At the end of the first quarter of 2024, the total resources of modern warehouse and industrial space in Poland amounted to over 32.7 million sq m, which means an increase of 9.5% compared to the same period last year.
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A new tenant of the warehouse in Pruszków
– As expected, the growth dynamics of the warehouse and industrial market dropped below 10% from the average annual level of almost 16% recorded over the last 10 years. New supply in the period from the beginning of January to the end of March slightly exceeded 852,000 sq m, which is an increase of 47% compared to the previous quarter, but a decrease of over 55% compared to the first quarter of 2023. It is worth emphasizing that the increase in the number new warehouse projects, especially those implemented on a speculative basis, could be positively influenced by the long-awaited reduction in interest rates, which would translate into lower investment financing costs – says Jakub Kurek, Director of the Industrial and Warehouse Space Department at the consulting company Newmark Polska.
At the end of March 2024, over 2.3 million sq m were under construction, i.e. 17.6% less than in the fourth quarter of 2023, but over 9% more than in the first quarter of 2023. Developer activity for several quarters remains at the level of approximately 2.4 million sq m. and focuses mainly on the six largest warehouse markets in the country (Warsaw and the surrounding area, Upper Silesia, Central Poland, Lower Silesia, Greater Poland and Tricity). The Lesser Poland Voivodeship is also enjoying great interest from developer companies, where investments with a total area of almost 152,000 sq m are currently being implemented.
The total volume of space leased in the first quarter of 2024 was almost 872,000 sq m, which means a decrease of over 25.9% year-on-year and 54% quarter-on-quarter. This is the lowest level of tenant activity recorded in Poland since the third quarter of 2017. Moreover, for the first time in 17 quarters (i.e. since the fourth quarter of 2019), it did not exceed 1 million sq m.
– Taking into account the average annual demand, which has been over 4.6 million sq m since 2016, we forecast that this year's volume of lease transactions on the warehouse and industrial space market in Poland will also exceed 4 million sq m. – adds Jakub Kurek.
The structure of transactions concluded in the first quarter of 2024 was dominated by new lease agreements (58%). Renegotiations accounted for 36% of total demand, with expansions accounting for the remaining 6%. It is also worth adding that during this time, tenants rented a total of 58,900 sq m. based on contracts concluded for a shorter period (up to one year).
– The highest tenant activity was recorded in the Masovian, Łódź and Greater Poland voivodeships, whose share in the total transaction volume amounted to 23.8%, 20.4% and 19.0%, respectively. Warehouses offering energy-saving and sustainable development solutions and ensuring comfortable working conditions were very popular among tenants, says Agnieszka Giermakowska, Director of the Market Research and Consulting Department, ESG Leader, Newmark Polska.
The largest transactions finalized in the period from January to the end of March 2024 included the lease of 62,000 sq m. in Hillwood Łódź II by a confidential tenant from the commercial sector and a new agreement concluded by an e-commerce company for 60,000 sq m. at Panattoni Park Poznań A2. Another large lease agreement concerned the lease of 49,800 sq m. at Panattoni Park Poznań West Gate II by ID Logistics.
At the end of March this year, the share of vacant space in the total resources was 8.2%, which means an increase by 0.8 percentage points quarter to quarter and by 1.7 percentage points year-on-year. The availability of space in existing buildings is systematically increasing and at the end of the first quarter amounted to almost 2.7 million sq m. compared to 1.13 million sq m in investments in progress.
– Rents for prime warehouse and industrial space in major markets remain relatively stable. In the case of locations with a relatively high vacancy rate, tenants can count on more attractive rent rates and incentive packages. At the end of the first quarter of 2024, the highest rents were recorded in Warsaw (zone I), but recently the Pomeranian and Lesser Poland voivodeships have joined the group of the three most expensive markets – says Urszula Sobczyk, Director of the Valuation Department at Newmark Polska.
