A recent study conducted by Colliers International showed that in 2013 almost 397,000 sq m of new warehouse space was developed in Poland, with the total supply of such premises reaching 7,760,000 sq m. In the same year, more than 2,400,000 sq m of warehouse space was leased, 66 per cent under new lease agreements and 34 per cent by the renewal of existing lease agreements. More than 30 per cent of these agreements were BTS transactions (that is, built-to-suit warehouses designed for the individual needs of clients).
A growing commercial market has increased the interest in leasing new warehouse space. Choosing the right warehouse space for a particular business is a key strategic decision, therefore, many factors, both legal and practical, should be taken into account while making it.
Location and form
According to the Colliers International report referred to above, modern warehouse space in Poland is concentrated in nine main areas, the largest of which are Warsaw (divided into three zones), Górny Śląsk and Central Poland. The others include Poznań, Wrocław, Szczecin, Gdańsk and Kraków.
Well-developed infrastructure, high internal demand, and location have attracted increasing interest on the part of foreign investors in Polish warehouse space, especially with the emergence of a new type of client from the e-commerce sector, with distribution depots in a number of countries. The location chosen by these clients depends strictly on the target market they supply, therefore Szczecin is popular for the Scandinavian market, Poznań and Wrocław for the German market, and the area adjacent to the A4 highway between Wrocław and Górny Śląsk for the Central European market. Given the increasing number of international shipments to and from the port of Gdańsk, this city may in the near future constitute serious competition for ports in Western Europe, with many businesses opting to relocate their warehouses to Poland.
Warehouse space can take the form of a detached building or premises in a logistics park.
An increasingly popular solution, particularly for businesses which need special equipment and design in order to operate—such as those operating in the car industry and storage of food products or pharmaceuticals which require refrigeration—are BTS transactions, in which developers assist tenants in finding the optimal solution for them and designing a warehouse in a way that leaves room for further expansion.
Leasing warehouse space—legal perspective
The most popular way of securing the legal title to use warehouse space is by entering into a lease agreement.
From the tenant’s perspective, it is crucial to conclude a lease agreement for a fixed term. This secures the tenant’s interests by excluding the statutory right of early termination of the agreement by either of the parties, a possibility provided for by the Polish Civil Code where leases are agreed for an indefinite term.
Under the Polish Civil Code, a lease agreement concluded for a fixed period may be terminated by either party for reasons specified in the Code. Therefore it is very important to include in the agreement all the circumstances which would entitle the parties to terminate the lease with immediate effect. Moreover, the lessor may terminate the lease agreement if the tenant defaults on at least two rent payments, provided the lessor has given the tenant written notice of its intention to terminate and, following an additional 30-day period in which to pay the rent, the tenant still has not paid the amounts due.
The lessor may also terminate a lease agreement without notice, if the tenant uses the property subject to the lease in a manner contrary to the agreement and, despite a warning, does not cease using it in this way, or if the tenant neglects the property to such an extent that it is at risk of being damaged.
Under the Polish Civil Code the tenant is entitled to terminate the agreement without notice: (i) if, at the time of handover, the property under the lease has defects which preclude it from being used as provided for in the agreement, or (ii) if the defects arise later and the lessor does not, despite receiving a notice, remedy these defects within an appropriate time, or the defects cannot be remedied, and (iii) if the defects in the property pose a danger to the health of the tenant or its household members or employees, even if the tenant knew of the defects at the outset of the lease agreement.
Polish law provides that a lease agreement concluded between commercial enterprises for a period longer than 30 years is deemed, after the lapse of this 30-year period, to be a lease concluded for an indefinite period of time which, as noted above, may be terminated by either party by giving notice of the prescribed statutory length without specifying a reason.
During the negotiations for a lease agreement, it is in the tenant’s interest to negotiate provisions which guarantee the stability of rents to be paid, and exclude the applicability of the Article 685 of the Polish Civil Code which allows the lessor to unilaterally increase the rent with effect at the end of any calendar month. It is good commercial practice to agree a fixed rent at the outset, and provide that this figure is subject to annual review based on an independent index specified in the agreement such as, for example, the Harmonized Index of Consumer Prices (published by Eurostat).
Part of the costs of renting warehouse space are the service charges, that is, costs spent maintaining the property, as well as charges for utilities—electricity, water and heating. In order to avoid incurring excessive and unexpected costs the tenant should negotiate to have all services included in these charges and the method of calculating them specified in detail in the lease agreement.
When negotiating a lease of warehouse premises, the tenant should also consider the inclusion of a clause allowing changes to be made to the premises without the need for the lessor’s consent. It is also advisable from the tenant’s perspective to include in the agreement permission from the lessor for the subletting of the premises. The choice of suitable solutions depends very much on the individual tenants, their plans and expectations.
To conclude, the warehouse market in Poland, with its ability to be flexible and adjust to the individual needs of specific clients has much to offer both current and future tenants.