Poland Warehouse Market - OF COVID-19 ON THE POLISH - Knight Frank
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K N I G H T F R A N K .C O M . P L / E N / R E S E A R C H
Poland
knightfrank.com.pl/en/research
Warehouse
Market
Research, Q1 2020
INFLUENCE
OF COVID-19
ON THE POLISH
WAREHOUSE
MARKET
1
P O L A N D. W A R E H O U S E M A R K E T. Q 1 2 0 2 0 K N I G H T F R A N K .C O M . P L / E N / R E S E A R C H
WAREHOUSE MARKET INVESTMENT
IN POLAND MARKET
5.00%-5.50%
19.2m 2.2m 6.8%
THE MOST SOUGHT-AFTER ASSETS: Prime yields (BTS*):
sq m sq m • BTS PROJECTS WITH LONG-TERM
LEASES
total warehouse stock supply
under construction
vacancy rate • PORTFOLIO TRANSACTIONS Prime yields (multi-let*): 5.50%-6.00%
ALLOWING A GEOGRAPHIC
3.8 m 2.50-5.00
DIVERSIFICATION
sq m EUR/sq m/mth • SBU’S / LAST MILE LOGISTICS
ASSETS SITUATED WITHIN
2019 investment volume
(industrial): 1.3bn EUR
ADMINISTRATIVE BORDERS
average annual average headline rents
OF THE LARGEST CITIES * assuming long WAULT, substantial volume, very good covenants, market rents and location
take-up 2017-2019 at the highway / expressway with close distance to the largest cities
T he warehouse market in Poland is
one of the fastest growing sectors
• DEVELOPING
locations such as Kraków, Tricity
MARKETS: Developer
stays
activity
strong, with
consistently
nearly E arly 2020 showed
strong activity in the investment
continued 2020 industrial market maintained its
leading position within the commercial
The current market sentiment proves
that the industrial market is the most
of the Polish economy. and Szczecin that are growing in 2.2m sq m of warehouse space being market in Poland with the total level of sector with nearly 60% of investment resilient in light of the COVID-19
importance as logistics hubs. Their under construction at the end of transactions amounting to EUR 1.7bn. volume constituted by transactions in pandemic, which is clearly visible in
Strategic location in the central part expansion is strongly triggered by Q1 2020. Modern warehouse stock Investors’ activity and the volume of the warehouse sector, of which the most the number of ongoing transactions and
of Europe, on the crossroads of many development of road infrastructure in Poland is expected to exceed purchases in the first quarter did not significant were portfolio deals. Total prime yields, which remained intact
important European routes influences (highways and expressways), as 20m sq m by the end of 2020. The highest slow down but economic downturn volume of acquisitions in this segment since the beginning of the year. Many
dynamic development of warehouse well as ancillary infrastructure (e.g. developer activity is noted in 2 largest caused by the COVID-19 pandemic reached value of EUR 994m in the first institutional buyers perceive warehouse
market in the country. freight, handling or cargo facilities). concentration hubs, i.e. Warsaw area can be seen on the real estate market months of the year, comparing to over market as a safe haven in the current
and Upper Silesia, where a total of 52% within next months. Nevertheless, in Q1 EUR 5bn within the last 3 years. circumstances and decide to increase
During the last 5 years, total warehouse • EMERGING MARKETS: including of warehouse space under construction their allocations in Poland.
stock doubled and exceeded e.g. Kielce, Lublin, Bydgoszcz, is located.
19.2m sq m at the end of Q1 2020. The Konin, which recently appeared
industrial market in Poland can be on the developers’ radar. Their Demand for modern warehouse space Investment transactions volume in Poland Prime yields
divided into the following categories: location is strongly stimulated by remains high, with the recent 3-year (EUR bn)
the improving road infrastructure, average approaching 3.8m sq m of Warehouse Office / Retail / Hotel / Residential / Mixed-use Office Retail Warehouse
• ESTABLISHED LOCATIONS: expanding supply chains of the key leased space. Logistics and production
five largest industrial markets logistic operators and relatively companies which have long remained
9%
encompassing over 80% of modern higher availability of the workforce. among major players on demand side 8
warehouse space: Warsaw and Emerging markets already cover as of the warehouse sector, have been 8%
7
surroundings, Upper and Lower much as 8% of warehouse stock in joined by e-commerce tenants (such as
7
7%
Silesias, Wielkopolska and Central Poland. Amazon and Zalando, which opened 6
Poland. 8 and 3 fulfilment centres in Poland 6%
respectively over this time). 5
5%
4
1 2 3 4%
Diversified 3
3%
Strong occupiers’ sources of
MARKET activity, triggered demand (e.g.
3PL’s, retailers,
Predominance 2
2%
by expanding of built-to-suit
TRENDS supply chains of e-commerce
sector, light
projects 1 1%
key players
production) 0 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q1 2020
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q1 2020
4 5 6 7
Availability Warehouse
Expected of workforce market being
Stable development becomes the most Source: Knight Frank Source: Knight Frank
headline of emerging a growing resilient during
rents markets importance for the COVID-19
key occupiers pandemic
2 3P O L A N D. W A R E H O U S E M A R K E T. Q 1 2 0 2 0 K N I G H T F R A N K .C O M . P L / E N / R E S E A R C H
Annual warehouse supply and total stock in Poland
WAREHOUSE CONCENTRATION New supply (left axis) Total stock (right axis)
ck
3 500 000 l sto
Tota5 years
AREAS IN POLAND
t 25 000 000
3 000 000 re cen
ver
bled o 20 000 000
2 500 000 dou
15 000 000
2 000 000
10 000 000
1 500 000
5 000 000
WARSAW 1 000 000
500 000
500 000
Total stock: 4.5m sq m
S6
0 sq m 0 sq m
Stock increase
44% TRICITY
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
(2014/2019):
S7
Supply
584,000 sq m Source: Knight Frank
under construction: S6 S11
A1
Vacancy rate: 7.3% S16
Warehouse take-up and vacancy rate in Poland
Headline rents: 2.50-5.00 EUR ZACHODNIOPOMORSKIE
Take-up (left axis) Vacancy rate (right axis)
S10
C ENTRA L P OL AN D S5 S61 4 500 000 18%
S3
Total stock: 3.1m sq m BYDGOSZCZ 4 000 000 16%
3 500 000 14%
Stock increase
147% 3 000 000 12%
(2014/2019):
2 500 000 10%
Supply
under construction:
78,000 sq m WIELKOP OLSKA S8
S19
2 000 000 8%
WA R SAW 1 500 000
A2 6%
Vacancy rate: 10.1%
1 000 000 4%
S3
2.50-3.50 EUR
A2
Headline rents: A1
500 000
S11
A2 2%
0 sq m 0%
CENTRAL POLAND
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q1 2020
U P PER SILESIA ZIELONA GÓRA S5
S8
S17
S7
Total stock: 3.2m sq m A18
Source: Knight Frank
LUBLIN
S12
Stock increase
100%
(2014/2019): A4
LOWER SILESIA Development of major warehouse hubs in Poland
Supply A8 S19
540,000 sq m Total stock 2014 Increase of total stock in 2014-2019
under construction: A1
S11
Vacancy rate: 6.3% S3 S74 5 000 000
S8 4 500 000 44%
Headline rents: 2.80-3.60 EUR 4 000 000
A4
UPPER SILESIA S17 3 500 000
100%
3 000 000 104% 147%
LOWER SILESIA S7
RZESZÓW 2 500 000 67%
A4
2 000 000
Total stock: 2.5m sq m A1 1 500 000 294% 181% 809%
S1 KRAKOW 1 000 000
Stock increase 500 000
104%
(2014/2019): S19 0 sq m
not existed in 2014
Warsaw
Upper Silesia
Wielkopolska
Lower Silesia
Central Poland
Kraków
Tricity
Zachodniopomorskie
Emerging markets
Supply
257,000 sq m Existing highways and expressways
under construction:
Major routes under construction
Vacancy rate: 5.7% Planned road investments
Headline rents: 2.70-3.90 EUR Source: GDDKiA Source: Knight Frank
WIELKOP OLSKA ZAC H O D N I O P O M O R SK I E K RAKOW TRICIT Y EMERG ING MARK ETS
Total stock: 2.1m sq m Total stock: 736,000 sq m Total stock: 625,000 sq m Total stock: 623,000 sq m Total stock: 1.6m sq m
Stock increase Stock increase Stock increase Stock increase not existed
Stock increase (2014/2019): 67% 809% 294% 181%
(2014/2019): (2014/2019): (2014/2019): (2014/2019): in 2014
Supply Supply Supply Supply Supply
52,000 sq m 105,000 sq m 25,000 sq m 265,000 sq m 272,000 sq m
under construction: under construction: under construction: under construction: under construction:
Vacancy rate: 8.1% Vacancy rate: 1.5% Vacancy rate: 7.2% Vacancy rate: 4.4% Vacancy rate: 2.7%
Headline rents: 2.70-3.50 EUR Headline rents: 3.20-3.80 EUR Headline rents: 3.60-4.50 EUR Headline rents: 2.70-3.60 EUR Headline rents: 2.60-3.50 EUR
4 5P O L A N D. W A R E H O U S E M A R K E T. Q 1 2 0 2 0 K N I G H T F R A N K .C O M . P L / E N / R E S E A R C H
E-COMMERCE
has subsided and the availability of turn manufactures will be looking at a sector which a diverse range
spaces from tenants who did not make where they produce their goods. There is of investors wish to now deploy
it through this challenging period. In a feeling there will be less focus on cost significant funds to acquire and invest
AND
cases where speculative development and more resilience in supply chains. in standalone projects, portfolios and
does take place the developers will very Manufactures may be considering platforms. This is the sector which is
careful to control the process with their moving their production into the region currently viewed as most resistant by
THE WAREHOUSE SECTOR
own in-house construction team and where they are based. There is the investors and the sector which banks
make sure that the project completes on potential that CEE will benefit from feel more comfortable to provide debt
time and as quickly as possible. some fall out from production moving subject to careful review of the tenants
from Asia. This creates greater certainty and the project.
GEORGE LEWIS Direct product delivery to people’s over the process and supply but
DIRECTOR, CAPITAL MARKETS homes requires more advanced logistics naturally may have cost implications. In terms of current activity investors
technologies compared to deliveries Clearly the raw materials are often fall into several camps: the first being
to large-scale stores. The growth in imported and manufactures will need to those who are in transactions and are
W e have been living in a strange
world of lockdown and everyday
a whole new online worldopening up to
them. Retailers who have not created
whole shopping experience forms part
of the desire to buy. Many shops will
e-commerce will need warehouse/
logistic facilities which are suitable in
consider how much stock they are able
to hold and how long this takes to arrive.
committed to closing the deal, there are
those who are putting everything on hold
life has changed in a way that many of us platforms to sell product online have survive and coffee shops will no doubt the longer term for such a use. There will and watching and waiting and then there
could have never imagined. For better or had to adapt very quickly to offer this thrive but many retailers will need to be a requirement for new developments Automation of warehousing for are those investors who are carefully
worse how the world functions once we or face the prospect of going out of be innovative and creative to justify a with cross-docks and for taller buildings e-commerce and the future employment analyzing interesting opportunities and
come out of this crisis will be very business. It’s really a case for many of physical presence in shopping centers, which are higher than the standard 10 prospects is a clear trend and many selectively proceeding on some of them.
different than before. This lockdown has innovate or die. In certain cases this has towns and cities. metre eaves height. There is a further operators require relatively small This last group are in a great place and
accelerated the growth of e-commerce created a requirement from retailers for challenge that many companies find it workforces. Although on a positive in will be able to acquire with reduced
Direct-To-Consumer (DTC). short term warehouse space to handle The current high demand for warehouse difficult to anticipate growth and how the case of Amazon some of their larger competition.
this new way of operating along with space has been evident with logistic much storage space they will need in the facilities do in fact employ a significant
E-commerce has boomed in this creating user friendly web sites to allow owners and industrial agents kept future. This is alongside surges that can number of people. If however more In all it’s a dynamic time for the
lockdown period with COVID-19 goods to be ordered and payments to be very busy letting space. Developers are surround situations such as the current production is located closer to end warehouse and logistics sector as the
and it clear that it’s accelerated its taken securely. reporting significant leasing activity lockdown, the launch of new product or destination then are their opportunities growth and development of e-commerce
growth by several years in a matter and literally working around the clock at say Christmas when there is the need for the training and development of new massively accelerates. COVID-19 has
of weeks. Poland has been some way Clearly many products which to satisfy their tenants requirements. for extra space is temporary. This is not workers. brought many changes into our lives
behind Western Europe in its use of consumers are familiar with can be Once things start to settle there will a new situation with third-party logistics and not least how we shop and spend
e-commerce but is fast catching up and readily viewed and ordered online with be more clarity on the availability of companies (3PLs) managing outsourced Warehouse/logistics is today the star our money. In commercial property this
embracing it. An older generation less no need to be physically present when space. At that point developers will warehouse space for some time. performer of the commercial property has been great news for the warehouse,
comfortable with ordering online has buying. Other goods will continue to review if they will be prepared to world. It was already heading that but created further challenges for the
been forced to embrace this new way need a face-to-face interaction and undertake speculative development. For many companies they will be way prior to COVID-19 and that has retail sector.
5
of shopping in a short space of time. physically selecting in cases of certain Its seems relatively unlikely that this reviewing their supply chain and in now simple pushed to the top. This is
People who have previously refused food, high-end consumer products, will happen to any great extent until
to create an email account have now clothing and accessories where the it’s clear how much space may re-enter
been forced into it and discovered choice is very personal and for many the the market after the short term demand
Increase of retail
Extension
Diversification sector in demand
of tenats decision
of locations structure as
making process when
to optimize supply a consequence
negotiating lease
chains of accelerated growth
terms
POST-COVID-19
of e-commerce
TRENDS
Potential of CEE
Developers region to benefit
expected to revise from some fall out
their speculative from production
investment plans moving from Asia
6 7CONTACTS IN POLAND: COMMERCIAL AGENCY - OFFICE PROJECT MANAGEMENT
L-REP Izabela Potrykus-Czachowicz Urszula Łuszpińska
+22 596 50 50
izabela.potrykus@pl.knightfrank.com urszula.luszpinska@pl.knightfrank.com
www.KnightFrank.com.pl
T-REP Karol Grejbus VALUATION & ADVISORY
karol.grejbus@pl.knightfrank.com Grzegorz Chmielak
ASSET MANAGEMENT grzegorz.chmielak@pl.knightfrank.com
RESEARCH
Monika A. Dębska-Pastakia STRATEGIC CONSULTING EMEA
Elżbieta Czerpak
monika.debska@pl.knightfrank.com Marta Badura
elzbieta.czerpak@pl.knightfrank.com
CAPITAL MARKETS marta.badura@pl.knightfrank.com
Krzysztof Cipiur MANAGING PARTNER
krzysztof.cipiur@pl.knightfrank.com Daniel Puchalski
LAND ADVISORY daniel.puchalski@pl.knightfrank.com
Piotr Litwin CHAIRMAN OF THE BOARD
piotr.litwin@pl.knightfrank.com Monika A. Dębska-Pastakia
PROPERTY MANAGEMENT monika.debska@pl.knightfrank.com
Izabela Miazgowska
izabela.miazgowska@pl.knightfrank.com
PROPERTY MANAGEMENT COMPLIANCE
Magdalena Oksańska
magdalena.oksanska@pl.knightfrank.com
As one of the largest and most experienced research teams operating across Polish commercial real estate markets,
Knight Frank Poland provides strategic advice, forecasting and consultancy services to a wide range of commercial
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Reports are produced on a quarterly basis and cover all sectors of commercial market (office, retail, industrial, hotel) in major Polish
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research team to build in-depth expertise of socio-economic factors affecting commercial and residential real estate in Poland.
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