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Poland’s Warehouse Market in H1 2024: Key Insights and Trends

The first half of 2024 brought both challenges and opportunities to Poland’s warehouse market, showcasing a dynamic landscape of stabilization, growth, and strategic shifts. The market continues to expand, with notable trends around rental rates, new supply, and evolving tenant demands. Here are the key insights from REDD’s latest report:

Steady Growth in Supply, Slowing Speculative Developments

Poland’s warehouse market continues to expand, with 1.4 million sqm of new space delivered in H1 2024, bringing the total supply to 32.3 million sqm. This significant growth is a testament to the sector’s resilience despite economic headwinds. However, speculative developments have slowed, with the volume of space under construction falling to 2 million sqm, down by 500,000 sqm compared to the end of 2023. This shift reflects a market increasingly driven by Build-to-Suit (BTS) projects, designed for specific tenants rather than speculative ventures.

This trend is particularly evident in regions like Wrocław, Warsaw, Upper Silesia, and Central Poland, where demand for custom-built facilities remains strong. For instance, Wrocław leads the way with 562,000 sqm of new warehouse space under development, followed by Warsaw with 285,000 sqm, Upper Silesia with 271,000 sqm, and Central Poland with 269,000 sqm.

Stabilizing Rental Rates Amid Regional Disparities

While we continue to observe rental growth, it has significantly slowed compared to the rapid increases of 2023. This stabilization is largely due to the increased availability of space following the surge in new supply over the past year. By the end of H1 2024, 2.4 million sqm of warehouse space was available immediately, marking an increase of 15,000 sqm from the end of 2023.

However, regional differences in rental rates have emerged. In core markets like Warsaw and Wrocław, rental rates have continued to climb, particularly in prime, urban locations where demand remains robust. In contrast, peripheral markets with higher vacancy rates have seen downward adjustments in rents, especially in older buildings that face competition from newer, more sustainable facilities.

Dominik Łoś, Head of Leasing at LCube, comments: “The first half of 2024 brought rental stabilization and a noticeable decline in demand, primarily due to economic factors in Western Europe. Yet, there is cautious optimism, particularly in the retail and e-commerce sectors. Tenants are now more focused on energy efficiency and ESG-compliant buildings, and owners must adapt to meet these expectations.”

Retail and E-commerce Drive Demand Amid Economic Slowdown

While economic challenges have dampened overall demand, particularly from the TSL (Transport, Shipping, and Logistics) and manufacturing sectors, retail and e-commerce tenants have emerged as significant drivers of demand in H1 2024. These sectors are being fueled by increasing consumption, supported by falling inflation and rising real incomes.

Notably, nearshoring and reshoring trends are continuing to reshape the market, as companies relocate production closer to their supply chains to mitigate risks. A key example of this is the LCube Szczecin-Goleniów project, where space was leased to Copper Joint Electric, a Chinese company operating in the wind power sector. The project’s location within an industrial park that houses similar companies proved to be a decisive factor in securing the deal.

ESG and Energy Efficiency in the Spotlight

ESG (Environmental, Social, Governance) is no longer just a buzzword but a critical factor in tenant decision-making. Tenants are increasingly prioritizing energy-efficient solutions and sustainable building practices over superficial green certifications.

At LCube, for example, all new buildings are designed to achieve BREEAM certification at the Excellent level, with a particular focus on reducing energy consumption and lowering operating costs. Tenants are not only looking for sustainable practices but also expecting long-term commitments from property owners to ensure that buildings meet the latest standards in energy efficiency and contribute positively to their ESG goals.

What Lies Ahead?

As we move into the second half of 2024, the outlook for Poland’s warehouse market suggests further stabilization in rental rates. However, this will likely be accompanied by growing pressure on property owners to enhance their facilities with more energy-efficient technologies, driven by rising operating costs due to inflation, increasing electricity prices, and higher wages.

We also anticipate renewed activity from logistics operators, alongside continued demand from the retail and e-commerce sectors. Additionally, automation and robotics are expected to play a larger role in the strategies of tenants, particularly in manufacturing and e-commerce, as companies look to increase efficiency and reduce reliance on a shrinking labor market.

Curious to know more about the current state of Poland’s warehouse market? Our latest report dives deep into these trends and more.

Download the full report to explore the complete data and insights shaping H1 2024 and beyond.