Sheds by the sea
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The first industrial parks have arrived in the TriCity area. Is this only the beginning of greater things to come?
On the face of it, the TriCity area would seem to have everything going for it as a location for modern warehousing. It is Poland’s main port and entry-point for sea-freight from Scandinavia and the North Sea. The area is also a substantial market, with Gdańsk itself having a population of more than 460,500 according to the 2004 census, whilst there are over a million people living in the TriCity as a whole. As well as being Poland’s sixth largest city, historic and heroic Gdańsk is also a major tourist centre, further adding to the high demand for goods. So if, with all these advantages, the TriCity is the logical location for industrial parks, why have so few been developed up to now? The only ones in existence are those developed by Biuro Inwestycji Kapitałowych (BIK) – who specialize in build-to-suit warehousing – in Pruszcz Gdański (11,000 sqm), and more recently the 88,000 sqm Park Gdańsk by the US giant ProLogis, the first 17,900 sqm stage of which is scheduled to be ready in Q1 of 2007. The latter is the first large-scale speculative industrial park to come to the TriCity.
Lagging behind
The situation regarding the volume of warehousing compares unfavourably with other locations around Poland, such as in and around Warsaw – where warehousing initially took off in the country, and which according to CB Richard Ellis’s recent Big Box Poland report for the second quarter of 2006, now has around 2 million sqm of modern warehousing space. Warsaw is a much larger and more established market than the TriCity, so it is to areas with similar-sized populations that we must look to in order to gauge the true extent of the dearth of industrial space in this northern location. Katowice and Poznań can each currently boast app. 200,000 sqm of warehousing space, with the latter having more than 160,000 under construction. The environs of Łódź and Piotrów in central Poland have 150,000 sqm of existing space whilst the figure for Wrocław is now approaching 100,000 sqm. These are very much the hot spots of Polish warehousing, and the TriCity has a long way to go before it can look these other regions in the eye – in fact, it is not even mentioned in the CB Richard Ellis report.
Two questions therefore spring to mind: Why has ProLogis finally decided to take the plunge and open the first large industrial park in the area? and what seems to have been the problem so far with the TriCity for industrial developers? According to Michael de Jong-Douglas, ProLogis’s senior vice president for Central & Eastern Europe, there is no reason why it shouldn’t be an excellent location for industrial parks, especially considering the huge ‘Young City’ redevelopment of the Gdańsk shipyard area and other improvements to the infrastructure of the area: “There’s a lot of demand in the TriCity area,” explains Michael de Jong-Douglas, “there’s tourism, it’s a large regional area, and the port is being redeveloped.” But as he goes on to add, this is not the main factor behind ProLogis’s decision to open an industrial park in Gdańsk: “Right now it is consumer demand in the TriCity area which will generate the most business for us. Our park is a 2-3 year project, and based on what we hear from our customers and on consumer demand, we would like in the future to have additional sites in the area.”
Talked-about location
Michael de Jong-Douglas’s own view of why major warehouse developments have – until now – failed to take off in the TriCity is that localities need to become talked-about before developers have enough confidence to build industrial parks. This, he claims, is what happened in the case of Silesia: “Three to four years ago, people were asking: why has nothing been developed yet in Silesia?” Paweł Piasecki, development director at Lambert Smith Hampton, however, feels that the answer lies with the TriCity lacking many of the advantages of the south-west for industrial parks: “Silesia is a totally different location to the TriCity. It is a massive local market, and from there you can pretty much go anywhere. Gdańsk is basically at the end of the country.”
Michael de Jong-Douglas offers his own explanation for why the question hadn’t been asked earlier for the TriCity: “Gdańsk does have a smaller population than Silesia, which may explain to some extent why the development of modern industrial space lags behind this region. But,” he adds, “as with elsewhere in Poland, ProLogis are pretty much the first to develop a large, international industrial park in this region.”
Breeding the competition
ProLogis has made a name for itself in Poland and abroad for being a pioneer in developing parks in virgin territory. An observable pattern is that once the US firm has moved into an area, then other developers soon follow in its wake. This is how Michael de Jong-Douglas describes the process: “Our mode of operating could be described as being very aggressive: we develop on an inventory, speculative basis. We always like to have buildings under construction. In this way, we breed competition.”
And what was it in the case of the TriCity that finally prompted ProLogis to start the first significant speculative warehousing project in the area? The company’s senior vice-president explains: “The reason I’m interested in this market is because our customers are telling us: we are expanding, but can’t find any modern warehousing space in the north of Poland.” Once the company has been alerted to the level of demand, there follows an analysis of the pros-and-cons of the location in question: “We look at what the local employment conditions are,” says Michael de Jong-Douglas, “the transport links to ports and airports and the quality of public transport for employees.”
Highway to heaven
However, in the case of the TriCity, it could be that the state of the transport links continues to hinder the development of modern warehousing for some time to come, despite the presence of ProLogis in this local market. The main problem, it would appear, is the lack of a motorway link to the rest of Poland. The first stage of the north-south A1 is currently under construction, but this will only connect the TriCity with Toruń, and there have yet to be any concessions signed or legal work completed for the future stages. In the opinion of Paweł Piasecki of Lambert Smith Hampton, this is a major stumbling block: “The road infrastructure is pretty poor to say the least. The TriCity area will not be accessible by a motorway in the near future. Motorways only add value when they are complete, and it looks like the A1 will be one of the last motorway projects to be completed in Poland.”
Michael de Jong-Douglas would beg to differ with this point of view. “Poland is such a dynamic place at the moment, that no-one could cite the current lack of a motorway to Gdańsk as a reason not to invest there. The motorway when it comes will emphasize that this is a great region. No-one’s saying wait for the motorway – there’s business to be done now.”
Nathan North
On the face of it, the TriCity area would seem to have everything going for it as a location for modern warehousing. It is Poland’s main port and entry-point for sea-freight from Scandinavia and the North Sea. The area is also a substantial market, with Gdańsk itself having a population of more than 460,500 according to the 2004 census, whilst there are over a million people living in the TriCity as a whole. As well as being Poland’s sixth largest city, historic and heroic Gdańsk is also a major tourist centre, further adding to the high demand for goods. So if, with all these advantages, the TriCity is the logical location for industrial parks, why have so few been developed up to now? The only ones in existence are those developed by Biuro Inwestycji Kapitałowych (BIK) – who specialize in build-to-suit warehousing – in Pruszcz Gdański (11,000 sqm), and more recently the 88,000 sqm Park Gdańsk by the US giant ProLogis, the first 17,900 sqm stage of which is scheduled to be ready in Q1 of 2007. The latter is the first large-scale speculative industrial park to come to the TriCity.
Lagging behind
The situation regarding the volume of warehousing compares unfavourably with other locations around Poland, such as in and around Warsaw – where warehousing initially took off in the country, and which according to CB Richard Ellis’s recent Big Box Poland report for the second quarter of 2006, now has around 2 million sqm of modern warehousing space. Warsaw is a much larger and more established market than the TriCity, so it is to areas with similar-sized populations that we must look to in order to gauge the true extent of the dearth of industrial space in this northern location. Katowice and Poznań can each currently boast app. 200,000 sqm of warehousing space, with the latter having more than 160,000 under construction. The environs of Łódź and Piotrów in central Poland have 150,000 sqm of existing space whilst the figure for Wrocław is now approaching 100,000 sqm. These are very much the hot spots of Polish warehousing, and the TriCity has a long way to go before it can look these other regions in the eye – in fact, it is not even mentioned in the CB Richard Ellis report.
Two questions therefore spring to mind: Why has ProLogis finally decided to take the plunge and open the first large industrial park in the area? and what seems to have been the problem so far with the TriCity for industrial developers? According to Michael de Jong-Douglas, ProLogis’s senior vice president for Central & Eastern Europe, there is no reason why it shouldn’t be an excellent location for industrial parks, especially considering the huge ‘Young City’ redevelopment of the Gdańsk shipyard area and other improvements to the infrastructure of the area: “There’s a lot of demand in the TriCity area,” explains Michael de Jong-Douglas, “there’s tourism, it’s a large regional area, and the port is being redeveloped.” But as he goes on to add, this is not the main factor behind ProLogis’s decision to open an industrial park in Gdańsk: “Right now it is consumer demand in the TriCity area which will generate the most business for us. Our park is a 2-3 year project, and based on what we hear from our customers and on consumer demand, we would like in the future to have additional sites in the area.”
Talked-about location
Michael de Jong-Douglas’s own view of why major warehouse developments have – until now – failed to take off in the TriCity is that localities need to become talked-about before developers have enough confidence to build industrial parks. This, he claims, is what happened in the case of Silesia: “Three to four years ago, people were asking: why has nothing been developed yet in Silesia?” Paweł Piasecki, development director at Lambert Smith Hampton, however, feels that the answer lies with the TriCity lacking many of the advantages of the south-west for industrial parks: “Silesia is a totally different location to the TriCity. It is a massive local market, and from there you can pretty much go anywhere. Gdańsk is basically at the end of the country.”
Michael de Jong-Douglas offers his own explanation for why the question hadn’t been asked earlier for the TriCity: “Gdańsk does have a smaller population than Silesia, which may explain to some extent why the development of modern industrial space lags behind this region. But,” he adds, “as with elsewhere in Poland, ProLogis are pretty much the first to develop a large, international industrial park in this region.”
Breeding the competition
ProLogis has made a name for itself in Poland and abroad for being a pioneer in developing parks in virgin territory. An observable pattern is that once the US firm has moved into an area, then other developers soon follow in its wake. This is how Michael de Jong-Douglas describes the process: “Our mode of operating could be described as being very aggressive: we develop on an inventory, speculative basis. We always like to have buildings under construction. In this way, we breed competition.”
And what was it in the case of the TriCity that finally prompted ProLogis to start the first significant speculative warehousing project in the area? The company’s senior vice-president explains: “The reason I’m interested in this market is because our customers are telling us: we are expanding, but can’t find any modern warehousing space in the north of Poland.” Once the company has been alerted to the level of demand, there follows an analysis of the pros-and-cons of the location in question: “We look at what the local employment conditions are,” says Michael de Jong-Douglas, “the transport links to ports and airports and the quality of public transport for employees.”
Highway to heaven
However, in the case of the TriCity, it could be that the state of the transport links continues to hinder the development of modern warehousing for some time to come, despite the presence of ProLogis in this local market. The main problem, it would appear, is the lack of a motorway link to the rest of Poland. The first stage of the north-south A1 is currently under construction, but this will only connect the TriCity with Toruń, and there have yet to be any concessions signed or legal work completed for the future stages. In the opinion of Paweł Piasecki of Lambert Smith Hampton, this is a major stumbling block: “The road infrastructure is pretty poor to say the least. The TriCity area will not be accessible by a motorway in the near future. Motorways only add value when they are complete, and it looks like the A1 will be one of the last motorway projects to be completed in Poland.”
Michael de Jong-Douglas would beg to differ with this point of view. “Poland is such a dynamic place at the moment, that no-one could cite the current lack of a motorway to Gdańsk as a reason not to invest there. The motorway when it comes will emphasize that this is a great region. No-one’s saying wait for the motorway – there’s business to be done now.”
Nathan North
