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Poland MarketBeat

Małgorzata Dziubińska • 31/05/2021
Cushman & Wakefield MarketBeat reports analyse quarterly Poland commercial property activity across office, retail and industrial real estate sectors including supply, demand and pricing trends at the market and submarket levels.

Industrial

The warehouse market continues to grow at a dynamic pace and the results for Q1 2021 show that this trend is strengthening. Total take-up reached 1.6 million sq m, which is a record outcome noted in a quarter and 70% higher compared to the first quarter of 2020. Still, the key source of demand comes from companies representing logistics, retail, e-commerce, manufacturing and automotive sectors.  

Restrictions in retail sector have accelerated the e-commerce industry and multi-channel sales strategy of various types of products (FMCG, food, electronics, DIY/furniture, clothing). As a result, the demand for logistics space of various types has increased, including large BIG-BOX distribution centers and BTS projects supporting regional and international distribution as well as smaller projects (cross-docks, courier hubs, modern small business units – SBU) located within the central subzones of key agglomerations in order to support last mile logistics and shorten delivery times. The industrial sector is also performing well, including the automotive industry as evidenced by growing demand connected with the further sector evolution in direction of electric cars industry. 

In Q1 2021 developers started construction of 1.2 million sq m and a total of 2.5 million sq m is scheduled for completion within the next 12-16 months to increase the market stock to ca. 24 million sq m in 2022. This indicates a very strong growth of development activity which refers to both, emerging industrial sub-zones in key regional warehouse markets and completely new locations such as Wałbrzych, Zgorzelec, Kalisz or Siedlce. The reasons of geographical diversification are limited warehouse space or land availability in the core logistics hubs but also improving transport infrastructure openning up new opportunities in terms of supply chain diversification and workforce availability. Due to the limited supply of greenfield sites in urban markets, developers are increasingly willing to invest in brownfield projects.  

Strong demand as well as limited volume of speculative investments are keeping vacancy rate low. As of march 2021 there was ca. 1.4 million sq m of warehouse space available for lease which was 6.5% of total warehouse stock in Poland, down by 0.9 pp. compared to the same period year ago. Rents have remained stable but may increase due to strong demand, limited speculative investments and rising construction costs. 

 

Retail

Nearly 70,000 sq m was delivered to the market across all retail formats in Q1 2021. The new supply comprised eight new retail schemes sized between 5,000 sq m and 11,000 sq m, most of which were standalone stores and small retail parks. More than 380,000 sq m of retail space is currently under construction and scheduled for delivery this year and in 2022. Of the 31 schemes in the pipeline, 16 are retail parks, with the biggest expected to provide 18,000 sq m. A total of nine weeks of lockdown in Q1 2021, an unclear lease status of many tenants, uncertainty caused by the worsening pandemic and the lack of a specific date for the lifting of retail restrictions have all left their mark on the entire sector. Many tenants are restructuring their chains and closing unprofitable stores. Q2 2021 will certainly be a period of major challenges for the entire retail industry, but the lifting of lockdown restrictions scheduled for 4 May will be very encouraging to see. According to economic forecasts, the forthcoming months are expected to see a rebound amid substantial consumption growth. 

 

Office

 In first quarter of 2021, the total office stock in Warsaw and eight largest regional markets accounted to over 11.9 million sqm. The vacancy rate has continued its upward trend since the second quarter of 2020, largely driven by economic uncertainty caused by the outbreak of the Covid-19 pandemic. Amid subdued occupier activity in recent quarters and a build-up of new supply in the last three months, the vacancy rate rose to 12.2%, up by 3.8 pp year-on-year. Occupier activity has also continued a downward trend since the onset of the pandemic with total leasing activity accounted 213,500 sq m in the first quarter of 2021 what reflect decrease by 41% compared to the same period in 2020.

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