Real estate / 10.05.2024

Good results in the warehouse rental market in 2023! What are the forecasts for 2024?

Analyses of the 2023 real estate market show a slowdown in the industrial and commercial warehouse rental sector compared to the record year of 2022. Nevertheless, the results are still satisfactory and promise stability in the future.

Why such predictions? First, the number of new leases has increased. Second, the amount of space under construction has increased. In addition, there was noticeably greater optimism among market participants, compared to previous years. Still, interested parties took action with some caution.

Increased tenant activity

Both in European markets and locally in Poland, an improvement in tenant activity in the market could be observed, especially in the sector of logistics operators and retail chains. An increase in activity in Poland was also noted in e-commerce.

As JLL analysts noted, the e-commerce sector generated as much as 600,000 sqm of new demand during 2023. In the so-called Big Five area:

Sphere I – Warsaw-city,
spheres II and III
- Central Poland – Łódź/Stryków,
- Lower Silesia – Wroclaw area,
- Poznań area,
- Upper Silesia – Katowice area,

total demand stood at 2.4 million sqm (76% of the total market).

As noted by the authors of the Newmark Poland report, the structure of transactions concluded throughout 2023 was dominated by new leases, including those for BTS – Build-To-Suit projects (50.4%).

A significant part of the demand was shaped by renegotiations – as much as 40.2%, and the remaining 9.4% were expansions.

2023 also saw a sizable amount of short-term leases, i.e. those concluded for a shorter period, not longer than a year – they covered almost 244,000 sqm.

Good results in the rental warehouse market in 2023! What are the forecasts for 2024?

Supply in numbers

The Newmark report cited above indicated that for the whole of 2023, new supply totaled more than 3.7 million sqm, 16% lower than that occurring in the previous year.

The highest activity was recorded in the Masovia, Silesia and Lubusz provinces, where 702,500 sqm, 599,100 sqm and 437,300 sqm of new space were completed, respectively.

At the end of the year, there was about 2.8 million sq. m. of space under construction, 17.6% less than in December 2022, which was a record year. These figures, therefore, directly point to a gradual slowdown in the construction market.

At the same time, the vacancy rate stood at 7.4% at the end of the year, up 3.3% year-on-year and the highest in three years.

The highest vacancy rate is in the provinces:

Świętokrzyskie (18.4%),
Lubusz (14.2%),
Lodzkie (10.2%).

The least, on the other hand, in the provinces:

Subcarpathia (1.7%),
Pomeranian (1.7%),
Lesser Poland (2.2%).

Time for stable rents?

In contrast to the volatile 2022, rent increases of 5% were much more predictable. Increases could be seen primarily in newly completed projects. This was especially true for those properties that featured higher technical standards, ESG compliance and energy efficiency.

The highest rents were traditionally recorded in Warsaw – between €6 and even €10.0/sqm in newer developments in Zone I. In other major regions, rents were in the range of €4-6/sqm. The exception was Krakow, where rents rose almost to 8 euros/sqm in the most expensive locations.

What are the predictions for 2024?

Real estate analysts agree that 2024 should bring further stabilization and development of this rental sector. As in the case of office rentals, we can see a significantly increased interest in ESG aspects, both at the level of tenants, landlords, and developers.

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The author used the following studies: