By Peteri @

When arriving in France and immediately driving away from Charles de Gaulle airport, it’s hard to miss all the warehouses/distribution facilities on your way to Paris. I found this article interesting as companies battle for logistics superiority by building in more affordable Eastern and Central Europe. The WSJ’s Isobel Lee explains:

The industrial real-estate market is booming in Central and Eastern Europe, thanks to the region’s geography and cheap labor along with the benefits of Europe’s unified currency and lack of trade restrictions.

Developers are adding new warehouses and distribution facilities at a record pace. The math is simple: the facilities can be built and operated at low cost in countries like Poland or the Czech Republic and still serve affluent markets of high-cost countries such as Germany, Switzerland and France.

Rents for modern industrial space in Poznan, Poland, are about €3.50 euros ($4.09) a square meter compared with €5 a square meter in Berlin, 170 miles to the west, according to JLL data.

This disparity has attracted some of the world’s largest retailers. Inc. AMZN 1.87% operates five high-tech fulfillment centers along Poland’s border with Germany, in Poznań, Szczecin and Sosnowiec, plus two in Wrocław, and it plans further expansion.

By contrast, the e-commerce giant has four fulfillment centers in Italy, a country with a population of more than 60 million, compared with less than 40 million in Poland.

Domestic and foreign investors have also paid attention to the trend. About 3.7 million square meters (40 million square feet) of new space was added in 2017, a 68% increase over 2016 and 55% more than the record amount, which dates to 2007, according to broker Cushman & Wakefield Inc.

“This is the right place for us to be,” said Robert Dobrzycki, chief executive of Europe for Newport, California-based Panattoni Development Company Inc., which built about 38% of the new supply in Central and Easteern Europe last year. Other players include Prologis Inc. (based in San Francisco in the U.S. and in Amsterdam in Europe) and P3 Logistics Parks, owned by Singapore’s sovereign-wealth fund GIC Pvt. Ltd.

Read more here.

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