BRICKS & MORTAR: Warehouses find home in Poland

By bne IntelliNews May 22, 2008

Matthew Day in Warsaw -

They may not be everybody's idea of architectural heaven, but warehouses have never had it so good in Poland. Big boxes are mushrooming across the country in all their cubic glory and their rate of progress shows little sign of flagging.

Take the figures on the logistics and warehousing sector as evidence. A March report by Jones Lang LaSalle on the European logistics market shows that the amount of new warehouse space rented and leased by companies in the Polish market grew by 58% last year – the highest in Central Europe. The company also says that another 1m square metres (sqm) of floor space was added to existing supply, an increase of 63% on the previous year. Total stock, according to Cushman & Wakefield, now comes in at 4.23m sqm, and the first three months of this year saw 471,000 sqm taken up in lease agreements.

"It's a very dynamic market at the moment," says a happy Maciej Chmielewski, head of industrial at the property advisory agency Colliers International in Warsaw. Chmielewski points to Poland's growing economy – GDP hit 6.1% was 2007 – as one key reason for the sector's rapid expansion from an, admittedly, low base. With its EU membership and competitive cost base, Poland has become a leading European destination for manufacturers, and their growing presence has created a natural demand for distribution warehousing.

A further aspect that has helped drive the growth of warehousing has been Poland's flourishing retail sector, which now covers some 5m sqm. As Poles earn more, and possess a fair propensity to spend, supermarkets and shopping centres have become commonplace – and where there are shops, there has to be an extensive supply chain supporting them.

The growth of retail has also helped warehousing grow into the regions. For a long time, warehousing remained concentrated in and around Warsaw, but as retail has spread out from the cities into the regions, the distribution parks have followed. "The level of business in Warsaw is still doing well, but in percentage terms it's decreasing as the regions in Poland – especially in areas like Wroclaw, Poznan – catch up," explains Michael de Jong-Douglas, senior vice president for CEE at the logistics park developer ProLogis. Figures from Colliers reveal that 86% of all new space built in 2007 was outside Warsaw and the capital's percentage of total stock fell below the 50% mark for the first time.

Roads to warehouses

The logistics business has also begun to benefit from the long-overdue expansion of Poland's motorway network. Although road construction has progressed at a snail's pace, which has frustrated the logistics sector's development, it's set to pick up as Poland gets ready for the 2012 European football championships – and this should increase the already-apparent tendency for warehouses to follow the main roads.

"New locations for logistic centres will emerge as freeway construction accelerates and high-quality infrastructure penetrates previously 'untouched' regions [of the country]," says Robert Dobrzycki, regional partner for CEE at logistics developer Panattoni Europe, adding that this will help demand to remain "constant" in the near future.

Big sheds springing up in Poland's regions should not only breathe new life into them, but also reinforce the country's growing status as a key European logistics hub. In part, this stems from Poland's geographic position. Covering the main east-west trade routes between the EU and former Soviet states, and the rapidly developing north-south links, Poland has begun to revive the historical role of European transport artery, which was brutally severed by both World War II and the subsequent Cold War.

On top of this, price has a hand to play. Being pretty-much flat means that Poland makes an ideal habitat for warehouses in search of a home, and an abundance of land has helped keep prices down. "Rental levels are lower in Poland than in its neighbours," says Chmielewski. "This is mainly because the price of land is lower here than in the Czech or Slovak republics. So in Poland you can pay €3 per sqm, while in the Czech Republic and Slovakia it is 10 or 15% higher," although he added that the supply of suitable land close to Poland's southern neighbours has now become limited.

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