Tailor Your Business in Lodz 2023

WAREHOUSE MARKET IN CENTRAL POLAND ŁÓDŹ REGION IN COMPARISON TO POLAND

RENTS W arehouse rental rates have been on a strong upward trend across Poland for more than a year. The rental growth has been driven by several factors, most of which are related to the outbreak of war in Ukraine: very high inflation, interest rate hikes translating into increased project financing costs, as well as rising building material prices and low warehouse space availability - particularly in Q2 and Q3 2022. As a result, most regional markets in Poland saw rents rise by around 20-30% in 2022, especially for space in new projects due to their greater exposure to the above factors. Rents in existing facilities also rose, albeit less sharply. What changed, however, is that new developments that used to be very competitive in terms of rental rates have grown slightly less attractive and some tenants considering whether to expand or relocate are more willing to renew their leases in their current locations. The upward rental trend continued throughout the first half of 2023, albeit at a significantly slower pace. Only a handful of markets reported rental growth in the second quarter. The general disinflation trend, improved warehouse availability and more predictable construction costs are stabilizing rental rates. However, with further interest rate hikes in the eurozone, debt financing costs continue to rise. As a result, most developers are unwilling to give ground in rent negotiations. Headline rents for big-box projects in Poland are in the range of EUR 3.60-6.50/sq m/month - depending on location. Rents for SBU/City Logistics projects are higher - EUR 5.00-7.50/sq m/month. Rents in the Łódź province and in other regional markets have risen sharply over recent years. The highest of EUR 4.50-4.90/sq m/month are in Łódź, with rents in the other subzones of Central Poland being in the range of EUR 3.60-4.20/sq m/month. Effective rents stand at EUR 3.80-4.50/sq m/month in Łódź and at EUR 2.90-3.80/sq m/month in other locations. With financial incentives that are offered to tenants being scaled down, effective rents are only lower than headline rents by a maximum of 15-20%. Due to high development financing costs, developers have curtailed financial incentives but continue to offer rent-free periods (a maximum of two months per lease year) and fit-out contributions. Rental rates are impacted by many factors, including location, availability and adaptation works requested by tenants. In addition to rent, tenants are required to pay service charges ranging between PLN 5.50-8.50/sq m/month and utility charges.

TAILOR YOUR BUSINESS IN ŁODŹ | PUBLICATION BY CUSHMAN & WAKEFIELD

HEADLINE RENTAL RATES ON REGIONAL MARKETS, Q2 2023

7.50

6.50

5.50

5.50

5.50

5.50

5.20

4.90

4.80

5.10

4.50

4.40

4.30

4.80

4.20

4.50

4.10

4.50

euro / sq.m. / month

4.30

4.20

4.00

3.90 3.80

3.90

3.90

3.80

3.80

3.60

Lublin

Tricity

Silesia

Poznań

Kraków

Szczecin

Rzeszów

Wrocław

Łódź - city

Warsaw - city

Western Poland

Warsaw - Suburbs

Bydgoszcz / Toruń

Łódź - surroundings

Source: Cushman & Wakefield

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