GARBE knows Europe – Country Scope

Closing the logistics sector gap in Poland

With approx. 38 million inhabitants, Poland is the largest member of the EU in Central Eastern Europe. It posted a GDP of EUR 502.4 billion in 2019[1] and has witnessed remarkable economic expansion after undergoing major political and economic transformation in the 1990s. The Polish logistics real estate market has also enjoyed a boom in recent years and seen a significant rise in demand due to the strong growth in prices in other top European markets.

Poland’s logistics sector became increasingly attractive starting with its entry into the EU in 2004, after which some international companies soon began realigning their production and distribution networks to the East. Poland has benefitted greatly from companies realigning their businesses thanks to its strategic location at the crossroads of many important European transport routes, its low land prices and rents, the low costs of labour and the existing pool of qualified personnel. The Polish government’s investment in the expansion of infrastructure and extensive funding by the EU only made and are making the country even more attractive. In 2019 alone, EUR 3.3 billion was invested in expanding Polish country roads and motorways. There are currently 1,290 kilometres of motorway under construction and an additional 2,140 in preparation.[2] Poland’s logistics industry is one of the fastest growing sectors in the Polish economy thanks to an economic growth rate of 8.8 % in transport/logistics/communication. This sector is already one of the country’s main economic pillars, accounting for a share of more than 11 % of the nominal gross value added.[3]

Emerging submarkets driven by infrastructure development

Up until now, Poland’s logistics market has primarily focused on ‘voivodeships’ (administrative districts) in and around the cities of Poznań, Warsaw, Lodz, Katowice and Wrocław. Approx. 80 % of the modern logistics space available is located in these five established logistics regions. Massive investments in road and transport infrastructure have placed increased emphasis on decentralised regions, such as Gdańsk, Szczecin, Bydgoszcz, Białystok, and Lublin, as logistics hubs and have increasingly drawn the attention of developers and investors to these areas. Current major projects in Szczecin or Bydgoszcz testify to the increasing appeal of these submarkets.

Market indicators point to dynamic growth

Poland’s fast-paced logistics real estate market and growing demand is clearly reflected by the development of market indicators over a five-year period. Poland’s existing logistics space has almost doubled since 2016 and reached approx. 20.6 million square metres by the end of 2020 due to the high level of building activity. This increase in space has not only made Poland the market leader in Central Eastern Europe, but has allowed it to eclipse other established Western European countries. The prime rent simultaneously rose by 16 % to EUR 4.30/sm. The logistics region of Warsaw achieved the highest rents, while Katowice and Wroclaw recorded the strongest growth in rental prices with an average annual growth of +4.8 %. Poland’s increased significance as a logistics market caught the eye of investors and led to growing demand for investment properties. Growing interest pushed the transaction volume in 2020 to a new all-time high of around EUR 2.6 billion and drove yields down. In general, the prime yield has fallen by 1.10 percentage points since 2016 and came to 5.20 % at the end of 2020.Despite the rapid growth, the level of prices are still moderate compared to Western Europe and attractive for investors. Our GARBE PYRAMID Map provides an overview of the top rents and yields in the individual Polish logistics markets in 2020.

(Still) the top market in the secondary ranks

Even if Poland’s logistics real estate market is still second to primary European markets such as Germany or the Netherlands, it is well on its way to establishing itself as a top market with the current rate of development. The strong momentum of recent years will also carry on in the future. The e-commerce sector’s high backlog demand will also act as a driver of demand and absorb large parts of the newly emerging space. A rise in interest from investors can be expected due to the moderate prices and the attractive yield level.