New large production investments and higher construction activity shaped the industrial market in the Upper Silesia region in 2014, according to the latest report of JLL. The analysts give positive outlook of the market in 2015.
Upper Silesia, often referred to as the industrial heart of Poland, possesses all the features necessary to develop as a robust manufacturing and logistics destination, can be read in the publication. An extensive modern and expanding road infrastructure has generated a number of attractive locations throughout the area for warehousing and production facilities. The region features the highest population density in Poland and neighbours the large agglomerations of Kraków and Ostrava in the Czech Republic, making it a sought-after logistics hub. Owing to its long-standing industrial traditions, one of the region’s key assets is its skilled labour force: a factor of high significance to production firms looking for investment opportunities. Finally, the location in southern Poland, close to the geographical center of Central and Eastern Europe, is favourable for companies distributing across the wider region.
The ongoing improvements to the road system will certainly influence the geography of the industrial market in the future. The most prominent investment in 2014 was the completion of a section of the „DTŚ” road which now connects to the A1 motorway.
Increased demand did not impact the vacancy rate in Upper Silesia. As of Q4 2014, the region offered 172 000 sq. meters of floor space that was immediately available, which accounted for 11,1% of the existing stock (1 545 000 sq. meters). In addition, 39 000 sq. meters – some 30,4% of stock under construction – is speculative, according to JLL. This might temporarily further increase vacancy rates. However, strong demand should be sufficient to absorb much of this new space in the longer term, analysts say.
Both headline and effective rents in Upper Silesia were stable during 2014, however, some discrepancies were registered between particular locations. For example Gliwice, owing to its prominent location on the A1/A4 junction, is typically more expensive than projects located more to the East. In general, the headline rent band in Upper Silesia ranges between EUR 3,0 and 3,7 /sq.m/month with effective rents standing at EUR 2,4-3,3 /sq.m/month.