Last year 7R completed the construction of its sixth warehouse within 7R Gdańsk Logistics Park. Do you have any further plans for this investment?
At the end of last year, we delivered our last building in Gdańsk and therefore reached the limit for this park’s expansion. The warehouse with an area of 18,000 sq. m., similar to other facilities in Gdańsk-Kowale, was fully delivered soon after the construction was completed, which once more proved that tenants find the location very attractive. This is also confirmed by the fact that one of the companies that leased space in our sixth facility was LPP, a company that over eight years ago, was our first tenant in Gdańsk and which, over the years as it operations grew, systematically expanded the space it occupied at our logistics park. The total area of all the warehouses within the park is over 140,000 sq. m. Our first facility there, developed over the period of almost two years, was delivered to tenants in 2010. Today that may seem like a long time but at the time it was a standard practice on the market. The situation changed over time and the park in Gdańsk-Kowale started expanding at the pace of practically one warehouse per year due to the growing need for modern warehouse space in the region.
As the construction of 7R Gdańsk Logistics Park is now completed, is the company planning any further investments in the Tricity area? How would you rate the potential of this market?
The region is expanding dynamically, and the perspectives are even better now than they were a couple of years ago. Certainly, one of the key factors which made the Tricity region so appealing for investors was the expansion of the DCT terminal in Gdańsk. By now, the terminal has doubled its potential and it handles twice as many container ships as before the expansion. Ports in the Tricity area have also reached an unprecedented handling volume in the recent years. It is worth mentioning that the Central Port in Gdańsk is also planning its further development. A call for tender for a concept of the port’s development was launched last December. The objective is to build several terminals, including a bulk terminal, a general cargo terminal, a passenger terminal and a RO-RO terminal on the area of 500 ha. All of these factors add up to an increased demand for warehouse space for unloading, handling, and shipping of cargo, and this demand could increase even more if the plans for building the Central Port materialize.
7R was one of the first companies in the industry to notice the potential of the Tricity market. Over the years we have gained significant experience in this market which will now result in new investments. Our plan for the immediate future is to develop over 100 sq. m. of modern warehousing space in the region.
So what locations are the most desirable for 7R?
We are considering the entire Tricity area and its immediate vicinity for new investments. We are interested in developing areas close to the A1 motorway, near Tczew and northward. We are also considering areas around the Tricity Beltway junctions. Some plots have the additional advantage of being close to the Pomeranian Special Economic Zone, which has been operating dynamically and attracting investors for a number of years now. Apart from the Tricity region we also see a lot of potential in Western Pomerania, especially in cities such as Szczecin, Słupsk, and Koszalin.
Is 7R planning to develop more standard logistics parks or will you be turning to your new concept of City Flex warehouses? Will both types of property attract tenants?
Tricity is a flexible area with space for both large big box warehouses and smaller facilities located just outside of city centers, fitting into our City Flex concept. These projects are not competitors in terms of attracting tenants. On the contrary, they complement each other and provide a more complex offer. If a customer required a large central warehouse in northern Poland, we could provide it from our rich portfolio of large logistics parks, and if our tenant wanted to improve the distribution network on its final stretch, we would be happy to offer one of our City Flex spaces.
There is, of course, a group of tenants interested only in large projects that want to lease warehouses with areas ranging from several thousand to tens of thousands of square meters, and this is our target for big boxes. At the same time, we observe that there are lots of companies that require smaller spaces to arrange offices and warehouses. In some cases, they also require customer service points or exhibition spaces, so City Flex facilities are a perfect fit for them. In the next 24 months, we are planning to build 10 to 14 City Flex facilities all over the country. In order to meet our tenants’ expectations, we are the first company in Poland to offer a single joint agreement for leasing areas in several City Flex facilities.
How are you planning to organize such a large number of construction sites over such a short time span, taking into account the current situation on the construction materials and contracting market?
Indeed, because of the excellent market conditions and many constructions underway, the availability of construction materials and contractors is quite limited at the time. That is why we decided to offer investment packages. One such package covers several buildings being developed by one contractor. In a similar way to offering a modern solution of signing one lease agreement for several warehouses under the City Flex program, we would like to start cooperating with general contractors and engaging a single company to develop several of our investments.