Poland grabs the action as CEE and SEE come back on the radar

Poland is grabbing a growing amount of the action in Central and Eastern Europe as western investment interest in Russia ebbs due to the Ukranian conflict, according to Hadley Dean, managing partner of Colliers International Eastern Europe.

‘The weight of capital looking at the country is astonishing. We’re seeing some huge deals happening.’ The strong interest in the Polish market was already visible in the third quarter of 2013, but Dean claims 2014 has got off to an even more promising start with bumper fee revenue recorded in the first three months. The main target is Poland, but other CEE markets such as Czech Republic, Hungary. Romania and Slovakia are also seeing more action, he said. ‘With the exception of Bulgaria, each of these markets has got some big deals happening, in a price range north of €20 mln. There’s a real need for quality product.’

Southeastern Europe is also coming on the radar, Dean said. Serbia is a case in point, he added. ‘Serbia never had a wave of development so supply is scarce. Even Greece is popping back. We have a Russian client who is looking to invest a huge amount in offices in Greece.’

Logistics centre
Poland’s rising star as an investment location is linked to its growth as a logistics centre, Dean added. ‘Europe is seen as one big logistics market, and Amazon’s new warehouse facility in Poznan will be serviced from Germany. The growth of e-tailing is very exciting. Retail has always changed, and this e-tailing is just another phase in the retail dynamics. Same-day delivery is going to change everything. If you can get an online product the same day, traditional retailing will feel that, but that does not mean that’s the end of retail as we know it. It’s just part of the evolution. Shopping centres need to focus more on the experience…they need to become a destination. The biggest centres will survive.’

In recent weeks, a string of international logistics specialists including Panattoni, P3 and Goodman has announced a new wave of development across Poland, including speculative projects. ‘It’s time,’ Dean said. ‘We need it. There’s going to be such a strong demand for logistics space as part of the new distribution chain. Same-day delivery will completely change everything.’

In mid-April, Panattoni Europe unveiled plans to develop a new logistics park in Bielany Wroclawskie near Wroclaw on a speculative basis. Construction is expected to commence shortly on the first building, which will provide around 20,000 m2. In total, the park will include two premises offering 83,000 m2 on completion. 'The new industrial space at Panattoni Park Wroclaw III is our response to the dynamic economic growth of the Lower Silesia region and expansion of the local road infrastructure,' the company said.

In Wroclaw, Panattoni already manages two distribution parks, Panattoni Park Wroclaw I in Bielany Wroclawskie and Panattoni Park Wroclaw II in Nowa Wieoe Wroclawska, offering a total of nearly 125,000 m2 of modern warehouse space.

Elsewhere in Poland, Panattoni recently completed the construction of the first European factory for American vehicle manufacturer Polaris Industries. The 33,000-m2 facility was built in a special economic zone in Opole, Poland, and consists of 25,600 m2 of production space, 3,400 m2 of warehouse area, with a further 3,981 m2 of offices.

Panattoni Europe is also developing 233,600 m2 of new warehouse space in Poland, including two facilities for Amazon in Poznan and near Wroclaw.

Panattoni’s latest speculative development in Wroclaw follows hard on the heels of an agreement by its smaller peer PointPark Properties (P3) to build a 11,252 m2 build-to-suit (BTS) production and warehouse facility for online furniture retailer Sofa.com at PointPark Poznan. PointPark Poznan is located some 10 km from the city of Poznan and close to the A2 highway, that since 2012 provides Warsaw with an unbroken motorway link to Berlin and Western Europe.

According to Piotr Bzowski, P3 Poland’s leasing and development director, there is a shortage of logistics facilities available on the Poznan market. ‘This is why we see more and more companies turning to BTS projects to meet their production and distribution needs.’

Sydney-listed logistics giant Goodman is also active in the Polish market. In March, it announced plans to create a new Poznan site for Mousquetaires Group in a deal that involves the acquisition of the old facilities in the city of the grocery and DIY franchising chain. Goodman will build a 74,000 m2 food logistics site and 8,500 m2 of offices for Mousquetaires Group, with delivery due in early 2015.
Goodman will also buy the existing Mousquetaires Group properties in Poznan, which include 45,500 m2 of storage and office facilities.

While CEE and Poland in particular are steaming ahead, Russia is seeing business shrivel in the wake of the Ukraine conflict. Dean: ‘I think the main challenge will be on debt side as the banks are not open for business as usual. It is anticipated that this will continue until the uncertainty of the Ukraine situation is resolved. However most of the investors, even the international ones are backed by Russian money and are long term players and see this as a great opportunity to go on the acquisition trail. Plus there is also a growing trend for large Russia corporates to buy their own real estate and it is anticipated that there will be some very significant transactions during 2014.’