Breaking the spell of the eastern wall

MLP Group is planning the construction of the first logistics park in the region. The developer with Israeli capital has bought an area of 10.5 ha in the Euro-Park Mielec special economic zone from the Lublin administrative district. The developer is planning to build facilities with a total area of 54,000 sqm on the plot on ul. Plewińskiego in Lublin, including warehousing and offices. The first stage is to come into use by the end of this year with subsequent stages to be finished in a year or a year and a half. “Even before the purchase of the land we had the first lease agreement signed,” reveals Radosław T. Krochta, the general director and vice-president of the board of MLP Group. Who is the tenant? So far this remains a secret, but it has emerged that it is a German company and the contract for 10,000 sqm was signed for ten years. According to unconfirmed media reports it is ABM Greiffenberger, which had earlier been looking for an opportunity to locate its business in Lublin.

Rivals watching closely

The progress of the commercialisation process will certainly be of interest to other developers, who have for some time been trying to figure out how to operate in the so-called Poland ‘B’ zone. “We could become interested in an investment if we had a very good client needing a long-term lease. But even ten years could be too short a period for us. We would also be more interested in a lease upwards of 15,000 sqm,” admits Andrzej Wroński, the national director for Poland of PointPark Properties. There is also the problem of what happens when the lease expires. “We can currently see only relatively weak interest in eastern Poland, and such small demand is not generating any further supply in this region,” explains Ewa Zawadzka, the vice-president and head of development of Prologis in Poland. She goes on to add that if a tenant was interested in a warehouse facility on the eastern wall, the developer would enter negotiations because it is quite able to deliver modern warehouse space in this region. Panattoni Europe’s managing partner Robert Dobrzycki believes that the interest in the east is mainly for industrial facilities and BTS developments outside retail parks. These are often required by companies that operate locally and need to have their current premises modernised or extended. “This is attested to by our developments for such firms as Zelmer in Rzeszów, which identified the need for the optimisation of its production line in a few separate buildings and adapting them into a single modern production and warehouse complex. Another example was the Pilkington plant developed by Panattoni in Tarnobrzeg – its first factory was located in Sandomierz, where the construction of a new facility was impossible due to planning restrictions,” explains Robert Dobrzycki. When can we expect the sector to start moving in the region? “This is a little like reading tea leaves. It all depends on when the national infrastructural projects are completed. It is clear that the worst aspect of the situation is the roads. The geopolitical situation further east is another factor that is difficult to predict. So it could be three years or ten when this starts to happen,” says Andrzej Wroński. The distance from Western Europe certainly does little to encourage companies to locate their enterprises in this region. “It should be noted that eastern Poland can be successfully served from Upper Silesia, which is a mature warehouse submarket offering modern distribution space in strategically located facilities,” points out Ewa Zawadzka. However, MLP does not share such concerns about commercialisation. “We believe that the eastern wall has substantial potential. It offers easy access to a relatively cheap labour force. We are seeing a great deal of interest from all kinds of tenants: from the production and logistics sectors and retail chains. At the moment there aren’t any professionally built logistics parks in the region. We are the only ones and we believe that we will be able to lease out the project relatively quickly. Judging by the number of enquiries we are getting, we should be able to fill the entire park within a year or two,” claims Radosław T. Krochta. Only time will tell if his confidence proves to be well-founded.