Magdalena Szulc, SEGRO’s managing director for Central Europe, talks to the BPCC’s Michael Dembinski about prospects for the warehouse market – and the challenges facing the sector.


We last spoke on the eve of the Russian invasion of Ukraine; you noted then that there has been a boom in the Polish warehouse market going on for the past few years. How has the war changed the situation – has investment risen or fallen? Have investors shied away because of risk? And has that been offset by demand for military logistics and warehousing for supplies for Ukraine?

The war initially came as a strong shock to all of us – not only in the industry, and brought a sense of uncertainty as well. Long-term it provoked significant changes as energy and raw materials costs increased, financing costs and inflation went higher. Regarding the overall investment market, for sure the appetite for big purchases has decreased throughout the year. The demand on the market is still driven mostly, as in previous years, by logistics, retail and production, and it is not easy to calculate how big a percentage of their operations is dedicated to logistics for supplies for Ukraine. Certainly at the very beginning of the conflict, humanitarian aid organisations were interested in warehouse space in our country.

Inflation has pushed up interest rates, pushing up yields on government bonds. This makes the typical yields on real estate in general less attractive, yet developers are also hit by inflation in building-material prices, energy prices and wages; how will this affect leases – and how will this affect the sector as an asset class? Has industrial real estate reacted differently to commercial and retail space?

In the face of the situation, however, this was met with understanding from customers, and we recorded unprecedented rental growth. It allowed investors to keep their eyes on the industrial real estate sector. However, investors are taking more cautious approach to commercial real estates, and those planning to invest in the domestic market are paying close attention to the location and standard of properties, especially ESG credentials. Customer demand for warehouse space across Europe continues to be positive and made up of a wide variety of customer types. In 2022, investment transactions in Poland valued €5.8 billion, of which the warehouse market was responsible for €2 billion. Tenants’ activity was strong and the market recorded 4,500,000m2 of net take-up.

Are you seeing evidence of near-shoring or ‘friend-shoring’ from manufacturers and their supply chains, shifting production bases and logistics hubs from the Far East to countries closer to home like Poland?

According to the experts’ expectations, we may become a centre of gravity here. The Far East is no longer as profitable as it once was, due to, among other things, the need to bypass Russia, rising transportation costs or the troublesome lockdowns in China, which caused numerous supply chain disruptions. In Poland, we are in a good position: compared to Western Europe, our country remains an attractive market with affordable rents, when it comes to warehouse properties. In fact, according to a recent Reuters report, Poland is among the top choices for European companies as a near- or reshoring country. The so-called ‘friend-shoring’, based on positive political relations of countries in the supply chain, is also a significant argument here. To sum up, our market is considered mature and prospective, and we have much to gain from these trends.

After a huge leap caused by the pandemic, has the rapid rise of e-commerce slowed down, or just returned to its pre-Covid growth trend? How is last-mile logistics developing in Poland now? How much further do you see e-commerce advancing?

Indeed, e-commerce significantly accelerated in the times of pandemic and now came to the pre-pandemic pace of growth. The situation in e-commerce market is still good and Poland, with double-digit increase, is at the forefront of growth among European e-commerce markets. According to estimates by PwC experts, there are years of further growth ahead, and by 2027 the value of the e-commerce market in Poland will increase by more than 94 billion złotys to 187 billion złotys. Understandably, the situation is still uncertain due to various macroeconomic reasons, but today e-commerce has still big impact on the warehouse market both in city logistics as well as in the big boxes.  

How is SEGRO in terms of your target to achieve carbon neutrality by 2030? Have you been held back by the side-effects of the Russian invasion of Ukraine, inflation and high energy prices – or have they spurred you to accelerate your efforts?

We are committed to intensify our efforts to reduce carbon footprint in both embodied and operational carbon, and we are trying to reach the goal despite external conditions. We are working though to carry out our Responsible SEGRO strategy tasks as much as before.

Have you observed any new technological trends growing in importance over the past year that have affected the construction and operation of warehouse space?

Prefabricated elements and usage of local suppliers to manage the risk in supply chain as well as to reduce operational carbon on the construction site are becoming more important. Also, any solution, which will bring in the future lower media costs to customers, is well welcomed. Therefore, we started to implement heat pumps as well as more and more of PV panels. BIM (Building Information Modelling), which we now use as a standard at the project stage, is also new trend which helps us to be ahead of the game, with a 1:1 building model calculating the best possible ergonomics for future customers. On the other hand, environmental certification, which is not new on the market, entered new level – for us the standard score for BREEAM is now Excellent or higher, across the whole of Europe. This also brings to the table new solutions coming with every project – they are essential for the building to be highly scored.

What could the Polish government do in terms of legislation to make Poland more attractive to foreign investors?

It would certainly be useful to have more special economic zones to encourage them to invest their capital here. A more predictable and stable tax system, which would give a chance for stable development in the long term, would also be useful, of course.