Time to get the party going

The 20th Eurobuild Warehousing and Logistics Conference took place in the modern interiors of the Copernicus Science Centre in Warsaw’s Powiśle district. The event opened with a presentation by Ewa Zagórska of Digital Real Estate, who argued for the continuing need to digitally transform the sector. The construction sector is the least technologically advanced in Poland – and this slows down the entire project management process. And so, she outlined the solutions devised for logistics real estate that can enhance the technological aspects of Polish warehouses.

The first panel discussion, chaired by Damian Kołata of Cushman & Wakefield, was devoted to the development market. Michał Białas of 7R suggested that we can already feel a sense of cautious optimism in the air – demand is becoming diversified, while an upturn in customer activity is evident, but the pressure for closing deals is still not there and decisions are being taken slowly. Michał Samborski of Panattoni provoked some laughter from the audience by comparing the current state of the market to getting ready for a good party. We’ve got our glad rags on and are all ready to go, but the fun hasn’t started yet. Tomasz Kostrzewa of LemonTree stressed that prime locations and high-quality developments have become crucial these days – a sentiment that all the panellists agreed with. E-commerce is still among the main sources of tenants while the potential of the life science sector was also highlighted.

The investment panel was hosted by Sławomir Jędrzejewski of JLL. He began the discussion by summarising the results of recent months, which have not been encouraging. The panellists pondered about what lies in store when it comes to the cost of money. Capital is slowly returning, but investors are still very cautious. They all agree that building in Poland will become more and more expensive. They also wondered how best to manage a warehouse portfolio in such a challenging market. Anna Szelc of Invesco noted that both developers and investors in Poland need to be more creative. Tomasz Jaroszewski of Hillwood emphasised the role played by building good relationships with tenants and retaining them in existing locations. Attention was drawn to the disparity between base rents and effective rents, and the fact that new buildings will become more expensive. However, these experts do not foresee any further rent increases. Witold Kubik of BGK insisted that the warehouse market is still attractive for banks, while the confidence in the logistics sector can be seen in the fact that BGK raised the investment limit for warehouse properties this year.

The one-hour lunch break gave everyone an excellent opportunity for some networking. Bremer prepared a pleasant surprise and treated the conference guests to some isotonic kombucha – an authentic Chinese beverage based on fermented tea. And so, after the break, with renewed energy we could all focus on the panel about the rental market. The moderator, Marta Bijak-Haiduk of Deloitte Legal, raised the question of why tenants are reluctant to change location. There were many answers. Bartosz Klimek of Fortress Europe claimed that this could be related to the fear of losing employees. Ewa Zawadzka of MDC2 was of a similar opinion, pointing out that the location matters a great deal because access to infrastructure and labour is vital. According to Bartosz Klimek, effective rents are set to fall, but they will continue to be influenced by the location, the technological specifics of the building and the length of the contract. It was noted that Poland is still benefiting from nearshoring and friendshoring, but needs to keep an eye on the competition from the Czech Republic and Romania. The panellists also paid considerable attention to how the currently deteriorating condition of the German economy could impact the Polish market. According to Joanna Sinkiewicz of Accolade, the Polish sector will feel the pain from this downturn, given that many entities have capital ties to the German market. Bartosz Klimek added to this that Poland is not currently perceived by Germans as a safe place to invest. The potential consequences of the end of the war in Ukraine were also considered. Poland could become a base for Ukrainian reconstruction; however, the conflict first needs to come to an end for this to become a factor.

The conference closed with a panel devoted to discussing the condition of old and new facilities on the market. Poland ranks fifth in Europe in terms of the volume of warehouse real estate, but most of its buildings are now ageing and don’t meet the latest demanding ESG standards. Michał Śniadała of CBRE, who chaired the panel, examined the advantages of old logistics properties. It turns out that there are quite a few: older warehouses are often more attractive to tenants because they are in prime locations and are cheaper. However, on the side of the tenants, Andrzej Potyra of Żabka Property Fund and Dariusz Lipiński of InPost Group were ardent fans of new facilities. They insisted that they always choose new, much more expensive BTS properties as they meet the specific needs of the company. A question was also raised about the future of the oldest facilities that are not up to current standards. The panellists did, in fact, entertain the notion that such buildings could well be demolished, especially those in central locations in areas attractive to residential developers.

And so, another exciting conference is now behind us. We would like to thank Cushman & Wakefield for their expertise and our sponsors Axi Immo, Harden Construction, LemonTree, Bremer, Mountpark and Dekra for their support in organising the event. We would also like to express our appreciation for the strong attendance of all guests and hope to see you all again on October 17th at the Sound Garden Hotel in Warsaw for Eurobuild’s 15th Office Market Conference – Trends & Outlook.