also prized locations.
Silesia has a population of four million, and its gradually increasing spending power and well-developed infrastructure make it a natural location for logistics companies, said Marek Wachowski, Katowice office manager at property agent Henry Butcher.
Demand for new warehouse space in Silesia already exceeds supply. "Silesia offers a wealth of old warehouses and production holes that don't meet the requirements of modern companies and hypermarkets," Wachowski said.
Silesia has only 40,000 square meters of 'class A' warehouse space. Class-A refers to space with, for example, state-of-the-art telecom systems, floor space and temperature-controlled rooms. As a benchmark for demand, Warsaw, with only half the population base, today has more than four times Silesia's modern storage space, which will climb to eight times the space by year's end.
The southwestern region has 33 large transport, forwarding and logistics firms, and many are forced to use old rented premises, Wachowski said. The majority of existing warehouse space was built in the 1960s and 1970s to serve the region's heavy industrial sector. Refurbishment is expensive, and it's generally better to knock down outdated warehouses and start fresh, he said.
And some distributors and logistics firms are acquiring land and building their own modern warehouse space, Wachowski said.
Distributor Zywiec Trade, for example, has just constructed an estimated 10,000 square-meter warehouse to provide distribution for its mother company, Zywiec brewery, owned by Heineken, he said. Another logistics firm, French-owned FM Logistic Polska, has developed two centers, one in Mszczonow, midway between Warsaw and lodz, and another in Tychy with 10,000 square meters that services Kraft Jacobs Suchard and Danone. A third project is underway in Tomaszow Mazowiecki, east of lodz, which will eventually consist of 60,000 square meters of warehouse space.
But financing land purchase and warehouse construction is expensive, and the majority of warehouse space is leased with projects underway by developers specializing in warehouse construction, said Brian Patterson, managing director of AIG/Lincoln, a U.S.-based company developing warehouses in Poland. "There are probably 100 Western and major Polish logistics companies, but of these, there are only a handful who own their own facilities," he said.
Demand for warehouses is not only being fueled by the growing number of logistics and distribution firms. In Silesia, for example, production and manufacturing firms account for a significant amount of the client base, and with production facilities developing the area shows great potential for warehouses, developers said.
"Of the light industrial and warehouse sector in Katowice, 75% is slanted toward light manufacturing and production," said Patterson. "The further south you go the more emphasis on production."
Tax breaks associated with Katowice's Special Economic Zone has attracted numerous investments by major international firms, notably in the automobile manufacturing sector. General Motors kicked off development in 1996 with a production facility in Gliwice. Several other multinationals followed suit, among them, the Lear Corporation and Delphi Automotive Systems Poland, both of which are GM suppliers. "There will be more suppliers," said Wachowski of Henry Butcher. "Suppliers have to have their warehouses close to the mother company,"
Development of warehouse space in Silesia faces competition with other business operations such as retailers and that is forcing land prices upward, developers said. In Katowice, for example, a 7-15 hectare location with utilities can cost up to $20-$40 per square meter, Wachowski said.
Although Silesia shows promise, the real jewel is lodz, said Patterson. "lodz is one of the best kept secrets in Poland. We take clients there and they say they didn't realize it, we usually need to suggest it to them," said Patterson. AIG/Lincoln is developing a warehousing project in lodz. lodz is ideal because it is in the dead center of Poland. Here distribution firms can service the whole country from one depot, Patterson said. Furthermore, lodz is a cheaper investment than Silesia and offers massively beneficial terms for production companies wishing to lower their labor costs, he said. The city offers around 15-25% cheaper rental rates than Warsaw for new projects, but "it can cost about half or even less (than Warsaw) to get hold of high quality managers and really good quality senior people," Patterson said. Furthermore, recruiting hassles are limited due to a sizeable influx of graduates emerging from the city's technical university, he said.
But other companies see Poznan as showing greater promise. "Poznan is the one most likely to develop due to its geographical position," said Mariusz Krzysztof Trzesniewski, president of Promexim, a forwarding company which has just opened a 6,000 square meter warehouse there. "It is becoming the hub for distribution nationwide," he said.
Not only is the city close to the German border and hence a prime location for trade with Western Europe, but monthly rents come in at around $6 per square meter, compared to around $10 in Warsaw. Older warehouses, not tailored to modern forwarding needs, are priced at only $2-$3 a square meter, he said.
Other locations around Poland don't have large-scale demand for warehousing services yet, industry sources said. Promexim, which operated in Gdansk for two years, said that despite the area's size, its logistics requirements are as yet undeveloped and there are few large customers hunting for the service there, Trzesniewski said.
