Take up healthy, supply lagging

Modern warehouse stock around Warsaw far exceeds that of the rest of Poland. In the capital it totals 1.060 mln sqm and elsewhere just 180,000 sqm. That is about to change, as there is a good deal of warehousing under construction in the regions at the moment, more in fact than is due in Greater Warsaw over the next year or so

Most modern warehousing in and around Warsaw, according to King Sturge's report, is at the disposal of retailers and third-party logistics providers but there is currently little demand to service the distribution requirements of manufacturers and the markets to the east of Poland. With the country's entrance to the EU in 2004 however, this trend should be reversed, given the increased foreign direct investment that is expected and Poland's position as an EU border territory with countries to the East, such as Belorussia, Ukraine and Russia.

Take up high, vacancy low
Despite Poland's well-documented economic woes, there has still been strong demand for large logistics warehouses of 10,000 sqm and above. Ten such leases were signed in Poland last year, compared to six in 2001 but demand is also robust for warehouse space of between 500 sqm to 2,000 sqm. In the Warsaw area, vacancy has been very low at just one per cent but this is in part because of the low supply of new stock here, where there is little speculative development. The report in fact finds that the supply of modern warehousing in this region is far less than around other major European cities, including Milan, Rotterdam and Dublin, for example. It is concluded that availability of space in logistics and out-of-town distribution warehouses is likely to remain tight for the rest of this year and the first few months of 2004, because of strong demand and limited supply.

Rents down, yields up
Prime rents are USD 3.5 to USD 5 per sqm a month for logistic and out-of-town distribution warehouses and USD 5 to USD 5.5 per sqm a month for in-town warehouses. Occupational costs for modern warehousing in this region of Poland, are now among the lowest for a capital city vicinity in Europe. Prime industrial net yields are 11 per cent, which is around 120 to 140 basis points higher than those in other major European investment regions.