In the 2nd quarter of 2007 the modern warehouse space stock in Poland amounted to 3,155,000 sq.m. Nearly 54% of the total stock was located in Warsaw, which means a decrease of 6% compared to the 4th quarter of 2006 and a decrease of over 25% compared to the end of 2004. The capital city’s share in the country’s total stock is falling due to the booming development of regional markets. Poznań, Wrocław, Upper Silesia and Łódź appeared on the map of modern warehouse space in 2005, followed by Kraków and Tricity in 2006. Investors are also showing interest in Bydgoszcz and Szczecin (the first modern facilities will probably be constructed in these regions as early as 2008).
The development of the regional markets is affected mainly by the development of road infrastructure. Developers are looking for land near large urban centres or in the proximity of the existing or planned motorways. Upper Silesia and the region of Central Poland draw considerable benefits connected with the construction of motorways (A4 and A2 motorways respectively, and the intersecting A1 motorway). Investors’ interest in northern Poland results mainly from the expected completion of the A1 motorway, to be completed in 2010, running from Tricity through Toruń, Stryków, Piotrków Trybunalski, Częstochowa and Upper Silesia, to the border crossing to the Czech Republic in Gorzyczki. Due to the poorly developed road infrastructure and low purchasing power, the eastern part of Poland still has no modern logistics parks.
In the first half of 2007 rental rates for modern warehouse space increased on average by 10-20% compared to 2006, depending on the location of space leased. Prices are expected to rise further in the forthcoming quarters on account of the rising prices of commercial land and construction costs.
Since the beginning of 2006, prices of commercial land in Poland have increased on average by 100-150%, depending on the location. The highest price increase was noted in the regions of Warsaw, Poznań, Wrocław, Upper Silesia and Gdańsk, and in the surroundings of Stryków. In the corresponding period, construction costs rose by approx. 20-40%.

Supply
At the end of the 2nd quarter of 2007 there was 1,100,000 sq.m. of modern warehouse space under construction in Poland, of which 74% was speculative space and the remaining 26% was “built-to-suit” space, i.e. buildings constructed upon the client’s individual order on a plot of land previously selected. The demand for speculatively constructed schemes, i.e. without any previously concluded leases, is usually generated by companies leasing small and medium-sized space (from 3,000 to 10,000 sq.m.) which expect a quick building delivery. They are willing to pay a small premium as part of the rent (5%-10%) for the possibility of leasing space practically “right away”. Such building schemes are located mostly in Upper and Lower Silesia and in the Warsaw region.
The demand for “built-to-suit” buildings is generated by companies looking for large space (from 10,000 up to several dozen thousand square metres). Such companies plan their strategies well in advance and, therefore, the time of a building delivery is not of such importance. They attach the greatest importance to having an optimal location, which enables them to economize on transportation, to tailor the technical parameters of a building and to have a lower rent. It takes approximately 18 months to complete a “built-to-suit” building.
The construction process itself is usually quite quick (from four to six months), but a significant amount of time is necessary for choosing a site, checking its legal and building status and obtaining administrative permits. Another option is a combination of speculative construction and the “built-to-suit” system. This is a more frequently used system in which the developer first secures the land, obtains the building permit and then offers clients the possibility of constructing a building according to their individual specifications in a given location.

Demand
In the record year, to date, of 2006 the demand for warehouse space amounted to 913,000 sq.m. The year 2007 promises to be even more optimistic as leases for nearly 635,000 sq.m. were signed in the first six months of 2007 alone. As many as 44% of lease transactions (280,000 sq.m.) were made by logistics operators. The market share of logistics operators has been steadily increasing for years, because more and more companies are opting for outsourcing warehousing, logistics and transportation services. The greatest demands were recorded in the Warsaw region (211,600 sq.m., in the first half of 2007), Upper Silesia (163,000 sq.m.) and Poznań (118,000 sq.m.). In the new warehouse region of Tricity, the demand in the first half of 2007 amounted to 34,000 sq.m. However, the first warehouse space was only completed in January 2007. Due to the low supply in Kraków in the first half of 2007, lease transactions were concluded for only 2,500 sq.m. Given the analysis of leases made in the first half of 2007, the leading developers in terms of the volume of space leased include ProLogis and Panattoni (nearly 30% market share each), followed by SEGRO (11% market share), Bel Properties (5%) and Menard Doswell (4%).