Of rising costs and too few millennials

On a scorching June morning it was a relief that the venue was in the cool underground conference facilities of the Indigo Hotel in Warsaw. In the first presentation Tomasz Mika, the head of the industrial department in Poland at JLL, took to the stage and tried to answer the question of when the current boom would end. He examined the market in detail but found few, if any factors that threatened its current growth. The unemployment rate turned out to be a major topic of the day but although it is currently at an all time low, a company such as Amazon can still move its distribution centre to Poznań, offer a 15 pct premium on wages to attract staff, and make a saving in comparison to having its operations based in Germany. He was followed by two further presentations by Segro. Waldemar Witczak, the regional director for Poland at Segro gave an overview of his company’s operations and explained its current focus on urban logistic centres. He was followed by Fabien Fridrici, the regional director for France, who after explaining in Polish that he didn’t speak Polish, went on (in English) to talk about building two-tier warehouse facilities, which is Segro’s response to the lack of suitable development land in urban areas. He claimed that the proportion of useable space to land was around 80 pct in the company’s latest Paris Air2 centre and that this could grow to over 100 pct in future centres by adding further levels. The final presentation of the day was by Paweł Kopeć, the international account and bid manager at Randstad Polska, who pointed out that although Polish unemployment now stands at 3.5 pct this level varies widely across the country. He also mentioned that the government’s social policies were having the effect of taking workers out of the labour pool and that warehouse operators also had to compete for staff with every other company that was active in a given region. Then he examined the employment structure of many of Poland’s regions comparing each city to Wrocław, which he had taken as his benchmark.

It was now time for a short coffee break, which was to be followed by the panel discussions. The first was entitled ‘Desperately seeking staff... and keeping them happy’. Oskar Kasiński, CEO of HR Design Group, acted as the moderator and he was joined on the stage by Jarosław Czechowicz the country manager of Goodman Poland and Marzena Tkaczuk, the head of BTS business development at Panattoni Europe. All the panellists agreed that the trends that can be clearly seen on the office market are coming over to Polish warehouses, especially with millennials taking up an ever increasing proportion of the workforce. These are demanding workers who require flexible and comfortable working conditions. The next panel was to focus on ecommerce and urban locations and was moderated by Damian Kołata, an associate at Cushman & Wakefield, who mentioned that one of the most frequent internet purchases from Amazon in the US was a can of coke, as frequently office workers could not be bothered to get up from their desks to go to the nearet store. Mirosław Koszany, the CEO of Biuro Inwestycji Kapitałowych was then to set the cat among the pigeons by stating that the urban warehouses around Poland’s major cities were already good enough to meet the delivery expectations of customers. Adrian Biesaga, the development director at Waimea Holding, then pointed out that small businesses certainly needed more space in cities and Bartłomiej Krawiecki, the head of development at 7r, then pointed out that when such businesses did not invest in such space, they failed. Monika Duda, the head of logistics at M4 Real Estate, then mentioned that warehousing was not actually the biggest cost as it was dwarfed by the costs of transport. Still the demand for urban space is undoubtedly huge. As Damian Kołata pointed out, although ecommerce accounts for 4 pct of retail sales, it already accounts for 25 pct of warehouse space. The final discussion of the day was devoted to costs and was moderated by Renata Osiecka the managing partner of Axi Immo. Everyone agreed that costs in the industry were rising across the board, but again a point made by the previous panel was reiterated by Karina Trojańska, the CFO for Panattoni Europe Poland. Real estate is not the biggest expense and then she pointed the finger at transport and labour. Łukasz Kozerski, the business development manager at CFE Polska also agreed that the price of labour was rising, but was also confident that similar rises wouldn’t be seen in the price of materials. According to Waldemar Grabka, the investment officer at Exeter Property Group, rents in Poland are low, and there is lots of land to develop. After all, Poland is a flat country. Soon afterwards everyone poured out into the foyer for lunch, a glass of wine and quite a bit of networking. ν