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The development of e-commerce and the accelerating urbanisation process translate into a growing stock of urban warehouses in Poland. Their supply is about 1.6 million sq.m with the prospect of growth.
Within a decade, Poland’s warehouse stock more than tripled from 6.3 million sq m at the end of 2010 to nearly 21 million sq m in 2020. This rapidly developing real estate sector is showing signs of maturity. This is evidenced, among others, by new formats appearing especially in the largest agglomerations. An example is the urban warehouse segment, jointly analysed by JLL and SEGRO in the report “Logistics Avenue: urban logistics in Poland”.
In Poland, urban warehouses are enjoying a growing interest from customers. Recent years have seen a significant increase in new developments in this format and SEGRO’s portfolio comprises up to 67% of the total value. The development of urban logistics is a result of, among others, growing population in agglomerations, development of e-commerce sector and the trend of same day delivery – as well as the transformation of supply chains, comments Bożena Krawczyk, SEGRO Investment Director Central Europe.
Urban warehouses – what kind of warehouses?
Urban logistics assets are by definition located within city limits. However, this is not a fully comprehensive definition.
Until recently, most urban warehouses in Poland were designed as standard “big-box” facilities, which are not necessarily directly related to the logistical service of a city. However, warehousing stock within city limits also includes a range of alternative mixed-use formats with a dominant warehouse function. Therefore, in order to make an accurate classification, not only geographical criteria but also functional and technical criteria must be taken into account, explains Tomasz Mika, Head of the Warehouse Space Department, JLL.
The types of operations carried out in such warehouses, which are usually used for sorting and distribution, are therefore important.
In many cases, especially in relation to the largest retail chains, urban warehouse space complements much more complex logistics chains, handling the so-called “last mile” deliveries in the chosen city. This is reflected in the smaller sizes of individual modules. For example, in Warsaw, the average size of new transactions from 2018 was around 2,000 sq m, compared to 6,000 sq m in suburban locations, adds Maciej Kotowski, Market Analyst, JLL.
Other features of an urban warehouse include a significantly higher share of modern office space (up to 20-30% of GLA), dedicated parking spaces, as well as increasingly common sustainable development and placemaking solutions.
Demand for urban warehouses increasingly sophisticated
The urban logistics market is dominated by occupiers from logistics, retail and related sectors such as FMCG, food and electronics. However, manufacturing companies, seeking to take advantage of proximity to urban areas and wider access to skilled labour, also generate a significant proportion of demand, comments Waldemar Witczak, SEGRO Regional Director.
Growing purchasing power and increased online trade are driving demand from courier companies. Previously, their expansion model relied primarily on building their own facilities to fill gaps in global supply chains. Today, in parallel with the huge increase in the number of parcels to be delivered, these companies increasingly prefer to rent warehouse space.
It is expected that the structure of demand for urban facilities in Poland will slowly transform towards that observed in Western Europe, where warehouses of this type attract start-ups, companies focused on new technologies, data centres and niche manufacturers, as well as R&D laboratory operators. This will make the segment of warehouses located within the city perimeter even more diversified and sophisticated, adds Waldemar Witczak.
The development of this market segment will also continue to be influenced by the changing shopping needs of Polish consumers.
The growing volume of online sales in Poland, which has additionally accelerated due to the pandemic, will certainly become the main driver of the new demand for last-mile facilities and developers’ activity, especially as the sector is already facing an insufficient supply of product. This applies to cross-docks, small courier hubs, as well as new mixed-use formats, which may also include old industrial, retail and office buildings in city centres, explains Bożena Krawczyk.
The market is just starting
The supply of urban warehouses in Poland amounts to around 1.6 million sq.m, which accounts for nearly 7.5% of the total commercial logistics and industrial space in Poland.
Interestingly, the majority, as much as 70% of the supply located in cities is still standard big-box warehouses. A significant part of the market (over 20%) are also SBU (Small Business Units) facilities, i.e. buildings offering small business modules. Cross-dock warehouses, which are mainly used by courier companies, are also gaining popularity. Projects vary in size, shape, technical specifications, etc. This confirms that there is no one-size-fits-all template for a city warehouse, which further hinders new speculative investments. However, the unrelenting demand, combined with the growing interest in urban locations among investors, allows us to look to the future with a great deal of optimism. As of 2015, urban warehouses accounted for around 11% of the transaction value in the warehouse sector. However, given the dynamic urbanisation and changing consumer behaviour, we can expect their share to grow in the coming years, comments Tomasz Puch, Head of Capital Markets, JLL.
Warsaw has the largest share (40%) of urban warehouses. The second place is occupied by Upper Silesia, which gains thanks to the developed road infrastructure near the main urban areas. The third largest market is Łódź, which can be attributed to the size of the agglomeration, the historical development and the industrial character of the city.
The city logistics market has great growth potential. A further 1.8 million sq.m of logistics and warehouse space is under construction, of which 80% in and around the largest agglomerations and over 25% inside cities. In Warsaw, 26% of the space under construction falls within the administrative borders of the capital, adds Tomasz Mika.
Historically, the vacancy rate in parks classified as urban logistics has fluctuated considerably – from 0% to 22%, which can be explained by the relatively small supply (base). However, the total vacancy rarely exceeded 200,000 sq m. For example, in December 2020 it stood at 230,000 sq m, which represented around 9% of the stock.
The amount of rent depends not only on the location itself, but also on the lease terms, technical standard and many other factors. The cheapest warehouses located in the city offer space for EUR 0.5 more than the best properties in the suburbs.
Photo: Bożena Krawczyk, Segro