Hubert Wojtera, Industrial & Logisitc Director at AXI IMMO, in the podcast ‘Warehouse market in Łódź – the logistic heart of Poland’, talks about the warehouse market in the Łódź region and the factors that have recently influenced it. Read on or listen (podcast only in Polish).
Central Poland is the third largest warehouse market in Poland and an important international distribution hub serving the CEE region and the Baltic countries. The main clusters of logistics real estate are located in the Łódź, Stryków and Piotrków Trybunalski submarkets. Central Poland is often selected by large logistics firms and retail chains as a location for their central warehouses serving the national market. It also attracts international distribution companies and production firms thanks to its strategic location, access to labour and a favourable business environment. AXI IMMO experts checked how the market is developing and its perspectives.
Investment activity in Central Poland was particularly high in H1 2020. The largest transaction closed during that period was the acquisition of Logistic City in Piotrków Trybunalski (135,000 sqm) by Polish Logistics LLP, a new investment platform launched by REINO Capital, IO Asset Management and the Grosvenor Group. Moreover, Savills Investment Management acquired the Leroy Merlin logistics centre located in the town of Piątek (123,000 sqm). The same investor bought the Łódź East IV park as part of a portfolio transaction signed with Panattoni. Investec, GIC and P3 also became owners of Łódź Logistics assets in H1 2020 as a result of portfolio takeovers. In addition, Segro bought 7R City Flex Łódź and Tritax EuroBox acquired Panattoni Park Stryków III.
“Łódź is a strategic location for Polish and international firms seeking expansion in Europe. The Łódź Investor Relations Department has created 44 subzones within the Łódź Special Economic Zone. Location at the crossroads of major European transportation corridors, including the A1 and A2 motorways and the S8 expressway, ensure optimal conditions for distribution to the north, south, west and east. Moreover, the cargo rail connection with Chengdu, launched in 2013, additionally improved the attractiveness of this logistics hub” – comments Hubert Wojtera, Industrial & Logistic Director at AXI IMMO.
Total stock of modern warehouse and logistics space amounted to 3.2m sqm as at the end of June 2020. Only 42,000 sqm was delivered in the first six months of 2020 – 83% less compared to H1 2019. Following a period of high development activity by all major players in previous quarters, only three schemes were under construction as at the end of June 2020 – Panattoni City Logistics Łódź II (24,200 sqm), 7R City Flex Łódź II (13,400 sqm) and BTS K-Flex Uniejów (9,500 sqm). The slowdown was triggered by an increase in the amount of space available for immediate occupation. Indeed, total stock in Central Poland increased by 176% over the past 5 years, which was the highest result of all major Polish markets and is well ahead of the national average of 115%. Reduced new supply combined with stable occupier demand resulted in a decrease in the vacancy rate from almost 12% in Q1 2020 to 6.9% at the end of Q2 2020. This result is broadly in line with the national average of 6.8%. Headline rents have been stable meanwhile, ranging from 2.90 euro/sqm in Piotrków Trybunalski to 3.60 euro/sqm in new schemes in Łódź.
“Thanks to its well-developed road infrastructure, the Central Poland region is selected by logistics operators, retail chains and electronic firms as well as construction and DIY companies. All major developers are present on the Łódź market, including Panattoni, Logicor, Goodman, Prologis, P3, Segro, MLP, White Star RE and Hillwood, as well as local players” – adds Hubert Wojtera from AXI IMMO.
A total of 395,000 sqm was leased in the Central Poland market between January and June 2020 (+24% vs H1 2019). This was the second highest gross demand level of all Polish markets (jointly with Upper Silesia). Space leased in H1 2020 in Central Poland accounted for 12% of this market’s total stock. The largest lease was signed by Amazon at Hillwood Łódź I for 73,000 sqm. In addition, a retail chain took 51,900 sqm at Exeter Stryków and another retailer extended its 46,600 sqm lease at Segro Logistics Park Stryków. Logistics firms and retail chains were the two most active groups of occupiers, jointly accounting for 65% of all space leased in H1 2020. There has also been a noticeable increase in activity by e-commerce operators and electronic firms.
„The Central Poland warehouse market comprises three main submarkets and two smaller micro locations that have been developing rapidly over the last few years. Łódź – Central Poland’s dominant city – is the most important warehouse location in the region, characterized by postindustrial architecture which is a product of its long-standing manufacturing traditions. Currently, the city specialises in urban logistics, light production distribution. The second key market is Stryków, which is located north of the city nearby the A2 motorway. This location is one of the most popular choices for national and international distribution centres, including logistics firms and retail chains. Thirdly, Piotrków Trybunalski is situated south of the city of Łódź, on the A1 motorway and nearby the S8 expressway, in close proximity to national roads number 12, 74 and 91. Finally, relatively young submarkets of Kutno, in the northern part of the region, and Rawa Mazowiecka in the east attract occupiers thanks to good access to labour and lower labour costs.” – adds Hubert Wojtera from AXI IMMO.
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