Poland Real estate not immune to economic and geopolitical impacts

The total supply of modern I&L stock across the capital city markets in the CEE-13 countries amounts to almost 25 mln sqm and over 67 mln sqm at a country level.

Investment trends in the Industrial & Logistics sector

The significant interest in the I&L asset class, with investors seeking various opportunities such as land acquisition, single assets, large portfolios, and long income sale & leaseback arrangements have all been observed. However, the sector is not immune to economic and geopolitical influences, including higher financing costs, pricing mismatches between buyers and sellers, and limited product availability.
Dominika Jędrak, the director of research and consultancy inPoland and the CEE region at Colliers

Despite these challenges, the I&L sector remains a key focus for investment in the Central and Eastern European (CEE-6) region.

Yield compression and rental growth

Significant yield compression in the CEE-6 region between 2012 and 2021, was driven by low product supply and strong demand. Additionally, rental rates have risen substantially, especially in the most sought-after markets with low vacancy rates. While rental growth may stabilise in the short to mid-term, economic pressures could lead to marginal decreases in some markets. Despite these fluctuations, the overall outlook for the I&L sector in the broader CEE region remains positive, with expectations of continued growth and performance. Capital values per sqm continue to look attractive relative to Western Europe.

Supply and demand dynamics in the Industrial and Logistics sector

The total supply of modern I&L stock across the capital city markets of the CEE-13 countries amounts to almost 25 mln sqm and over 67 mln sqm at a country level. Despite variations in vacancy rates among CEE-13 countries, demand for I&L space has been strong in recent years, driven mainly by such sectors as 3PL, retail, and distribution. However, a decrease in demand was recorded in most countries in 2023, attributed partly to economic and geopolitical factors.

Sustainability initiatives

Sustainability initiatives in the CEE-6 region touch almost 90 pct of the total stock of modern industrial and logistics space. The CEE-6 countries have been implementing green solutions in buildings for a long time, resulting in facilities with the highest levels of environmental certification, such as BREEAM or LEED. Progress in ESG implementation varies across the CEE-6 countries, but it is the most developed group of countries among the wider CEE-13 in this respect. A growing interest in green technologies and energy efficiency is evident across the Baltics countries, although progress in the implementation of ESG principles is at varying levels.
Silviu Pop, the director of research for Romania and the CEE region at Collliers

Labour market dynamics in the CEE-13 region

The labour market in the CEE-13 region, particularly in the production and logistics sectors, noted significant salary disparities among countries, with notable salary increases observed in the CEE-6 region. This growth is attributed to the nearshoring trend in logistics and the automation of production processes. While the production sector experiences substantial year-on-year growth, the logistics sector grows at a more modest pace. The increasing demand for qualified personnel in logistics and production specialisations is driving businesses to expand and develop closer to the Central European region.

Migration trends and workforce dynamics

Significant annual changes in migrant populations are observed in several countries, particularly in Romania and Bulgaria. The Western Balkans have also been a significant source of migration to other European countries. Despite challenges in recruiting employees with specific competencies, the region remains a significant corridor for internal migration, providing industries with opportunities to acquire employees with diverse experiences and skills. Furthermore, labour markets are still more accommodating than in Western Europe.