Warehouses remain on investors' radar

According to the 7R and Colliers report “The Logistics and Industrial Sector: Development Trends from a 2022 Perspective,” the volume of investment transactions in the Polish industrial and logistics market amounted to €191 million in the first quarter of 2022. And although the current economic situation, coupled with significant uncertainty due to the war in Ukraine, poses further challenges for the logistics sector, in the long term there will be no major changes in terms of supply and demand, although the growth rate of this segment of the market may be lower than in previous years.

Geopolitical changes beyond our eastern border have sent shockwaves through capital markets, including the commercial real estate investment market. In the initial phase, fund managers focused on ongoing processes and assessing the impact of these developments on the profitability, stability, and liquidity of the assets being acquired. At the same time, they adopted a “wait-and-see” strategy for all new investment processes. However, an important factor influencing the strength and duration of this strategy was the source of capital.

In contrast, U.S. capital was more cautious in the early stages, watching the moves of other market participants. However, seeing that European capital remains active, it is also returning in search of interesting, reliable projects.

It is worth noting that capitalization rates for new projects remain very competitive, which is linked to growing pressure for rent increases, driven in part by rising development costs for new properties. Another significant factor is the high degree of certainty regarding high inflation in the eurozone—next year, this will result in higher rent indexation for existing lease agreements compared to previous years.

Investors who leverage their real estate purchases with bank loans are currently keeping a close eye on rising financing costs and the prospects for delivering satisfactory returns to their shareholders, while “all-equity” investors believe that the warehouse sector has the greatest growth potential and continue to accept sellers’ current asking prices.