The development of e-commerce and the accelerating urbanisation process is translating into a growing stock of urban warehouses in Poland which currently stands at approx. 1.6 million sqm, with the prospect of further growth.
City warehouses are becoming increasingly popular among tenants in Poland. Recent years have seen a sharp increase in new developments in this format. In SEGRO's portfolio such projects account for 67% of its total value. The development of urban logistics is a result of, among other things, the growing populations in metropolitan areas, the development of the e-commerce sector and the trend towards same day delivery as well as the transformation of supply chains,
comments Bożena Krawczyk, Investment Director, Central Europe, SEGRO.
What is city logistics?
Until recently, most urban warehouses in Poland were designed as standard big-box facilities that were not necessarily directly related to the logistics service of the city. However, the warehouse stock located within city boundaries also includes a number of alternative mixed-use formats with a predominantly warehouse function. Therefore, in order to accurately classify the urban logistics market in Poland, it is necessary to consider not only geographical criteria but also functional and technical aspects as well,
explains Tomasz Mika, Head of Industrial Poland, JLL.
In many cases, especially regarding the largest retail chains, urban warehouse space complements much more complex logistics chains, and handling last mile deliveries in a particular city. This is reflected in the smaller sizes of individual modules. For example, in Warsaw, the average size of new deals since 2018 was around 2,000 sqm, compared to 6,000 sqm in suburban locations,
adds Maciej Kotowski, Research Analyst, JLL.
Demand for urban warehouses is increasingly sophisticated
The urban warehouse market has been largely dominated by occupiers from logistics, retail and related industries such as FMCG, food and electronics. However, manufacturing companies, seeking to benefit from their proximity to urban areas and wider access to skilled labour, also generate a significant share of demand,
says Waldemar Witczak, Regional Director, SEGRO.
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 operators of research and development laboratories. This will make the urban real estate segment even more diverse and sophisticated,
adds Waldemar Witczak.
The growing volume of online sales in Poland, which has further accelerated due to the pandemic, will certainly become the main driver for new demand for last-mile facilities and developer activity operating in this market segment, especially as the sector is already facing insufficient product supply. This applies both to cross-docks, small courier hubs, as well as new mixed-use formats, which may also include old industrial, retail and office buildings located in city centres,
says Bożena Krawczyk.
Supply – market is heating up
Interestingly, up to 70% of the supply located in cities still comes in the shape of standard big-box warehouses. A significant part of the market - over 20% - is made up of small business unit facilities, i.e., buildings offering small business modules. Cross-dock warehouses, which are mainly used by courier companies, are also gaining in popularity. Projects vary in a number of ways including size, shape, and technical specifications. Because there is no one-size-fits-all template for a city warehouse, it further hinders new speculative investments. However, the unrelenting demand, combined with 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 total transactional value in the warehouse sector. However, taking into account rapid urbanisation and changing consumer behaviour, we can expect their share of the market to grow in the coming years,
comments Tomasz Puch, Head of Capital Markets in Poland, JLL.
The industrial market in Poland has the potential to reach new heights, as 1.8 million sqm of logistics and warehouse space was under construction in Poland. 80% of this total has been built in and around the largest agglomerations, with more than 25% of this space located in inner-city locations. In the case of Warsaw, 25% of the space under construction was within the administrative borders of the capital,
adds Tomasz Mika.
