The industrial sector is growing rapidly
Despite a decline of about 0.49 million sq. m. from the fourth quarter of 2023, growth in the industrial sector remains strong.
"At the end of March 2024, the total stock of industrial and logistics space in Poland stood at 32.7 million sqm, up nearly 10% year-on-year. This is the fastest growth rate in Europe. Development activity continues with about 2.32 million sq. m. under construction, down slightly from the previous quarter. The largest amounts of new space under construction are in the 'Big Five' markets and around Gdansk and Krakow. Development activity is also gaining momentum in smaller markets such as Bydgoszcz-Toruń and Szczecin," says Martyna Kajka, Industrial and Logistics Director, BNP Paribas Real Estate Poland.
The highest volume of warehouse construction in January-March 2024 was recorded in Lower Silesia (586,000 sqm), Central Poland (396,700 sqm) and Warsaw II (301,500 sqm). Meanwhile, the largest amounts of new warehouse space in the first quarter were delivered in Lower Silesia (272,000 sqm), the Tri-City (167,200 sqm) and Poznań (121,100 sqm).
High level of new supply with weakening demand
More than 850,000 sqm of new industrial and logistics space was delivered in the first quarter of 2024, an increase of more than 270,000 sqm compared to the last quarter of 2023.
At the same time, demand declined in the first three months of 2024, when more than 870,000 sqm of industrial and logistics space was leased, down about 25% compared to the same period in 2023. BNP Paribas Real Estate Poland notes that this was the lowest leasing volume since the second quarter of 2019. This decline is largely attributed to the economic slowdown and an overall increase in operating and financing costs. However, demand for industrial and logistics space weakened not only in Poland, but also across the CEE region.
The highest leasing activity was in Central Poland, where more than 178,000 sqm was leased in the Łódź region, and in Warsaw II, where 168,000 sqm was leased. Poznań ranked third with 165,000 sqm of leases. The largest transaction of the first quarter was a 62,000 sqm lease by a retailer at Hillwood Łódź II Chocianowice.
Vacancy rates rise again
The overall vacancy rate in Poland's industrial and logistics sector has been rising since 2021, when it reached an all-time low of 3.3%. In January-March 2024, the rate stood at 8.2%, the highest level since September 2020 (8.5%), increasing 1.7 pp year-on-year.
At the end of the first quarter of 2024, warehouse availability rose to 2.61 million sqm after 852,000 sqm of new space was completed. The lowest vacancy rates of less than 4% were in the Tri-City, Rzeszow and Krakow, while the highest, exceeding 10%, were in central and western Poland, including Wroclaw, Zielona Gora and Gorzow Wielkopolski.
Warehouse developers expand land banks
The BNP Paribas Real Estate Poland report also indicates that, according to the new planning law, existing zoning studies will be replaced by new master plans by 2025, meaning that zoning plans cannot be amended until then. Supplementary areas, which are intended to allow certain types of projects, will be a key element of these plans.
"Initially, the supplementary areas procedure was also supposed to apply to warehouses in order to facilitate their construction, but in the end the Polish government excluded warehouses from the list of investments covered by this procedure. As a result, the new regulations will make it much more difficult to develop warehouses in Poland, which is likely to affect the real estate and logistics market, especially given the growing demand for warehouse space driven by e-commerce and logistics development. Fearing the new regulations, developers are increasing their land banks," says Robert Pawlowski, Industrial and Logistics Director, BNP Paribas Real Estate Poland.
Warehouse developers have recently become particularly active in land purchases. CTP, for example, has added 0.5 million sqm to its land bank, which includes about 3 million sqm of land with active or pending building permits. In 2023, Satoia acquired about 1.2 million sq. m. to its land bank, most of which was industrial land. The company also plans to acquire another million square meters of land or more by the end of this year. Prologis also recently expanded its land bank by more than 23 hectares in Zabia Wola.
E-commerce gains momentum
Online retail sales in Europe as a whole are expected to grow by 42% between 2022 and 2027. GlobalData estimates that e-commerce in Poland will grow by 38% by 2027, surpassing the growth rate projected for Belgium, the Netherlands and Austria, with online sales reaching more than 24 billion euros. The growing popularity of e-commerce will translate into more deliveries and investments in logistics networks and warehouse infrastructure in and around cities.
E-commerce continues to go from strength to strength.
This is evidenced by the result of InPost, which delivered 589.5 million parcels last year, an increase of 16% compared to 2022.And on December 19, 2023, it processed a record nearly 11 million parcels in one day, compared to 1 million in 2019 and just 500,000 in 2016.This shows that Poles prefer parcel delivery, which is also important in terms of minimizing their carbon footprint and reducing their environmental impact.
