Poland is seeing a recovery in its industrial real estate sector, standing out in H1 in terms of both investment and occupier activity, according to research from Jones Lang LaSalle. At the same time, the CEE region overall is still in a fragile state.

Panattoni’s E91 million sale of five industrial properties to Standard Life Investments in Q2 was, according to JLL, the driver of y/y growth in the Polish investment market in the first half. Elsewhere in Central and Eastern Europe, industrial investment remained “fragile and uneven.”

Source: Jones Lang LaSalle

Compression of prime yields in H1 amounted to 25 basis points in both the Czech and Polish markets. Elsewhere “huge” compressions were seen – such as a 150 basis point compression seen in Bucharest – but JLL notes that yield shifts in these markets are only being seen on paper so far.

Take-up, meanwhile, saw y/y growth across CEE markets due to the almost non-existent take-up in H1 2009. However, only Poland recorded growth compared to H2 2009, and this amounted to 19 percent.

The Polish market is currently characterized by slow, quarter-by-quarter improvement, according to Tomasz Olszewski, head of JLL’s industrial department for CEE. He noted, however, that a few “islands of oversupply” exist in the market.

“This mainly relates to Błonie, near Warsaw, where in one city you have more than 200,000 sqm of available space. This is a huge oversupply and I think it will be very tough to recover in the foreseeable future,” he said. The Szczecin region is also problematic, as one poorly commercialized development there represents over 90 percent of the overall supply.

“Generally across Poland, speculative supply is getting tighter and tighter, and there’s hardly any willingness among developers to build speculatively,” Mr Olszewski stated. In his view, a hybrid pre-lease/speculative model will dominate the market for the next few months, possibly for up to a year.