The outbreak of war in Ukraine caused a slight slowdown on the warehouse market in Poland, caused by the disruption of supply chains. Over time, some of them were rebuilt and new suppliers were found. In turn, since the beginning of March, developers have been struggling with, among others, with the problem of the lack of availability of building materials, which resulted in an increase in prices.
From the beginning of March 2022, an increase in base rents by 20-40 percent was visible. and effective rents by 20-50%. This is the effect of increase in prices of fuels and construction materials, increase in project financing costs and deterioration of investment funds' sentiment. However, the increase in rents did not weaken the activity of tenants. The end of the first quarter of 2022 brought a reversal of the downward trend in capitalization rates, which was caused, among others, by inflationary pressures and deterioration of investor sentiment. In 2022, yields for the best logistics and industrial facilities increased by several dozen basis points.
After the period of the pandemic "shopping rush" in the logistics sector, the investment market cooled down. The reasons for this should be sought primarily in the increase in interest rates. As a consequence, the cost of capital increased and the availability of debt financing decreased. As a result, investors are now more selective and focused on purchasing individual properties or their small portfolios. Particularly attractive from their point of view are warehouses rented historically at lower rates (compared to higher rents in newly built facilities), which reduces investment risk and offers good prospects for increasing income from real estate. Investors who purchase long-term leased facilities and at the same time offer indexation of rent based on the inflation rate are also counting on a similar effect - explains Paweł Suracki,
In the first quarter of 2022, the vacancy rate reached the lowest value in the history of the market - 3.1 percent, but in the following quarters it increased to over 4 percent. This jump was mainly due to the high volume of new, vacant space delivered for use. At the end of Q1 2022, the volume of space under construction amounted to 4.8 million sq m, which was the highest value in the history of the industrial and logistics space market. However, in Q2 and Q3 there was a decrease in the volume of space under construction, which was caused, among others, by lack of availability of construction materials, increase in their prices and difficulties related to financing the construction of logistics and industrial facilities.
It is estimated that in 2023 the total resources of the industrial and logistics market will exceed 30 million sq m. According to experts, the next year may bring a further increase in rents, but it will not be as dynamic as in 2022. Despite rising rates, Poland will remain an attractive I&L market compared to Western Europe. A further increase in vacancy rates, the development of the trend related to the implementation of ESG strategies by enterprises, as well as the phenomenon of friendshoring are expected.