Walter Herz Invest gets in the game

Walter Herz is expanding the scope of consulting services and branching out with a new business line - Walter Herz Invest. The entity is responsible for purchasing and securing real estate and land for the construction of projects in the commercial, warehouse and residential sectors.

This year, Walter Herz, a leading consulting company on the real estate market in Poland, took the role of an investor and co-investor, as well as a strategic advisor in the comprehensive implementation of projects in the retail, logistics and housing sectors. Walter Herz Invest team supports investors in recognizing the potential of individual projects, advises on the selection of the optimal location and analyses terms of investment. The scope of operations of the new investment entity include the selection and purchase of land and real estate, creating investment value, developing documentation for projects and getting construction permits.

Establishing the new Walter Herz entity is associated with Groups’ acquisition of land located near the main national roads, three of which are located in the Masovian Province and one in the Warmian-Masurian Province. The plots are intended for the construction of commercial facilities, logistics and warehouse projects, and gas stations.

– Through the activities of Walter Herz Invest, we want to increase our involvement in the area of investing and strategic consulting in the implementation of projects in the warehouse and commercial sectors, where the greatest increase in demand for space is expected. Our qualifications, acquired during many years of market analysis, constitute the foundation for planning the most optimal use of land, as well as changing the functions of real estate in order to achieve high profitability of projects. We will provide the partners with whom we invest with the opportunity to generate long-term benefits from the investment, stable income and an increase in the value of the property. As well as investment security in times of exceptionally rapid changes, challenges and opportunities currently presented by the real estate market - says Bartłomiej Zagrodnik, Managing Partner, CEO of Walter Herz.

The global commercial real estate market is currently undergoing a transformation process, which is associated with changing needs of users and consumers. This phenomenon can also be observed in all sectors of the real estate market in Poland. The launch of a new Walter Herz business line, dedicated to the warehouse, retail and housing segment, is closely related to market trends. Such trends as the continuing high demand for warehouse space in Poland, which is a consequence of global changes in supply chains, the accelerated development of last mile logistics and e-commerce, as well as changes in the shopping habits of Poles, which resulted in the flourishing of retail parks and local shopping centers at an unprecedented scale, means that the retail and warehouse sectors have the best development prospects and attract the most attention of investors. The supply gap in the housing sector is causing record levels of transactions concerning land for this purpose.

While investing in individual segments of the real estate market in Poland has recently been significantly limited, the commercial sector is the only one that has recorded progress when it comes to the growth of new supply. In the first half of 2023, approximately 150 thousand sq m. of commercial space were put into operation in Poland, which is 40 per cent more than in the same period a year earlier. About 70 per cent of new space is in retail parks, which continue to grow across the country. In many regions there is still a great demand for modern retail facilities, the average saturation of retail space in Poland is still much lower than in Western European countries. Almost 500 thousand sq m. of commercial space is under construction across Poland.

Projects related to the implementation of retail parks attract investors with a lower entry threshold than in the case of large facilities. Their advantage is also a shorter construction process. For tenants, the format is attractive due to the lower level of rental rates and service fees, which means that most retail parks are fully commercialized at the time of opening. Selecting the location and the optimal group of tenants is crucial here. Customers now like to shop close to home and, among others, in chain discount outlets and off-price stores located in retail parks, which are currently in their expansion phase in our country.

Until the beginning of this year, the warehouse sector was the fastest growing area of the real estate market in Poland since 2020. However, in the first half of this year, the demand for warehouse space decreased. Nevertheless, in the context of moving production from Asia to Europe, this sector of the Polish real estate market has a lot of opportunities for further development in the long run. The costs of leasing space have been increasing for several quarters, but they are still much lower than on the Western European market. Despite a record-high new supply (2.6 million sq m. of completed space in the first half of this year), the vacancy rate on the Polish warehouse market remains at 7 per cent.

The exceptionally fast pace of development of the logistics sector in recent years has brought Poland third place in Europe in terms of the volume of warehouse resources. The process of optimizing supply chains is a chance for the industry. It has been ongoing for several years, creating the opportunity to attract entities that were previously focused on the Far East. Investments in semiconductors and chips, as well as an increase in indicators related to online sales, planned by the EU may also be beneficial for the sector.