Time for speculative investments, small industrial units and growth of secondary logistics hubs. New market records are set, however there is no change in the leader’s position.

The industrial property sector in Poland is in an excellent shape. The lowest in 10 years vacancy rate and the record value of transactions concluded in Q1 2015 are an accurate reflection of the prevailing trends. The all-time record breaking beginning of the year resulted in something of a “gold rush” that pushes investors towards speculative developments.

The favourable macroeconomic climate, road infrastructure development, positive investment sentiment, growing GDP and expansion of the e-commerce sector accompanied by the increasing monthly salary translate into a surge in industrial production and dropping unemployment.

Industrial tenants, encouraged by the currently prevailing market conditions and positive economic forecasts for Poland continue to expand their operations, which in turn leads to increasing demand for industrial properties.

It follows from our detailed research that the continuous high level of tenant activity resulted in a drop of the vacancy rate by a further 0.3 p.p down to 5.4%, which is something of a record. The vacancy rate has not been as low as that for more than 10 years. Additionally, even though a further 555 000 sqm is currently under construction, all the space should be leased by the year-end.” – comments Anna Staniszewska, Director, Research & Consultancy, BNP Paribas Real Estate Poland.

As illustrated in the latest report drawn up by BNP Paribas Real Estate Poland, the value of industrial and logistics transactions in Q1 2015 topped at a record €149 million euro, which constituted 34% of the value of all investments made in the period under consideration. This considerable interest in industrial and logistics assets shown by investors exerts a downward pressure on prime yields, currently standing at 7.15 – 7.25%. In Q1 2015 some 270 000 sqm were delivered, bringing the total stock to more than 9 million sqm.

The increased demand for industrial and logistics space lead to a significant change in developers’ outlook. Many are now involved in speculative developments, as the risk of finding no tenants is not great due to the positive economic situation. This trend is noticeable not only in the primary clusters, but also in Kraków, Rzeszów, Lublin and Toruń.

“Construction of facilities where no tenants have been secured for the industrial and logistics space is an increasingly more frequent phenomenon within the industrial property sector. It is with great attention that we are following the arrival of subsequent new speculative developments and expansion of the small business units market. We are now witnessing the growth in importance of secondary hubs and the increasingly bolder approach taken by developers in terms of extremely attractive incentives offered to tenants.” – comments Katarzyna Pyś-Fabiańczyk, Head of Industrial & Logistics Department at BNP Paribas Real Estate Poland.

Additionally, Q1 2015 saw the setting of a new record in respect of a single market transaction volume. The international retail chain JYSK, represented by Paribas Real Estate Poland, signed a lease for a record 40 500 sqm of industrial space in Logistic City – Piotrków Distribution Center.

“The first quarter of this year was an all-time best beginning of the year for the Industrial & Logistics Department at BNP Paribas Real Estate Poland and the entire market sector in Poland. I hope that this favourable trend will continue and thus stimulate further progress in respect of the so-far niche developments and new locations.” – comments Katarzyna Pyś-Fabiańczyk, Head of Industrial & Logistics Department at BNP Paribas Real Estate Poland.

There is no change in the leader’s position. The market continues to be dominated by Prologis which owns 25% of the existing industrial space. Segro and Panattoni are also in the top three.


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