2020, a year driven by warehouses

2020 will go down in history as a year full of challenges and difficulties related to the COVID-19 pandemic. The undoubted winner of this period is the logistics and industrial space sector, which not only did not feel the negative impact of the coronavirus, but also saw an increase in demand mainly due to the strong acceleration in the e-commerce sector. Gross demand in 2020 reached the value of almost 5.24 million sq m, which is the best result in the history of the warehouse market.

As at the end of December 2020, total supply of Poland’s modern industrial and logistics space stood at approx. 20 680 000 sqm. The highest volume of existing stock, i.e. more than 4.9 million sqm (which represents nearly 24% of the existing volume), is located in the Warsaw I and II zones. Other leading industrial and logistics regions, i.e. Upper Silesia, Central Poland, Poznań and Lower Silesia (Wrocław) are also growing at a dynamic pace, whereas at the end of 2020 together they held 55% of the country’s existing stock (more than 11.3 million sqm). Nearly 20% of the total stock, which amounts to more than 4.1 million sqm of industrial and logistics space, is to be currently found in the emerging locations, this to include Kraków, the Tricity, the East (Białystok / Rzeszów / Lublin), Toruń / Bydgoszcz, Szczecin, the West and Opole.

As far as Poland’s commercial real estate market is concerned, the industrial and logistics sector proved to show the most resilience to the negative impact of the global pandemic. Gross take-up, not taking into account short-term leases, reached nearly 5.24 million sqm, which is a record-breaking result for the sector. In turn, as regards new leases and expansions, the year ended with a result of 3.6 million sqm, which is a figure nearly 30% higher than that recorded in 2019. This placed Poland amongst the top most active industrial and logistics markets across Europe. The sustained good availability of land, as compared to other countries, and Poland’s constantly improving road infrastructure represent only some of the strengths valued by tenants and developers alike – Igor Roguski, Head of Industrial and Logistics Department, Central and Eastern Europe, BNP Paribas Real Estate Poland

Altogether, just slightly below 2.0 million sqm of new space were delivered to Poland’s industrial and logistics market in 2020, of which the highest volume, i.e. nearly 670 000 sqm, was completed in Q3. The highest increases in terms of new supply between January and December were recorded in the Warsaw II (517 000 sqm) and Upper Silesia (426 000 sqm) zones. Panattoni A2 Warsaw Park (Grodzisk), with the area of approx. 104 000 sqm, completed in the Warsaw II zone, was the largest warehouse facility delivered to the country’s market in 2020. Additionally, there were five schemes with the area of in excess of 50 000 sqm delivered to the industrial and logistics markets across the country in 2020: P3 Mszczonów (58 000 sqm, Warsaw II), Hillwood Oleśnica (53 000 sqm, Wrocław), Hillwood Wrocław Wschód II (52 000 sqm, Wrocław), Prologis Park Ruda Śląska (51 000 sqm, Upper Silesia) and Prologis Park Janki (50 000 sqm, Warsaw II).

Developer activity on Poland’s industrial and logistics market continuous to be high. As at the end of 2020, there were more than 2.0 million sqm of space under construction, approx. 6% more than in the corresponding period in 2019. The highest volumes of space under development were recorded in Upper Silesia (401 000 sqm), the Tricity (287 000 sqm) and the Warsaw II zone (274 000 sqm). The largest schemes currently under construction include: Panattoni BTS Amazon Świebodzin (204 000 sqm) in the East zone, Panattoni Park Gdańsk Airport (96 000 sqm) in the Tricity zone and 7R Beskid park II (80 000 sqm)  in the Upper Silesia zone.

As at the end of December 2020, the vacancy rate stood at 6.9%, which represents a 1.6 pp drop q/q, and a 0.5 pp drop as compared to the corresponding period in 2019. New supply in Q4 2020 came to less than half of the quarterly average recorded since the beginning of 2019. Gross take-up (not taking into account short-term leases) reached record-breaking volumes both in Q4 alone, i.e. in excess of 1.5 million sqm, and altogether in 2020, standing at a total of 5.24 million sqm. In turn, the net take-up figure for 2020 came to more than 3.6 million sqm (an increase by approx. 30% as compared to 2019), while in Q4 it reached 966 000 sqm (a drop by approx. 3% as compared to Q4 2019). As far as the entire 2020 is concerned, Poland’s industrial and logistics market attracted most interest from organizations from the logistics, distribution, and manufacturing sectors, as well as numerous retail chains and the e-commerce industry. The increasing demand from the e-commerce industry is additionally contributing to greater developer interest in land around large cities, as well as growth in respect of the so-called small business units and last-mile warehouse facilities, i.e. urban schemes that enable organizations to reduce to a minimum the time it takes to deliver their goods to the customer. Additionally, nearshoring, i.e. the moving of manufacturing and logistics functions from Asia and Western Europe to Poland, will also encourage further growth of the country’s industrial and logistics market. Environmental awareness will be another trend to gain in importance in 2021 as industrial and logistics tenants are now looking for facilities holding BREEAM or LEED certification.

What are we to expect in the coming quarters?

Optimization and improvements in respect of warehouse logistics, as well as further restructure of existing supply chains will prove to be the key to success for industrial and logistics tenants in the coming quarters. Digitization, automation and robotization of warehouse processes will continue to grow in importance. Additionally, demand from the e-commerce industry will remain the main driver for sustained developer activity, while technological advancement and increasing environmental awareness will mean that operation of newly developed industrial and logistics facilities will become more efficient and cost-effective. Interestingly, there is also growing demand from data centre operators noticeable on the market now. The fact that an increasing number of global companies are investing in the Polish “data centre” market is a good sign for the future – Wojciech Nowicki, Associate Director, Industrial and Logistics Department, BNP Paribas Real Estate Poland

Author:

BNP Paribas Real Estate Poland

Last Updated on April 21, 2021 by Karolina Ampulska