Our visibility in the market will increase because we will have many facilities of this type scattered across Poland” says Tomasz Lubowiecki, CEO of 7R. Simultaneously, the property developer is working on more logistics parks. Soon it plans to expand to Rzeszów, Słupsk, and Wrocław.
This year marks 7R’s tenth anniversary. Because of that, you planned to beat the record of building ten warehouses every year. Will you be able to achieve this goal?
Tomasz Lubowiecki, CEO of 7R: This is a huge challenge. Last year we built and delivered seven facilities, we joined the country-wide league of property developers, and I think that this year we also have a chance of achieving our goal.
You are planning to deliver your first City Flex warehouses in the fall. How long did it take to develop the concept of the urban warehouses that you want to create?
We began our work on the program six months ago. We have already built six plots, in Szczecin, Łódź, and Siemianowice Śląskie, among other places. The facility in Gdańsk was delivered within two weeks and we are currently modernizing our existing small business unit in Sosnowiec. We are negotiating the remaining locations. We want to deliver from 10 to 14 City Flex units throughout the country within 24 months.
Will you equip each City Flex with cross-docks?
The thing that will distinguish us on the market is the depth of our warehouses. They will be 48-meters deep, while a classic big box has a depth of 96 meters. We will install cross-docks on request if the plot allows for such improvements. The most important factor is the plot’s location because we are interested in plots within cities, which are very hard to come by.
You are the first property developer to create a network of urban warehouses. Many companies in the sector had a similar idea but no one ever managed to create an entire program. Will you be the pioneers on the market?
We would like to be. We see this program as a challenge, but we also want to be distinguishable on the market. City Flex projects will be developed in cities, in convenient locations, therefore they will become our signature facilities. We are known for the original designs of our warehouses and we plan on using this advantage in designing City Flex units as well.
Where will the first City Flex units be developed?
In Szczecin, Łódź, and Gdańsk. We are also working hard on finding other locations across the country so that over a short period of time we could create an entire network. In some cities, there are individual small business units, but they are usually developed in older buildings and cannot be compared to the standard we are about to propose in our City Flex units. All facilities will have a BREEAM certificate.
Warsaw is also a difficult market since there already are urban warehouses located in the area.
Warsaw is practically an unlimited market for projects like these. We see space for at least five City Flex units there. We would be happy to deliver that many warehouses in the first development stage, but it will probably be a difficult objective to reach. Because of high prices of plots in convenient locations, rents in City Flex units will be approximately 15-20% higher than in classic big boxes. The most obvious location in Warsaw is Okęcie but we would also like to have warehouses in Praga and in the northern part of the city.
What kind of customers does 7R attract?
We build for large businesses. For example, we are negotiating with an e-commerce company that wants to rent three locations at once. This means that our model of a tenant signing one joint agreement for the lease of space in several warehouses as part of the City Flex program is already successful.
Which cities are attractive from the point of view of City Flex projects?
Every city that was once a voivodeship capital. After all, major delivery companies operate in all of them. For example, we will soon commence the development of a big box project in Słupsk for a major customer, but we can already see that this city has the potential to host a City Flex unit, even though it is not one of the largest hubs in Poland. We will be looking there for a plot near the city center.
Are you looking for niches in the eastern part of the country?
We do see potential in this part of Poland. Currently, more roads are being built and access to the workforce in the region is much better than it used to be. There was a time when Lublin was popular among warehouse developers, but this positive trend soon came to an end. I think that it is a promising direction, like Białystok or Kielce. We are also working on a project in Rzeszów which, in my opinion, is an excellent location. A false start is out of the question, it’s high time to invest there. This is a very dynamic and well-managed city.
What about Western Poland?
This is also a region with a variety of locations which are not obvious choices for investments but are developing rapidly, like Bolesławiec, near which Amazon wants to open its next warehouse. We are planning a logistics park in Wrocław and we already have a plot.
Do you develop warehouses for speculative purposes?
Out of the seven facilities developed last year, two were built on the request of two concerns: Teekanne and Velvet. Five of the remaining warehouses were generally developed for speculation since at the beginning the commercialization ratio was 30%. At delivery, each warehouse was leased out in 100%. Therefore, speculation is not risky because the market is ready to absorb it, especially in convenient locations.
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