Warehouse market of Katowice agglomeration revivals with new motorways

Upper Silesia is the most dynamic warehouse market in Poland according to the latest report published by Jones Lang LaSalle. New sections of the A1 motorway are acting as a stimulus to the industrial market of the region which is realising the opportunity of becoming a key location for the whole Central and Eastern Europe.

The Silesian region is, after Warsaw-Suburbs, the second biggest warehouse market in Poland. Total space of distribution parks located in Upper Silesia amounts to 1,31 million sq. meters, which represents 19% of the total supply in Poland. Such strong position on the Polish warehouse market results from several significant factors.

Upper Silesia is one of the most important regions in Poland in regards to economy and demography. Over 3 million people live within the Katowice agglomeration. Moreover, average salaries in the region are at the top of national statistics. Thus, the well-developed local market of end users is one of the key attractions of Upper Silesia for companies selling consumer goods.

The primary aspect in determining logistical attractiveness of a given region is road infrastructure. In this respect, Upper Silesia boasts excellent road network. It has been traditionally the region with the best connections and now with the with the completed Silesian section of the A1 motorway, which crosses the A4 in Gliwice (junction Sośnica), the region is capable of becoming a crucial location for the whole Central and Eastern Europe.

Apart from motorways, the Silesian region has a complex network of express roads. Such arterial roads link Katowice, Chorzów, Świętochłowice, Ruda Śląska and Zabrze. Gliwice will soon be well connected. The next significant route is S1 express road which will connect A4 motorway and Pyrzowice airport with the Czech border. Due to the superb road network, many companies operating in Kraków use warehouses in Upper Silesia.

Tenants are more likely to choose parks located in close proximity to the junction of motorways – in Gliwice (junction of A1 and A4) and Mysłowice (junction of A4 and S1). The Sośnica junction affects the geographical structure of the Silesian market and arouses tenants’ interest – especially retail chains and logistic operators – in the facilities of this area. There is also growing interest in Rybnik, Zabrze and Piekary Śląskie. In these cities there has not been any modern warehouse parks constructed yet, but bearing in mind their excellent communication links we expect that such investments will be soon launched.

Manufacturers appreciate both communication of parks and human resources. Therefore, they are particularly interested in Piekary Śląskie and Zabrze. These cities are attractive not only due to close proximity to motorways, but also due to easy access to potential employees (unemployment rate here is slightly higher than in the other Silesian cities). Possible locations for manufacturing investments are also Rybnik and Żory.

The position of Upper Silesia as an attractive warehouse location is confirmed by figures. In Q1 2012 88 400 sq. meters of warehouse space leased (Warsaw-Suburbs were ranked second with 64 500 sq. meters leased). Strong demand for warehouse space in the Silesian agglomeration was also verified by completion level, which was also one of the highest in Poland (37 900 sq. meters at the end of Q1 2012). The main transactions in Q1 2012 include: DHL – 33 800 sq. m. (Prologis Park Dąbrowa), Manuli Hydraulics – 9 300 sq. m. (Panattoni Park Mysłowice), Ponetex – 4 100 sq. m. (Prologis Park Chorzów).

Selected industrial space in the Upper Silesia region, Take up by sectors in Upper Silesia, Q1 2012, data source: Jones Lang LaSalle, Warehousefinder.pl, Q1 2012
Selected industrial space in the Upper Silesia region, Take up by sectors in Upper Silesia, Q1 2012, data source: Jones Lang LaSalle, Warehousefinder.pl, Q1 2012

Developers are acutely aware that Silesian market has strong potential and they are in search for sites which can be used as a location for industrial parks. However, despite promising prospects there are no speculative projects being constructed. Developers definitely prefer limiting risk and building for a specified occupier, even in such a developed market.

Logistic operators were the most active sector in regards to demand for warehouses in Q1 2012. They took over 75% of the space leased during the first quarter of 2012. Furthermore, Upper Silesia is still very popular among manufacturing companies. The latest production investments are: Johnson Electric (Panattoni Park Czeladź), Valeo and Manuli Hydraulics (both at Panattoni Park Mysłowice).

Many automotive companies choose the Upper Silesia region. Major investments, such as General Motors, Fiat or Isuzu, draw to the region companies which cooperate with them. Well-developed road infrastructure and convenient connection to the south border even attract producers of spare parts and subelements for automotive factories located in Slovakia and in the Czech Republic (KIA, Hyundai, PSA, Skoda).

Take up by sectors in Upper Silesia, Q1 2012, data source: Jones Lang LaSalle, Warehousefinder.pl, June 2012
Take up by sectors in Upper Silesia, Q1 2012, data source: Jones Lang LaSalle, Warehousefinder.pl, Q1 2012

Although Upper Silesia is the second largest warehouse market in Poland, it is not easy to find available space. Vacancy fell to 5,4% and is expected to remain at similar level over the next months. Lack of warehouse space is especially troublesome for companies searching for larger warehouses (10 000 sq. meters and more). In such case, usually pre-let development is the only solution.

The low vacancy level is affecting rents levels. Effective rents in Upper Silesia range from EUR 2,60 to 3,40 per sq.m/month. Decreasing vacancy level means that rents come under upward pressure. It is especially clear in new buildings – rents will be higher than in existing parks as developers seek to maximise their investment returns.

Upper Silesia is enjoying a revival due to its new motorways. The region attracts companies from various sectors and with different business strategies. Warehouse buildings are leased by logistics operators concentrated around the motorway junction in Sośnica and manufacturing companies (especially automotive) benefiting from incentives offered by the Katowice Special Economic Zone. Upper Silesia provides a vibrant local market, very attractive to companies distributing consumer goods.

Taking into account the geographical scope of occupiers which are present in this region, the companies confined to the local markets of Upper Silesia and Kraków, and multinationals using Katowice agglomeration as a base for expansion in Central and Eastern Europe, the prospects for the region with its new infrastructure are strong.

source: Jones Lang LaSalle, Warehousefinder.pl, Q1 2012