Looking to the future

Tomasz Cudowski: P3 recently announced that it had bought two sites in Warsaw for urban logistics centres. Is this part of a new strategy? Are there going to be any more purchases like this, and if so, where?

Bartłomiej Hofman: We’ve always followed the market very closely and reacted to changes in demand as well as to new trends. One of these is the soaring popularity of last-mile logistics centres, which has been underway for several years. Covid-19 has had an influence on this by accelerating the growth of e-commerce. Whether we are going to make more acquisitions is something I can’t rule out. But we are looking at Upper and Lower Silesia.

What kind of year was 2020 for P3? What have been your greatest challenges?

It’s certainly been a very demanding period, particularly at the beginning of the pandemic when nobody knew what to expect. We had two projects under construction in the spring and, fortunately, everything went well. We managed to finish the construction work on schedule and hand over two large buildings to our tenants – a central warehouse for PepsiCo in Mszczonów of around 60,000 sqm and a 17,000 sqm sorting station for InPost. At the height of the pandemic, we also bought two plots in the Warsaw area – one on ul. Faradaya and the other in Lesznowola district. This shows that we believe in this market. Last year we had a greater proportion of short-term leases. Companies were looking for extra space as a buffer to meet increased demand.

P3 Logistic Parks tends to stay on as the long-term owner of the centres it develops. Does such a strategy work in difficult times?

It certainly does. Our tenants appreciate the fact that we build centres that we later manage ourselves – as developers like us take a different approach to their projects. For instance, we construct buildings with an above-standard ceiling height of 12m and we do so even when a tenant doesn’t request this from us. They might find it useful in later years, and when they do require more space, they will be able to expand upwards. For this very same reason, the load capacity of our floors is also above-standard. We plan for how our tenants are going to grow over many years. Of course, because of this we have higher costs, but over the longer term it pays off for everyone.

How long do you think the current boom in warehousing is going to last? Once the pandemic is over, won’t vacancy rise?

I don’t think so. It’s already clear that the habit of shopping online is here to stay. And, well, we also still have a significant shortfall of warehouse space in Poland of around 0.5 sqm for each person, whereas in the Czech Republic the figure is around 0.85 sqm and in Germany it’s around 1 sqm. These two latter countries are in many ways very similar to ours, but in Poland we have the advantage of lower labour costs. To catch up with Germany, we would have to maintain a development rate of 2 mln sqm of new space a year in Poland for another ten years. Those aren’t bad prospects.

Do you think that investors are likely to stay interested in the warehouse sector over the next few years? Or are they going to want to return to other asset classes, such as offices and shopping centres?

I believe in warehousing and that the demand for it will last. Investors are putting their money in these assets not only because they are attractive today, but will also continue to be so in the years ahead of us. And the figures from Q3 show that the investment demand for warehousing is huge.

Have you found time during such a busy period to relax and go on holiday?

Somehow I managed this, although it was difficult to go anywhere far because of the flight restrictions. But that was no loss. Covid-19 didn’t stop me going sailing, so this year I went to the Masurian lakes three times. It’s a great place and sailing gives you such a wonderful adrenaline rush. It really does allow you to relax. I also play tennis every day and thankfully the courts are also open.

And where did you do your Christmas shopping? Didn’t you miss the atmosphere in the shopping centres with all Christmas tree lights and ‘Last Christmas’ playing over the tannoy?

Honestly, I never really spent any time in shopping centres, so it wasn’t much of a problem for me. I’m very glad that high streets and small community shopping centres are becoming more popular – this is a healthy way to shop as it’s often closer to home. There’s much more of a Christmas atmosphere there than in the big centres.