The drive towards diversity

The Expert Eye
The types of warehousing on the Polish industrial market have been undergoing a multi-faceted process of diversification that has been gathering pace in recent years. Newly-developed warehouse projects can now vary considerably in many respects, such as in terms of their size, location and function. Joanna Sinkiewicz, a partner and the CEE head of the industrial and logistics agency at Cushman & Wakefield, tells us more about how the differences that have been emerging across Poland

Newly-built warehouses can be distinguished by their size, type and the technology deployed in them. They can include multi-tenant buildings of 10,000 sqm or more (big-box facilities) and those with individual units of at least 2,500–3,000 sqm.

Many tenants these days, especially those that favour locations closer to large city centres, are tending to look for smaller-scale warehouse space. This type of occupier often treats their warehouse as a business centre that combines warehousing and office functions in a single location. This has given rise to the emergence of the small business unit (SBU) concept on the Polish market. Such modern facilities first appeared in Warsaw in late 2008 and early 2009 and typically comprised warehouse units of 600–1,000 sqm along with office units of 100–130 sqm. Although the concept even back then was nothing new, there is still a dearth of such facilities, especially in regional cities where tenants often have to make do with older projects that are technologically inferior to their more modern counterparts. According to a recent survey of industrial developers active in Poland by Cushman & Wakefield, the intensified development of SBU projects will be among the key trends for 2021.

Outside the big five

Another new trend that has been emerging is related to the location of warehouse developments. Unlike in the past, they are now being built on sites across the country. Poland once had five core markets: Warsaw and its outskirts, Central Poland, Upper Silesia, Poznań and Wrocław. Although these regions still account for close to 80 pct of the country’s take-up, the modern warehouse concept has gradually spread out to other large regional cities, such as the TriCity, Kraków and Szczecin, as well as the smaller markets of Bydgoszcz and Toruń, Lublin and Rzeszów. Modern industrial parks can now be found in almost all the main provincial cities and, in fact, almost anywhere that tenants want to be based.

The most interesting aspect, however, from the perspective of both the market and tenants, is the ongoing diversification of warehouse functions. The variety of functions is immense and is expected to grow even wider going forward. In its early days, the market began with large distribution areas. The first moves towards diversification were prompted by manufacturers seeking custom-built space to meet their own technical specifications. This was followed by urban warehouses (SBUs) with larger office sections. And then came the dawning of the age of e-commerce…

The e-retail revolution

E-commerce companies have been having a huge impact on the Polish warehouse market. A 2019 survey conducted for Cushman & Wakefield’s ‘How to Get the Hang of E-Commerce in Warehouses’ report revealed that e-commerce warehouse space accounted for close to 25 pct of Poland’s total industrial stock. Today, in the wake of Covid-19 and how it has accelerated the transformation of retail, the figure is estimated at more than 30 pct.

Projects delivered for e-retailers include not only large distribution centres (with diverse technical specifications due to the types of products handled), but also cross-dock schemes, facilities for courier companies, and small urban warehouses supporting last-mile logistics. The warehouses of the future are likely to combine retail and distribution, with the key drivers being e-commerce and the development of omni-channel retail. Therefore, the continuing growth of retail warehousing would seem to be inevitable.\

Sustainability and tech

As has been said, the current diversification of warehouses comes in all types, shapes and sizes – and so developers have had to come up with ideas to help them stand out from the competition. One example of this is the growing trend for green warehouses, usually aimed with the aim of achieving BREEAM certification. The technical standards of such projects contrast greatly from those developed even a few years ago and are even more pronounced when it come to warehouses built over a decade ago, as is reflected in the significant difference in the occupancy costs – as is confirmed in Cushman & Wakefield’s ‘Industrial Goes Green’ report.

Another notable trend is the technological diversification of warehouses. Automation – which is also being largely driven by e-commerce – is becoming ever more commonplace as warehouses are increasingly being adapted for this, with automated high-bay warehouses being a prime example of this trend.

We are bound to see more and more changes in warehousing formats and functions in the future. One of the next big things, for example, will be autonomous vehicles. It’s a question of when rather than if they will be approved for use in the EU and Poland, and when this happens significant changes will have to made to warehouses’ technical specifications. And as in the past, tenants will also have a major say on the shape of warehouses to come.

About C&W

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. It is among the largest real estate services firms with approximately 50,000 employees in 400 offices and 60 countries. In 2020, it generated revenue of USD 7.8 bln from its core services of property, facilities and project management, leasing, capital markets, valuation and other services.