Net demand (new deals and expansions) hit an impressive 1.1 million sqm – the second-best result in market history. Both courier and third-party logistic operators were responsible for almost half of new demand in Q1, followed by production companies (28 percent) and retailers (23 percent of net take-up). The industrial market in Poland is characterised by having both flexibility in lease contracts as well as sought-after formats. The market saw a wide range of contracts, from deals for units under 1000 sqm to a lease of 100,000 sqm. The industrial sector also saw tenant demand for various types of assets – from large big-box locations in the vicinity of major cities, emerging regional hubs, and BTS developments to city logistic schemes. Around 745,000 sqm of new industrial stock was completed in Q1 increasing total supply to 21.4 million sqm. The ‘Big Five’ markets still account for over 80 percent of total existing stock. Most of the new supply was concentrated in Upper Silesia, Warsaw Suburbs and Tri-City, with some 500,000 sqm being delivered to these three markets. Around 20 percent of this total newly completed space in Poland have been vacant.
The coming months will see a strengthening of the ‘Big Five’ markets, as almost 70 percent of space under development will supply these locations. Active occupiers and the high share of pre-let construction during the first three months of the year resulted in a further decline in the vacancy rate which now stands at 7.2 percent. Given current development market conditions, this is likely to remain stable or even slightly decline. Rents have remained relatively stable. Warsaw Inner City and other urban locations are the most expensive markets in Poland. In Warsaw, headline rents range from €4.3 to 5.25 sqm/month. The most attractive rents for big-box units are still to be found in out-of-town locations in Central Poland (€2.6 to 3.5 sqm/month). Prime yields for multi-tenant schemes with 5-year lease agreements, are around 5.25 percent (Warsaw Suburbs, Wrocław). The ongoing Warsaw inner-city projects stand at approx. 5 percent. However, as yet there is a lack of transactional evidence for such compressed yields. Assets with longer agreements (10 years) are trading at sub 4.50 percent, nevertheless, exceptionally long leased assets (15 years or longer) can be around 4 percent with further compression on the horizon.