EUR 374 mln transacted in H1 industrial volume record

Total industrial stock in Poland now stands at 16.9 mln sqm, according to JLL. Gross take-up in H1 2019 exceeded 1.6 mln sqm, while more than 1.1 mln sqm was delivered to the market with 2.2 mln sqm under construction.

Net demand over the first half of the year (taking into account new contracts and expansions) came to 1.1 mln sqm, representing a fall in the share of the total demand. However, 350,000 sqm was leased through the re-negotiations of existing contracts. JLL attributes the decline in net demand to the fact that many contracts have either expired or were prolonged that were signed in 2013/14 in a period of intensive growth. Logistics operators were the most active tenant segment, followed by retailers and light manufacturing companies – with all three accounting for almost 80 pct of the net demand.

The highest tenant activity was recorded in the Warsaw suburbs, where contracts for a total of 460,000 sqm were signed, followed by Wrocław (276,000 sqm) and Central Poland (216,000 sqm). Outside the ‘big five’ logistics regions, gross demand came in at 240,000 sqm, with 186,000 sqm of the leases being signed in newer locations on the warehousing map, such as Kielce, Podkarpacie and Białystok.

Central Poland, where over 250,000 sqm was delivered in H1, is still the leader in terms of the volume of new supply.

“At the end of H1 2019, 2.2 mln sqm was under construction, of which the largest markets – Upper Silesia, Wrocław, Central Poland, Warsaw and Poznań – accounted for 86 pct of the total. It’s worth noting that developers are bullish about the Polish market, which is confirmed by the volume of space being built on a speculative basis – the share of which now totals 45 pct. This is particularly visible in the largest metropolitan areas – more than 270,000 sqm was being developed on a speculative basis in Upper Silesia, followed by about 175,000 sqm in Warsaw and Wrocław, and 140,000 sqm in Central Poland. Large speculative investments can also be found in the TriCity, Szczecin, Kraków and Kujawy,” comments Tomasz Mika, the head of industrial for Poland at JLL.

Partly due to all the speculative activity, the average vacancy rate in Poland grew slightly to 6.3 pct at the end of H1 (5.7 pct in Q1). However, in Białystok, the vacancy rate dropped from 36 pct to 22 pct over the quarter. Rents also shifted up, despite the new supply, with particularly noticeable increase in Warsaw, Wrocław, Poznań, Szczecin, Opole and the Lubuskie region. Monthly rents in the Warsaw suburbs increased to EUR 3.8 per sqm, with the Warsaw inner-city remaining the most expensive market (headline rents ranging from EUR 4.3 to EUR 5.25). The most attractive rents offered for big-box units were to be found in Central Poland (EUR 2.6–3.2).

Prime warehouse yields came in at 6.25 pct (heading downward to below 6 pct), while exceptional long leased assets are trading at below 5 pct and Warsaw inner-city projects at around 5.50 pct.

“The volume of industrial investment transactions concluded between January and June 2019 was EUR 374 mln. This is the best ever H1 performance in terms of investment activity, and was helped by the inflow of Asian capital, especially from South Korea. The continued interest in the Polish market in the upcoming months is reflected by ongoing transactions involving both individual objects and real estate portfolios,” adds Tomasz Puch of JLL.

The largest investment transactions completed in H1 include the acquisition of Amazon’s fulfilment centre in Wrocław and Eurocash in Konin, both by Hines/Mirae from Blackstone for EUR 130 mln, as well as the Zalando Lounge distribution centre in Olsztynek by Hines/IGIS AM from Hillwood (for EUR 85 mln) and Castorama in Stryków by Tritax from Panattoni (for EUR 55 mln).