Tenants are shifting their focus to BTS facilities

BTS (build-to-suit) warehouses designed and constructed for long-term occupancy in line with individual client preferences and needs account for almost a third of Poland’s total industrial stock, or over 8 million sqm. In Poland, the largest have been delivered for e-commerce giants such as Amazon in Gliwice (210,000 sqm), Świebodzin (203,000+ sqm) and Szczecin (161,500 sqm), and Zalando in Szczecin and Bydgoszcz (130,000 sqm and over 104,000 sqm, respectively). Leading retailers and logistics companies are also investing in BTS projects - Leroy Merlin in Central Poland (close to 121,000 sqm), DHL in Żerniki (108,000 sqm) and Żabka in Radzymin (67,500 sqm).

Time matters

BTS warehouses are very popular with logistics companies and retailers, and e-commerce in particular, where time is of the essence. That’s why locations with convenient transport connections and proximity to motorways or expressways are clearly favoured. Another important aspect is the possibility of having a facility tailored to individual needs and technical solutions put in place to optimize picking, packing, shipping and returns management. Upgrading existing buildings to such standards is frequently financially and technically unfeasible - yet another argument in favour of BTS projects.

That said, BTS construction is a time-consuming process. Not only does it require securing land in the right location for the tenant, but also utility connections and mandatory permits, as well as assessing the environmental footprint of a facility, delivering the project itself and obtaining an occupancy permit.

Large facilities = a large workforce

Some of the largest BTS warehouses of e-retailers have up to a few thousand staff who need to be provided with appropriate welfare facilities as concern for employee wellbeing becomes imperative. Amenities that should be considered in designing a warehouse may include a spacious canteen, access to daylight, locker rooms, showers, bicycle shelters, green areas and outdoor breakout facilities, to name just a few. These will also help an employer gain a competitive advantage in the labour market.

A BTS project is a long-term investment

As BTS warehouses are mostly developed for long-term occupancy and are costly to deliver, it is worth recalculating potential costs over a timeframe of several years. Optimal solutions could be worked out with the landlord at an early stage of the design process to cut the costs of utilities such as electricity and water, with environmental care in mind. Proposed solutions may include improving the thermal insulation of a building, smart lighting systems with motion sensors and LEDs which will bring electricity bills down by up to several dozen percent. Some landlords also make the rooftops of BTS warehouses suitable for PV systems and heat pumps. All these solutions require additional outlays but are likely to generate substantial savings within a few years given the continuously rising energy costs.

BTS is a risk to the landlord too

Construction of a warehouse on a build-to-suit basis also poses a risk to the landlord who would like to be confident that investment costs will pay back over time. That is why developers carefully analyse a potential tenant’s financial standing and expect the tenant to submit a bank guarantee or a deposit to secure the tenant’s performance of the lease. A non-standard warehouse with an unconventional clear height or column grid may be unlettable to other tenants in the future – a reason why landlords delivering BTS buildings favour long-term leases.

Author:

Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska

Contact: luiza.jurgiel-zyla@nmrk-global.com