Not a bad year

New centres, such as those in Piotrków Trybunalski, Łódz and Poznań have sprung up next to Warsaw on the warehouse map. Logistics firms have remained the key players, while the developer of the year is ProLogis. The following are some of the responses to the survey, Eurobuild carried out among agents specializing in this market.

John Palmer, CB Richard Ellis:
1. Logistic warehouse construction and take up by occupiers is booming just outside Warsaw, in regions like Blonie and Teresin and also in Silesia and Poznan and in logistics locations - away from towns but strategically-located - such as Piotrków Trybunalski. Interestingly, this year, in the purely logistic market, nearly 100,000 sqm of logistics warehousing has been built and all of it has been leased. This is in stark contrast to the previous two years.

1a) There has been a continued trend for end-users, retailers and manufacturers to outsource their warehousing logistics requirements to third party logistics companies. Companies always look to cut costs and often the logistics sector is the last that is analysed to this end. They are now also reaching a critical size and they are big enough in Poland to consider outsourcing their logistics rather than do it themselves.

2b) Big players on the market: Giraud Logistic is a first class logistics company. They have won contracts and  are expanding into the Polish regions more and more. Other companies: FM Logistics, Danzas, Fiege, LDS, Exel Logistics, Tibbet & Britten, and TNT are looking to expand.

d) The biggest boom area we have noticed, for national and international storage logistic centres, has been Piotrków Trybunalski. Because it's well-located, as has been analysed by logistics experts, you already have companies established there such as Ikea, Ahold and Auchan. The same goes for locations in and around Łódź (Stryków is a very important location) and also Poznań. There has been very strong demand from companies for space in Silesia but very little of good quality is available.  We have also found some requirements for Gdańsk.

3. The deal we did in Poznań this year with ITM, who serve Intermarche, we feel was one of the biggest deals ever done outside Warsaw. This was at ProLogis Park Poznań.

4. The developer of the year is without any doubt ProLogis. They've taken some well-informed risks and developed out of Warsaw in the regions and other leading cities, and this has paid dividends.

5. Forecast: it's a very exciting time. No doubt there will be increasing development in the regions. A lot of space will arrive in Poznań, Będzin, the Katowice region and Piotrków Trybunalski in 2003, with ProLogis the market leader.

Tomasz Olszewski, Cushman & Wakefield Healey & Baker
1. Last year saw a tendency of major importance, namely the decrease in demand for speculative space, the surplus of which made a huge impact on the market and determined the level of rents. Two other important occurrences were the stabilisation of rents, which are currently increasing slightly, and growing demand for industrial/storage space.

2b) Logistics firms have been fuelling the demand for warehouses for the last few years and create demand for about 40-50 per cent of the supply. However, I have noticed end-users' growing interest in what the market is offering, as well as an ever-faster increase in demand for industrial space.

c) Rents have remained practically at the same level, which is determined most of all by their location, particularly in the Greater Warsaw area, which I can divide into three zones. In Warsaw where  the starting rents are USD 6 sqm for warehouse and USD 14-16 per sqm for office space. The next is the vicinity of Piaseczno, Ozarów Mazowiecki, Ursus and Błonie, where rents come to USD 4 sqm for warehouse and USD 10 sqm for office space. The third zone is made up of units located thirty or more kilometres from Warsaw, where developers have around 10,000 sqm of leasable space at a going rate of USD 3.5 sqm and USD 7-8 sqm respectively.

e) According to our data, which consists of 27 warehouse centres in Greater Warsaw, there is a vacancy rate of around 17.5 percent. This data is not entirely accurate though, since one of the listed buildings is a complex where almost 60 percent of the space has been leased and so the percentage has thus been inflated. Without the project mentioned, the vacancy rate would be less than 14 percent.

3. The deal of the year must be leasing the former Ford factory in Płońsk to an American company, APW.

4. The Metropol Group, which is continuously strengthening its position on the office and warehouse market, Bel Properties, who despite doubts, successfully carried out the enormous task of converting a 40 hectare plot, already under use, into a modern warehouse complex, and ProLogis, which has been very aggressive by entering the market in different locations.

5. In my view, developers are going to maintain the low supply of speculative space next year and the maturing market will facilitate the growth of build-to-suit projects. After an initial increase at the beginning of 2003, rents should return to their current level while demand should increase. Generally, I'm optimistic.

Piotr Wąs, DTZ
1. The market has been undergoing a process of significant restructuring. We can say that in most industrial/logistic projects, rents have stabilized. A lot of occupiers are examining their space requirements and are considering relocations to more efficient schemes.

2e) Vacancy rates in out-of-town locations have seriously diminished,

3. There were only approximately 4 deals around 10,000 sqm concluded this year. DTZ was involved in two of them: Electrolux with 13,000 sqm in Millenium Logistic Park in Pruszków and Jysk in Europa Park in Mszczonów.

5. We expect some spectacular take-up in 2003, with some deals of even around 40,000 sqm.

Jarosław Knyziak, Glob Nieruchomosci
1. 120,000 sqm found tenants, which was neither a bad nor a brilliant result. "Not brilliant", because despite rents falling by about a half, a larger proportion of space remained vacant. Tenants have tended to upgrade the standard of the space they lease, i.e. they have been leasing space of a higher standard at lower rates, which is very well-protected against fire, conveniently arranged, with high, 8-11 metre ceilings and dust-free floors. The standard offered by all respectable developers nowadays, in other words.

3. Our deals deserve to be listed among the deals of the year. They are: P&O Trans European Polska with 15,000 sqm leased in ProLogis Park Blonie, and Polifab Cieszyn  in Wrócław with 5,000 sqm in ProLogis Błonie.

4. Our developer of the year would be ProLogis Poland for their competitive, expansive and professional activity. Our second choice would be Bel Properties for their consistency in developing the modern warehouse and factory complex, Millennium Logistic Park in Pruszków and for their uncompromising stance on standards and competitive rents.

Erik Drukker, Jones Lang LaSalle:
1. Even though many people in the industry predicted 2002 to be a difficult year for the leasing market, it has proven to be stable in take up compared to last year. We will see that the final take up figures for 2002 will be similar to those of 2001.

2b) We see that more and more large companies themselves, or their third party logistics providers, are consolidating.

c) Prime Rents in Warsaw, Poznań, and Łódź have fallen over the last year but not significantly, though rental levels outside these cities have been hit hard and are at all time lows.  With vacant stock drying up, these will bottom out fully by the end of the year.

d) The most popular is currently around Łódź. I am not only talking about deals done so far but also about the requirements out there in the market at the moment. The new location, Poznań, is also very popular right now and will remain so for geographical reasons.

3. Ahold and ProLogis. Jones Lang LaSalle were the leasing agents.

4. ProLogis and AIG/Lincoln

5. 2003 will be a great year again with larger transactions happening outside the main cities with companies looking to consolidate their logistics operations in centrally-located hubs. New markets will include the southern belt of the country: the area between Kraków, Katowice, and Wróclaw.

Aneta Lawnikowicz, King Sturge:

1. This year was a lot better than last. We entered 2002 with a 26 per cent vacancy rate and are ending it with 15-16 per cent.

2b) In 2002, several logistics firms have been analysing the Polish market with a view to entering it in the near future.

d) There is around 100,000 sqm of modern space in central Poland: Łódź, Piotrków Trybunalski and Stryków and in the west: Poznań and Silesia for example. Next year, other areas such as Pomorze, Wrócław and Kraków will also have a chance to develop, though to a lesser degree.

e) The biggest vacancy rate is still in complexes located up to 17 kilometres from Warsaw (24 per cent) There is a slightly smaller proportion in Warsaw itself (23 per cent) but there is practically no space available in logistic complexes in Teresin, Mszczonów and Błonie for instance.

3. In my opinion, the deal of the year was the contract signed between ProLogis and Ahold Polska for three locations: Piotrków Trybunalski, Bedzin and Biełsko Biała.

4. I feel the developers of the year have been AIG/Lincoln and ProLogis, who have been very active all over Poland, whereas the American developer, TKG International, can be proud of its successes in the Warsaw region.

5. My prediction for next year is that around 200,000 sqm of space will find tenants and, as a matter of fact, King Sturge  will be involved in about 20 per cent of this. Rents should remain at the same level, while the amount of vacant space should drop to around 10 per cent. The market will be increasingly affected by locations outside Warsaw, where another 115-120,000 sqm will be added.

Grzegorz Luboinski, Maxon Nieruchomosci
1. As far as leased space in Warsaw and its vicinity is concerned (160,000 sqm), 2002 will compare with last year. This year there has been a significant increase in the range of leases outside Warsaw. At the end of 2001, it was commonly believed that the next few months would be better because of an improved economic climate. Unfortunately, this only turned out to be wishful thinking.

2a) In 2002 the highest demand has been for space between 1,000 and 4,000 sqm in the centre of Warsaw.

b) Retail firms, including those from Eastern and Western Europe, which are new on the Polish market, have mostly been interested.

d) Okęcie is still a sought-after and prestigious location in Warsaw because of its closeness to the airport. What's more, a growing number of firms are interested in the right bank of the Wisła River, which is well-connected but cheaper.

e) In Warsaw, most vacant space is located in the Praga district and a lot of it can be found in the Elemis complex, the largest warehouse complex (120,000 sqm) on that side of the river. Another complex is Metropol Park Jagiellonska (55,000 sqm), which only recently began to attract tenants.

3. I would consider the lease of 4.300 sqm of warehouse and office space by Artal Investment in the Włochy district, 3.600 sqm by Torpak Polska in Ursus and 2,000 sqm by the Merlin internet bookstore in Piaseczno, as the deals of the year.

4. The developer of the year I feel is ProLogis, for the number of deals and scope of its activity. It is the most aggressive competitor but at the same time the most flexible towards clients.

5. I hope that the economic situation will improve in 2003 and we could see signs of this in Autumn, when clients enquired more and more often about leasing possibilities in the near future, meaning that they are thinking of development.