A quality partner

MDC2 has been active on the Polish warehouse and industrial market for almost five years now and you are one of its founders. How much has it grown since then?

We started this company back in 2021, and as a founding partner I’ve been delighted to see how our team has grown and adapted to the unusual challenges of the past few years – post-Covid, inflation, interest rates and the war would have sunk most companies. Resilience is a key factor in our growth story and this is down to every single person at MDC2. We currently only have about 20 people, yet we are looking at some new hires as we grow our business towards a 10 pct market share. Our growth story is still unfolding and we are all incredibly excited about the potential of not only MDC2, but of the Polish logistics and warehousing market in general. The next decade will bring growth and opportunity, and as the company that has helped move the ESG agenda in Poland, MDC2 will be a major part of the next chapter.

And your company started operations just after the pandemic. How much has the structure of the market changed since then?

Any market would have been up-ended entirely by a black swan event, but to have a second one in the form of the war right on the heels of the first basically meant all bets were off. What we see now is the emergence of more competitive market space with several more dynamic companies vying for market share. Quality has come to the fore and that can only be a good thing. The funding market has been a key driver in the market changes we have seen over the last couple of years. The main investors are more risk-averse as regards permitting and pre-leases, but if you have quality product and financially sound tenants, deals are still there to be done. The focus on quality and sustainability are new focus points, so gone are the days of “green dot” BREEAM buildings. BREEAM ‘Excellent’ or ‘Outstanding’ are what the market is crying out for. Did you know that only some 3-4 pct of all modern warehousing stock in Poland is rated as ‘Excellent’ (New Construction). You just have to ask what on earth was everyone thinking when they built in the boom years between the great financial crisis and the start of the current downturn.

Would you say the market has now stabilised after the post-Covid boom? And do you think that there is maybe another boom around the corner?

I wouldn’t say we have stabilised just yet. The US Fed and the ECB still have some work to do; however, there are signs of optimism and we are positive about the future prospects for the Polish market. Once the interest rate cycle shows sustained downward movement, then I think we can think about a stabilised market. There also needs to be a recovery in the real economy and a boost in the tenancy market – which is still weak, albeit with some positive signs of a rebound. Poland has all the potential to be a tiger economy with the trend away from globalisation. The country has a lot of work still to do with its energy infrastructure, which could remain a hindrance to a boom. Overall, however, I would say the future is bright.

What makes your company and your warehouses different to those of other developers?

Quality, transparency, partnership. We set this company up as if we were a listed entity, appointing an extremely high-quality non-executive director board, which has proper oversight into the running of the company. We have numerous committees for risk and audit, Investment, remuneration, and of course ESG. ESG for most of our competitors is an after-thought, where they are still coming to terms with the ‘E’, let alone the relationship between all three letters. We lead with a governance-first approach, which really focuses on quality, transparency and partnership, as I have just said. This, for us, is paramount.

What is MDC2 busy developing at the moment? Can we expect any major announcements of new projects in the near future?

Like any good business we have a pipeline of really dynamic and interesting projects and we will be making announcements in due course.

How is the leasing going? Which sectors are tenants coming from? And has the trend for near-shoring also been making a significant impact on the market yet?

I mentioned quality earlier and when you look at our project lease-up of app. 80 pct compared to the market average of 45 pct, I think we are doing quite well. The tenant base is quite broad, but we do seem to attract high value-add clients. Near-shoring is underway and this is a key driver for this market as we look forward. I expect this trend to be a key driver in take up, no question. There are clearly some weaknesses apparent in the commercialisation of projects at present, but we feel the trend is turning more positive.

Your company is unusual in that all its employees take their summer holidays at the same time. How did you spend yours?

Well, we give the entire company the first week of July off. We think it’s important for everyone to rest and reset at the same time. This is an additional week of holidays on top of the statutory Polish standard, so it’s one of the nice perks we like to give to our entire team. I’m actually in Italy right now. I prefer late summer to the mayhem of high season.