The GDP forecast for 2019 in Poland prepared by Oxford Economics has been lowered by 0.3 pp. to 4.0.%. Nonetheless, Poland is still one of the fastest developing countries in Europe in terms of GDP growth.
A moderate amount of investment is visible in Warsaw as well as in regional cities. While supply in Warsaw is stabilizing, stock in regional cities is growing dynamically. Prime rents and yields in certain areas are under pressure – upward and downward, respectively. Total supply in 2019 will be approximately 7% higher than in 2018. The vacancy rate in Q3 2019 decreased to 8.25%. We expect that the vacancy rate in Warsaw will continue to decrease until the end of 2020. The availability of office space may increase in 2021 with second wave of new office developments located in the city centre, especially in the area of Rondo Daszynskiego.
Poland’s GDP growth rate is forecast to reach 4.3% in 2019 mainly driven by expanding domestic consumption and a rebound in investment. The third quarter of 2019 saw only ca. 50,000 sq m of new retail space delivered in two new retail schemes: Stara Ujeżdżalnia shopping centre (25,000 sq m) in Jarosław in south-eastern part of Poland and N-Park retail park (5,300 sq m) opened in Wrocław. Additionally, several retail schemes were extended. Among the largest extensions were Centrum Janki shopping centre (Warsaw agglomeration) by almost 12,000 sq m and Galeria Słowiańska in Zgorzelec by 3,000 sq m. The increasing market saturation in key metropolitan areas and changing shopping habits and consumer expectations are having a knock-on effect on the retail supply that will be dominated in coming years by small convenience shopping centres, retail parks and mixed-use schemes.
Despite the record level of new supply, the vacancy rate (5.6%) increased slightly by 1.6 pp. on an annual basis. Development activity remains buoyant with over 2.2 million sq m of warehouse space under construction. This combined with the higher number of speculative projects contributes to lower rental growth, although in some most sought-after logistics locations of Warsaw Suburbs or Wroclaw we noted a slight increase of prime rents by 0,2 EUR/sq m/month as compared to the end of June 2018. Prime yields continued to compress, falling to 6.25% in the case of multi-let schemes and 5.50% for long-term single-let warehouses.