Warehouse market matures for speculative projects

The supply of space on the warehouse market now amounts to almost 8 mln sqm, with around 600,000 sqm under construction. We expect a few more projects to be launched soon, some of which are to be completed this year. CBRE expects that the supply at the end of this year will reach 8.6 mln – and will increase over the next few years to exceed 10 mln sqm by the end of 2017. Poland has the best position in the region at this moment as far as investor interest is concerned. We expect to maintain this position in the near future. In Central and Eastern Europe, Romania is very often in competition against Poland, which is, however, a much bigger and certainly a more stable market. For many investors the security and lower risk are often more important than lower operating costs.

The favourable economic conditions and the higher supply are now encouraging warehouse developers to return to speculative projects. These include Prologis’ projects in Wrocław and the Ideal Idea facility in Warsaw. The purchase of land in Lublin by MLP could also be counted as a speculative investment. In addition, the fall in vacancy in many regions, which is pushing up rents, will also encourage developers to start building speculatively.

We expect a few large transactions, in excess of 50,000 sqm, to be concluded this year. We are aware that a number of developers are currently negotiating with firms interested in the leasing of such space. Some are typical BTS projects, which are to be built next year. In terms of tenant activity, the expectation is that this will be the strongest among production and logistics companies. You could say that production is the main driver of our market. One sector that is growing exceptionally well is the automotive industry. The facilities being built for Volkswagen, General Motors and Fiat will have a significant impact on the demand for warehouse space. E-commerce companies will also have an influence on the increase in the supply of warehouse space, but in my opinion this will not be of the same degree as in the case of production companies.

Silesia undoubtedly enjoys the most interest and this is where the largest projects are set to be located. The whole of southern Poland – from the Western border along A4 to the border with Ukraine – is also an area of great importance. The eastern region will become increasingly attractive for two reasons. One is the completion of A4 motorway, which will open up the Rzeszów market, for example, and connect it with Silesia and Germany. Another factor adding to the attractiveness of eastern markets are the changes in regulations for EU subsidies and the real estate tax relief offered by special economic zones. Eastern markets will benefit from significant relief, whereas the subsidies in central and western Poland are to be considerably limited.