Report - the warehouse market in Q1 2018 - Gerald Eve
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Report
– the warehouse
market in Q1 2018
A record amount of warehouse space
Gross demand
is under construction in Poland. 1.16
mln sq m
The Polish warehouse market remains in very good shape.
Net demand
The demand side saw a record-breaking start of the 812,000 sq m
year for the third time in a row. From January to the end
of March 2018, 1.16 million sq m of modern warehouse
New supply
space was leased, 20% more than in Q1 2017. Developers
314,000 sq m
completed 314,000 sq m, but almost 2 million sq m are
under construction. Developers unwillingness to build
Under construction
speculative investments resulted in a low vacancy rate,
1.98
mln sq m
which at the end of March this year was 4.2%.
Vacancy*
4.2%
Rents
Compared to the Q1 2017
*Compared to the Q4 2017
Axi Immo Group Sp. z o.o. 18 Twarda St. 00-105 Warsaw + 48 22 111 00 01 office@axiimmo.com www.axiimmo.com
Demand
Y
et another first-quarter record was broken this Worth noting is the further development of new
year with 1.16 million sq m of modern warehouse warehouse locations in Eastern Poland and Western
space being leased, of which new lease agreements and Poland. Improved infrastructure, in particular the
expansions accounted for more than 70%. This result is completion of sections of the S8 and S7 expressways,
20% higher compared to the same period last year. In just combined with a relatively greater availability of staff has
3 years, demand in the first quarter has grown by 86%. created higher interest among investors in new locations
in the Warmia-Masuria and Podlasie provinces. The best
From January to the end of March this year most new examples are Zalando’s 130,000
sq m investment being
lease agreements were signed in Central Poland, where built near Olsztynek in Warmia-Masuria and Panattoni park
236,000 sq m were leased, of which new lease agreements in Białystok.
accounted for nearly 94%. Warsaw came second with over
200,000 sq m, followed by Wrocław with 172,000 sq m. In Demand is dominated by logistics companies (32%),
Central Poland, Leroy Merlin’s transaction for 124,000 sq followed by retail chains (21%) and e-commerce (19%).
m was the main reason for the high result. Wrocław and These are the three main drivers of demand, the increase
Poznań had the largest share of lease extensions. in which is directly related to high levels of consumption in
Poland and Europe as well as changes in sales models and
new supply chain organisation.
Demand in regions in sq m Q1 2018
sq m
250 000
200 000
150 000
100 000
50 000
0
Central Poland
Warsaw Suburbs
Wroclaw
Eastern Poland
Upper Silesia
Poznan
Tri-City
Krakow
Szczecin
Warsaw Inner City
Western Poland
Torun/Bydgoszcz
Others
New agreements
Renewals Source: Axi Immo, Q1 2018
2The biggest lease transactions in Q1 2018
Tenant Property Region Type of contract Leased space (sq m)
Leroy Merlin BTS Panattoni Central Poland New deal 124,000
Zalando BTS Hillwood Eastern Poland New deal 121,000
Arvato Panattoni Park Stryków III Central Poland New deal 43,000
Source: Axi Immo, Q1 2018
Supply
T
he total supply of modern warehouse space at the sq m), followed by the Warsaw area (40,000 sq m) and
end of the first quarter 2018 was nearly 13.9 million Upper Silesia, Szczecin and Western Poland (32,000 sq m
sq m; by the end of 2018 it will exceed 15 million sq m. each).
From January to the end of March this year, only 314,000
sqm were completed, 34% fewer than in the same period However, an impressive 1.98 million sqm are under
last year, which was mainly due to breaks in construction construction. This is the effect of high demand from the
because of low winter temperatures. The largest amount last two quarters, including the signing of contracts for
of space was completed in Central Poland (over 150,000 over 100,000 sq m of BTS investments for the e-commerce
Space under construction at the end Projects under construction
of Q1 2018 – percentage share in the regions
sq m by the end of Q1 2018
500 000
Central Poland
Upper Silesia
400 000
Warsaw
1%
Eastern Poland
1%
300 000 Western Poland 2%
Tri-City 3%
Wroclaw 5% 23%
200 000 6%
6%
100 000
9%
19%
10%
0
Central Poland
Upper Silesia
Warsaw
Eastern Poland
Western Poland
Tri-City
Wroclaw
Poznan
Szczecin
Kielce
Krakow
Opole
Poznan 13%
Szczecin
Kielce
Krakow
Opole
Source: Axi Immo, Q1 2018 Source: Axi Immo, Q1 2018
3and retail sectors. Currently, Central Poland is the largest though, investments that were already 30-40% leased
construction site in the country, where 462,000 sq m are before construction have space not secured by rental
being built. This is followed by Upper Silesia (386,000 agreements. However, their willingness to take risk with
sq m) and Warsaw (258,000 sq m). With nearly 2 million an entirely speculative projects (100%) is limited on both
sq m, speculative space makes up 25%. In most cases, main markets and new locations.
Stock and vacanacy rate at the end of Q1 2018
4 000 000 8%
3 000 000 6%
2 000 000 4%
1 000 000 2%
0 0%
Warsaw Inner City
Warsaw Suburbs
Upper Silesia
Central Poland
Poznan
Wroclaw
Tri-City
Krakow
Torun/Bydgoszcz
Szczecin
Eastern Poland
Western Poland
Existing space (sq m)
Vacancy rates (%) Source: Axi Immo, Q1 2018
Vacancy rates Rents
T D
he average vacancy rate at the end of March this ue to higher investment costs, rental rates are
year dropped to 4.2%; however, in some large maintaining their upward trend in most locations.
markets it increased. There is low availability or a lack of Despite the increase in headline rents, developers are still
ready space in new locations and young markets, where offering the lowest effective rates in the Warsaw area
there is no speculative development and the number of starts from EUR 1.9/sq m. An upward trend is clearly visible
new investments is limited. The highest vacancy rates are in Wrocław and Upper Silesia, while rents are stable in
in the Poznań region (7.5%) and Kraków (7.3%). A slight Central Poland. Despite the increase in rental rates in the
increase can be observed in existing facilities from which warehouse sector in Poland, compared to Germany and
tenants have relocated to newly built warehouses. other western Europe markets, they remain competitive.
4Effective rents in regions (EUR/sq m/month) in Q1 2018
6
5
4.40
4
3.40
3.60 3.00 3.00 3.10
3 2.80 2.90 2.90 2.80
2.60 2.60
2.40 2.40 2.50 2.50
2 2.10 2.10 2.20 2.20
1.90 1.90
1
0
Warsaw Inner City
Warszawa Suburbs
Upper Silesia
Central Poland
Poznan
Wroclaw
Tri-City
Szczecin
Bydgoszcz and Torun
Eastern Poland
Western Poland
Effective rents (EUR/sq m) Source: Axi Immo, Q1 2018
Forecasts
T
he market is in peak condition and excellent The low availability of staff in the main logistics hubs
economic indicators mean that the forecasts for means that large e-commerce and production investments
the warehouse market for the remainder of the year are will go to the eastern part of the country, where staff
optimistic. If demand indicators and the pace of new availability is higher, and infrastructure is getting better.
investment remain at similar levels, we can expect last Large markets will continue to develop due to their scale
year’s record of 3 million sq m leased over 12 months to and the number of businesses already present in those
be broken. regions.
This year will also see greater activity among developers Warehouse products are very popular with investment
in the Small Business Unit warehouse segment. This comes funds, which is further strengthening developers’ appetite
as a response to demand from tenants who are increasing for starting new investments. The highest returns on
efficiency and shortening to a minimum delivery times to investment can be achieved on warehouse real estate.
the end customer.
5Contact Anna Głowacz Head of Industrial - Leasing Agency +48 797 420 950 anna.glowacz@axiimmo.com Monika Rykowska PR & Marketing Director +48 725 900 100 monika.rykowska@axiimmo.com Barbara Szymańska-Wieczorek Industrial & Research Coordinator + 48 885 777 111 b.szymanska-wieczorek@axiimmo.com Copyright© 2018 AXI IMMO. All rights reserved. The information contained in this document is proprietary to AXI IMMO and shall be used solely for the purposes of evaluating this proposal. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of AXI IMMO. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof. We would like to be told of any errors in order to correct them. Axi Immo Group Sp. z o.o. 18 Twarda St. 00-105 Warsaw + 48 22 111 00 01 office@axiimmo.com www.axiimmo.com
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