Neighbours on the horizon

The last few years have not been kind to the Germans. They have had to rescue not only their own but also the Greek economy from collapse. But they succeeded. Now they are turning their minds to investment once again – and Much of this will be in Poland

Emil Górecki

“We are receiving clear signals that German companies want to move part of their production or logistics operations to Poland. This is not a new trend because we have always been a source of cheaper labour for the Germans, but this process was recently set back by the crisis. Now it is coming back and is stronger,” says Marek Skrzydlak, a negotiator in the warehouse and industrial space department at Cushman & Wakefield.

The reasons for this have not changed for many years and will probably not do so for a long time to come, due to the traditionally cheaper workforce, the continually improving road infrastructure and Poland’s invariably excellent location. 
“It is more convenient to relocate distribution centres to the east in Rzeszów or Silesia than in German territory. Potential competitors of Poland, such as the Czechs or Slovaks, do not have enough available land where they could build warehouse or industrial facilities. An investor can point to a place on the map of Poland and we are able to find a suitable plot for them there,” claims Mr Skrzydlak.

However, Panattoni Europe has yet to see any increased interest from German companies in leasing warehouse or production space. The representatives of another developer, Goodman, also have nothing to say on the subject. Karolina Adamska, who is responsible for the development and strategy of the Łódź Special Economic Zone, remembers an earlier German influx a few years ago. According to her, the biggest increase in investment with German capital took place in the period between 2004 and 2008. So far, the management board of the zone has issued 16 permits to the Germans allowing them to do business there – and now 11 pct of the companies operating in the zone come from Germany. “We have in fact noticed an increase in interest in Q2, but there are no companies that received permits for operations last year that include investors with German capital. Recently, in Q2, there was only one such re-investment: 
BSH Sprzęt Gospodarstwa Domowego. However, inquiries from across the Oder river have been rare of late,” adds Karolina Adamska.

Germans only one of many

“We have in fact observed increased interest in investment from companies from abroad, but I would not restrict this to German companies alone,” argues Paweł Sapek, the regional director of Segro Poland responsible for the south of Poland. “It is evident that many investors from Western Europe are planning to enter our market. We have been receiving many more inquiries from potential clients recently, which is evidence of their positive assessment of the economic climate in our country,” continues Mr Sapek. The developer is in the process of preparing projects for companies from France, Scandinavia and Germany. “We are planning to sign new warehouse and industrial space leasing contracts soon. At this point I can say that our new clients are mainly representatives of the retail sector,” he adds.

Segro’s representative considers the cost of running a business, including rents, to be one of the most important factors contributing to the change of location. “I have heard the opinion that rents for industrial facilities in Germany are lower than the rates in Poland. It is easy for us to verify this: Segro is doing business across the whole of Europe, so we also know the German market, where warehouses are still considerably more expensive than those in Poland. I think this will encourage other companies to locate new projects in Poland,” he predicts.

Just as long as it is not too far east

Investors are still wary of eastern markets, such as Ukraine and Russia. In many respects, this is disadvantageous for neighbouring Poland, but in this case it is quite the opposite, providing us with hope for future waves of western investment. “We will still continue for a long time to be the most prominent bridgehead for companies that are rather unwilling to take the risk of operating to the east of EU borders,” argues our expert from Cushman & Wakefield. He adds that these are not just plans but concrete projects. “At the moment we are working for German clients that need several dozen thousands of square metres of warehouse and production space. A considerable number of these are connected with the production sector for the automotive industry,” reveals Marek Skrzydlak. We will have to wait for the names of such potential tenants to be revealed when contracts are finalised and the relocated factories are opened – and this could take even as long as a year. Such buildings need to have a clear specification and have to be built-to-suit.

The eastern bridgehead

Central locations at the intersections of north-south and west-east routes are now being 
chosen for distribution to Ukraine, Russia, Belarus and even the Baltic states. Opportunities are also evident in the TriCity, where hopefully the potential of the cities’ harbours will finally start being exploited, as well as in Poznań, which is close to and very well connected with Germany, as well as in Lublin and Rzeszów – located near the Ukrainian border. These are the places most enquired about by clients of the Warsaw office of Cushman & Wakefield.

When the credit crunch happened, it might have been expected that operations in Germany’s border area would be moved to Poland, as a speculative move to allow for the saving of a few euros per sqm and a few more from the hourly salaries of the workforce, although this was 
not necessarily the case with big companies. 
The production activity that Marek Skrzydlak speaks of has a much longer timeframe, at least as long as ten years. The north-west of 
the country has the disadvantage of considerably less interest from tenants and developers. Szczecin, which so far has only one 
logistic park (developed by ProLogis) and has had problems attracting tenants for a long time, can serve as a prime example. “The main reason is the poorly developed road infrastructure. 
The city could have great potential: it has an airport, a harbour, it is an economic zone and could be a good base for Scandinavian and German companies. However, few companies are opting to be present in the region at this point,” claims Marek Skrzydlak. ν