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Trends
Is the warehouse market in Poland set to keep on booming? When are we going to see the magic 30 mln? How is e-commerce market influencing the sector? Kamil Szymaƒski, the head of the industrial agency at Savills, answers these and other questions.

Anna Korólczyk-Lewandowska, ‘Eurobuild CEE’: What is the current situation on the warehouse and industrial market in Poland? And what are the latest trends?

Kamil Szymański, associate director, head of industrial agency, Savills: The logistics real estate market is still very active. In the middle of this year, the stock of modern space in the country reached 16.8 mln sqm. The annual increase in the supply of warehouse space since 2017 is more than 2 mln. We believe that the strong growth will continue over the next few years. Developers are still active on the main markets – in central Poland, Warsaw and its surrounding area, Poznań, Wrocław and Upper Silesia. We are also seeing growing interest in new locations among others in Eastern Poland e.g.: Rzeszów, Kielce, Lublin and Białystok. Locations in Western Poland, near the German border, such as Gorzów Wielkopolski and Zielona Góra are also increasingly drawing the attention of tenants and developers.

Are developers favouring speculative projects or build–to-suit orders?

We are currently seeing an increase in speculative projects, which also shows that the market is in a good shape as developers are not afraid of taking a risk. Interestingly, with all the speculative development new projects are emerging not only on the main markets but also in less popular locations, such as Kutno or Częstochowa. On the one hand, this is a response to the requirements of companies that are present on local markets and need the modern space that hasn’t been available so far. On the other, it represents an alternative for businesses located in major markets but that are now looking for new supplies of labour in places less affected by the shortages.

How does the Polish warehouse market compare with the rest of Europe?

Poland is one of the most active logistics markets in our part of the world. However, compared to the German market, which has almost 80 mln sqm of modern supply, it still some way to go to catch up. Furthermore, considering the size of the population, we do have significant potential for growth. There is continuing interest from companies that are choosing Poland as an alternative location for their current or future operations, to serve other regions of Europe, such as Germany, the Czech Republic or Slovakia. However, looking realistically at our warehouse and logistics resources, we are still behind Germany, France, the Netherlands, the UK and Denmark, but we have already overtaken Italy and are gradually approaching the level of Spain. The advantages of Poland mean that we have the chance to continue climbing up to the logistics ladder and joining the leaders of our continent.

During the last Eurobuild warehouse conference it was said that it was possible to increase warehouse space in Poland up to 30 mln sqm in a decade. Is this realistic? When will we reach 20 mln sqm?

I think this is very realistic. By the end of 2019 we will reach app. 18 mln sqm of modern warehouse and industrial space, and next year it will be possible to reach 20 mln – so reaching 30 mln sqm of modern warehouse space over the next ten years is a very realistic prospect. This could be achieved even earlier with the current growth rate, but some caution is advisable due to the inevitable business cycle. Although in my opinion the potential crisis will not impact the warehouse sector as much as it did a decade ago. But we have to take into account that some of the interest in the Polish market has already been used up, which could affect the pace of the sector’s development and future supply growth.

Which locations are tenants generally choosing? What are the factors determining this?

Employee resources are the main factor that is currently determining the choice of warehouse space. Just a few years back, when choosing a new location companies were mainly being guided by issues related to logistics and the improvement of related operations. Today, in contrast, the first step is to confirm the human resources potential connected of a given location. This doesn’t mean, however, that other factors are no longer valid. The road system, infrastructure and market access are still very important incentives, which is why the eastern side of Poland, for example, despite its labour pool is not so attractive because it still doesn’t have an extensive transport network. With their proximity to the German or Czech markets, central Poland, the west and the south are still enjoying the lion’s share of the interest. However, I would like to point out that Stryków outside Łódź is almost exhausted when it comes to the labour supply, and so it has become common to look for alternatives – new locations that are still quite close to the main transport routes, but with less competition between employers. And so Kutno, Częstochowa, Bydgoszcz, Toruń and recently Gorzów Wielkopolski have been appearing on developers’ and tenants’ radars.

And what types of buildings are tenants most interested in? What do they pay particular attention to? Are they looking for new formats? Do environmental certificates matter that much?

More and more of the facilities that are coming onto the market are being certified, usually BREEAM certified. Sometimes this is due to the implementation of certain corporate policies. Companies are looking for new locations that have sustainable development inscribed into their policies, so they are looking for environmentally friendly buildings. Thus developers are trying to meet these expectations. We will certainly be seeing even greater interest in certified buildings, especially from international companies. However, I wouldn’t call this a particularly strong trend. A large number of tenants from the logistics sector are looking primarily for systems and projects that can improve their logistics processes and solve their current employment problems. We are talking here, for example, about warehouses that have mezzanines and are set up for the use of the latest machinery and technological systems. Thus through automation they can be insulated to a degree from the situation on the labour market.

In what ways is e-commerce still transforming the warehouse market? And how could it change the sector in the future?

Clients from the e-commerce sector are not as demanding when it comes to the format of buildings as some people might think. The exception are warehouses designed for the courier companies that mainly service e-commerce stores. Flatter buildings with a large number of gates are recommended for such operations. For e-commerce, all the magic happens inside the halls, where the tenants themselves install automation systems. City logistics, so warehouses located within cities are also becoming more and more popular. As a result, tenants can be closer to the target customer and deliveries can be faster. In the future, e-commerce sector companies will find it difficult to compete with each other in terms of prices offered. Instead, their success will be determined by such aspects as product availability and the speed of delivery. The format of class ’A’ projects, however, should not change much in the near future. The retail and warehouse markets are beginning to permeate each other. The former is not developing as rapidly as it did a few years ago, but with the warehouse space market quite the opposite is the case. Huge changes are taking place in the world of retail. No one seems able to predict what traditional retail will look like in a few years’ time; but no one is in any doubt that the warehouse sector will be one of the biggest beneficiaries of these changes.

Is there any room left for other large players – developers and investors – on the Polish warehouse market?

I think there is some room, although it would certainly be a challenge for such a company. New players have been appearing regularly for the last three to four years. One of these is 7R, which from being a local developer has now become a company that is active across Poland. However, I think the entry barrier is very high. It requires a lot of know-how. If someone takes up the challenge and wants to enter this market, they have to accept that they will need people who have extensive knowledge of it. Such a debut could be difficult for companies completely new to the market. If another player emerges in the near future, I would bet it involves cooperation on a joint-venture basis. Companies that are well-known and experienced on the Polish market could then be working with investors who would like to enter it. On the other hand, there are investors that already have a property portfolio on the Polish market but have not yet set up a development structures. Now they can start thinking about starting such a business and bringing new projects to the market.

What are the biggest challenges for the warehouse market today?

Finding employees in a new location is undoubtedly one of the most important challenges that awaits tenants in the near future. Another challenge could be the availability of land ready for warehouse projects and in attractive locations, as this is gradually becoming scarce. ν

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