Real estate market

DearSirs,

Optimism prevailed in the warehouse sector during 2010, reflected Tulipan Park Gliwice by better-than-expected demand and limited supply. Total stock last year was 6.5 million sq.m, of which more than 300,000 sq.m was newly delivered. This new supply, however, is nearly 70% below 2009's level, but that higher figure reflected completed projects that started before the economic slowdown.

Most newly completed space was pre-let during the planning stage. Warsaw retains its position as the area with the highest concentration of warehouse space, accounting for 40%, or 2.6 million sq.m, of the country's provision. Upper Silesia, which came second, accounts for the biggest share, 31%, of new provision. Central Poland, Poznań, Wrocław, Kraków, Tricity and Szczecin complete the list.

Two regions have emerged on Poland's warehouse map: Toruń and Rzeszów, the second of which is seeing its first development activity, a 32,500 sq.m project. At the end of 2010 just 184,000 sq.m was under construction; some 80% of this space was pre-let. With developers now looking at restarting dormant projects, the amount of space entering the market is expected to rise during the second half of this year. However, investors need to ensure that schemes are pre-let in order to secure financing for construction to begin. The tight lending market has put a halt to nearly all speculative development. Since 2009 there has been a growing interest in built-to-suit developments, which satisfy tenants' demands in both building specifications and location. These projects are expected to stimulate the spread of warehouses to new locations.

Take-up for the whole of 2010 remained healthy, at around 350,000 sq.m in each quarter, bringing the annual transaction volume to 1,419,000 sq.m, a rise of nearly 86% on 2009. New lease agreements were signed for 903,000 sq.m, while lease renewals totalled 516,000 sq.m. The highest take-up rate, 32%, was reported in Warsaw, where most deals were struck for assets in the suburbs. Upper Silesia turned in a take-up rate of 31%, and Central Poland came in at 13%. As in previous years, the demand for warehouse space came from logistics operators (38%) and retail chains (14%).

At the end of 2010 Poland reported total vacant warehouse space of 980,000 sq.m, or 15% of total stock. The highest vacancy rates were in the suburban areas of Warsaw (approx. 22%) and Central Poland (13.5%). In areas with stock shortages headline rents remained at a stable level of EUR 3-4/sq.m/month, unchanged from 2009.