OCCUPIER INSIGHT INDUSTRIAL AND WAREHOUSE MARKET IN POLAND Q3 2017

INDUSTRIAL AND WAREHOUSE MARKET IN POLAND Q3 2017

Poland 13.02 million Tricity 139,100 Szczecin 81,000 Bydgoszcz and Torun East Poland 37,965,000 POPULATION Krosno Odrzanskie Swiebodzin 8,800 Poznan 263,000 Warsaw 614,500 4.9% UNEMPLOYMENT RATE (ILO) p 8.6% average or 20122016 Zielona Gora Zgorzelec Wroclaw 282,400 Kalisz Central Poland 619,500 East Poland 39,700 4.3% GDP GROWTH 2.5% average or 20122016 Industrial and warehouse space saturation: Emerging markets Upper Silesia 578,200 Kielce Cracow 77,500 East Poland PLN 4,473 PLN 3,989 average or 20122016 orecast 3.6 million 0 Leasing volume (Q1Q3 2017) Market trends 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 Supply 1 1 Occupier Sentiment Index** 30 20 10 0 2012 10 2013 2014 2015 2016 2017 20 30 40 ** The Occupier Sentiment Index or the industrial and warehouse market based on RICS quarterly commercial survey is a composite measure o overall market momentum, encompassing variables on supply, demand and expectations. A higher value would be indicative o tighter market conditions or tenants and thereore more upward pressure on rents. Tom Listowski, Partner, Head o Industrial & Warehouse, CEE A golden age or the Polish industrial market this best illustrates the current situation in Poland. Both occupier and developer activity has been setting new highs in recent years, uelled by the country s robust economy and transport inrastructure improvements. The market is oering ever more modern schemes and the growing importance o robotisation is already a act.

Warsaw 3.59 million Warsaw is the largest industrial market in Poland. Since January 2017, warehouse supply has totalled more than 371,100. Completions include several largescale schemes such as Panattoni Park Grodzisk II and III (88,400 ), Panattoni BTS H&M Grodzisk (37,400 ) and Panattoni Park Janki II (36,500 ). At the end o September 2017, there was approximately 192,100 o warehouse space under construction across nine projects, only one o which was in Warsaw Inner City: Hillwood Warsaw I (7,300 ). MASOVIA 5,346,627 POPULATION PLN 5,354 4.2% UNEMPLOYMENT RATE orecast TAKEUP Tenant demand or modern warehouse space remains healthy. The leasing volume totalled 614,500 in JanuarySeptember 2017, accounting or 67% o 2016 s level. Most o that space was transacted in Warsaw Suburbs (520,800 ). The share o new leases constituted 54% while renegotiations accounted or 39% o Warsaw s total volume. Expansions amounted to 38,700. 400 000 300 000 200 000 25,00% 2 15,00% 1 5,00% Warsaw s overall vacancy rate holds stable despite healthy supply levels. Compared with the end o December 2016, Warsaw Inner City s vacancy rate edged down by 2.1 percentage points to 8.7% (65,800 ), whereas that or zone 2 ell by 0.8 percentage points to 6.8% (192,200 ). (Q1Q3 2017) Tenant Lease type Property emag P3 Blonie 33,100 Electrolux Whirlpool Conidential Expansion/ MLP Pruszkow I 26,700 Goodman Warsaw I Logistics Centre Panattoni Park Konotopa II 25,900 22,000 Warsaw Inner City (zone 1) Warsaw Suburbs (zone 2) Warsaw Inner City (zone 1) Warszawa Suburbs (zone 2) Katarzyna Bojanowicz, Business Development Director Developers and occupiers continue to ocus on western Warsaw, which beneits rom a welldeveloped road network. There are many warehouse developments taking place in the vicinity o Grodzisk and Pruszków, attracting strong tenant interest. Rents in Warsaw vary, depending on the distance to the city centre. Prime headline rents stand at EUR 5.2 per in Warsaw Inner City.

Upper Silesia 2.24 million Upper Silesia is the second largest industrial market in Poland. Since January 2017, warehouse supply has totalled 117,700, delivered in six schemes, including Panattoni Park Gliwice III (51,000 ), Panattoni Park Sosnowiec IV (35,800 ), Panattoni Park Ruda Slaska (33,500 ) and Goodman Gliwice Logistics Center (21.800 ). At the end o H1 2017, there was 243,700 under construction in seven schemes. This year s total supply is expected to surpass last year s record high o 195,000 ollowing the completion o Panattoni BTS Amazon Sosnowiec (135,000 ). SILESIA 4,507,260 POPULATION PLN 4,532 4.2% UNEMPLOYMENT RATE orecast TAKEUP Occupier activity remains robust in this region. The leasing volume has totalled 578,200 to date. New leases accounted or 72% while renegotiations made up 26% o the total takeup. I the current trend continues, this year s takeup in Upper Silesia is likely to set a new high ollowing last year s 604,200. 350 000 300 000 250 000 200 000 150 000 50 000 1 1 Robust occupier interest pushed the vacancy rate down by 0.8 percentage points to 5.3% (117,700 ) since yearend 2016, with the average or 2012 2016 standing at 7.0%. (Q1Q3 2017) Tenant Lease type Property Amazon (BTS) Panattoni BTS Amazon Sosnowiec 135,000 Żabka MLP Gliwice 24,700 Jakub Kurek, Developer activity in Upper Silesia is driven by this region s large pool o available lands and welldeveloped road and rail inrastructure. In addition, easy access to skilled labour attracts industrial and warehouse space tenants rom various sectors to this region. MotoProil Prologis Park Chorzow 20,200 Conidential Logicor Czeladz 16,700

Poznan 1.86 million From January to September 2017, warehouse supply totalled 221,000, delivered across seven schemes, including P3 Poznan (64,400 ), Panattoni Park Poznan VIII (47,100 ) and Clip Poznan (37,800 ). Two smallscale schemes are under construction: Doxler Business Park (15,000 ) and MLP Poznan (9,700 ). GREATER POLAND 3,461,300 POPULATION PLN 4,048 TAKEUP Leasing activity has totalled 263,000 to date, compared to 358,200 in 2016, o which 80% was let under new lease agreements. Volumes o warehouse space leased through expansions and renegotiations amounted to 27,900 and 24,600, respectively. The largest transaction was BMW s lease or 32,000 in BTS Goodman Swiecko. In addition, Ceva signed a 24,600 sq m lease with the owner o P3 Poznan. At the end o September 2017, there was 123,300 o vacant space, accounting or 6.7% o this region s total stock. Compared with the end o December 2016, the vacancy rate edged down by 0.2 p.p. By comparison, the vacancy rate or 2012 2016 averaged 4.0%. 350 000 300 000 250 000 200 000 150 000 50 000 3.9% UNEMPLOYMENT RATE orecast 7,00% 5,00% 3,00% 1,00% (Q1Q3 2017) Adam Szyller, Tenant Lease type Property BMW (BTS) BTS Goodman Świecko 32,000 Ceva P3 Poznań 24,600 Conidential Logicor Poznań III 15,900 In anticipation o strong tenant interest in the Poznan region, developers have secured substantial sites or new developments. Tenants continue to enjoy low headline rents standing at EUR 2.90 3.40 per. Conidential (BTS) Panattoni BTS Poznań II 15,700

Wroclaw 1.61 million 123,100 o new warehouse space was added to this region s total industrial stock in the period rom January to September 2017. Six schemes were delivered to the market, including Hillwood Wroclaw 3 (40,100 ), Panattoni Park Wroclaw VII (30,000 ) and Hillwood Wroclaw I bis (26,400 ). By comparison, annual warehouse supply averaged 155,100 in the years 2012 2016. TAKEUP Warehouse takeup has totalled 282,400 to date, compared with the average annual leasing volume in 2012 2016 at 356,400. s accounted or 54% o the volume, while expansions and renegotiations made up 8% and 39%, respectively. At the end o September 2017, the region s vacancy rate stood at 5.1%, equating to 81,500, down by 0.5 p.p. compared with December 2016. It is also lower by 5.3 p.p than the iveyear high o 10.4% recorded in 2013. LOWER SILESIA 400 000 350 000 300 000 250 000 200 000 150 000 50 000 2,861,700 POPULATION PLN 5,055 4.2% UNEMPLOYMENT RATE orecast 1 1 (Q1Q3 2017) Tenant Lease type Property H&M (BTS) Panattoni BTS H&M Boleslawiec 60,000 Dirks Group Hillwood Wroclaw II 28,600 Whirpool OstSped Prologis Park Wroclaw V Prologis Park Wroclaw V 18,300 10,100 Miłosz Borkowski, Bielany Wroclawskie continues to attract the strongest tenant interest. Nearly all leading developers have delivered warehouse schemes to this market. Shrinking availability o qualiied talent is, however, becoming a growing concern or current and uture tenants. Rents remain at a moderate level o EUR 2.90 3.40 per.

Central Poland 1.60 million Five projects completed in Central Poland delivered 177,700 o new warehouse space to the market, accounting or more than 2016 s supply (166.800 ). The largest completions included Prologis Park Piotrkow II (42,200 ) near the interchange o the A1 motorway and the S8 expressway, and Panattoni BTS Decathlon (32,000 ) in eastern Lodz. There are also two large schemes under construction: Panattoni BTS BSH (79,000 ) and Panattoni BTS Castorama (50,000 ). TAKEUP Leasing activity hit a record high with 619,500 transacted in the period rom January to September 2017, which represented an increase o nearly 77% on the total takeup noted in Central Poland in 2016. O that total, new lease agreements accounted or 74%, while renegotiations and expansions made up 136,900 and 22,000, respectively. Five leases were made or more than 50,000. LODZKIE 20 000 The vacancy rate ell to a record low o 1.4% (23,100 ), down by 1.5 percentage points compared with where it was at the end o 2016. Healthy demand coming largely rom BTS tenants coupled with moderate supply pushed the vacancy rate down rom the high level o 12.9% recorded in 2013. 200 000 180 000 160 000 140 000 120 000 80 000 60 000 40 000 2,465,300 POPULATION PLN 3,997 4.2% UNEMPLOYMENT RATE orecast 1 1 1 Katarzyna Bojanowicz, Business Development Director (Q1Q3 2017) Tenant Lease type Property Castorama BSH / Expansion Prologis Park Strykow II (BTS Castorama) 101,700 Panattoni BTS BSH 79,000 There is strong occupier interest in LodzWidzew, where most o this region s warehouse and manuacturing space is located. Developers are becoming increasingly ocused on the western part o the city, near the S14 expressway. Headline rents remain lat at EUR 3.2 3.6 per. K+N P3 Piotrkow 55,800 OBI Panattoni Park Nowosolna (BTS OBI) 50,700

Szczecin 506,000 459,300 has been added to Szczecin s industrial stock since 2012. O that total, more than 315,600 has been delivered to the market since the begining o 2017. Completions include two largescale schemes: Panattoni BTS Amazon Szczecin (161,000 ) and Goodman BTS Zalando Szczecin (130,000 ). The development pipeline comprises Panattoni Park Szczecin II (32,000 ), scheduled or delivery in H2 2018. TAKEUP In Q1Q3 2017, the leasing volume hit 81,000. The largest deal was DHL s 31,000 sq m lease at Panattoni Park Szczecin I. In addition, Panattoni Park Szczecin I and II signed up three tenants who took up a total o 26,600. This year s takeup is unlikely to match the peak recorded in 2016, in which 349,100 was transacted. O that total, 91% was leased under new transactions. The region s rising stock pushed the vacancy rate down to 0.7% at the end o Q3 2017 on account o a lowbase eect. In the past, however, due to this market s low industrial stock, the vacancy rate luctuated between 0% and nearly 19.4% since 2012. WEST POMERANIA 350 000 300 000 250 000 200 000 150 000 50 000 1,681,800 POPULATION PLN 4,131 5.6% UNEMPLOYMENT RATE orecast 25,00% 2 15,00% 1 5,00% (Q1Q3 2017) Tenant Lease type Property DHL Conidential Conidential Conidential Panattoni Park Szczecin I Prologis Park Szczecin DC1 Panattoni Park Szczecin I Panattoni Park Szczecin II 31,000 21,000 15,800 7,400 Jakub Dudkiewicz, The Szczecin market is growing rapidly and has a huge growth potential. It beneits rom its proximity to the western border with Germany, encouraging developers to commence new projects. Headline rents remain attractively low at EUR 2.80 3.30 per.

Eastern Poland 445,000 The industrial stock has been growing in Eastern Poland at an average annual rate o approximately 50,000 with a record high supply o 174,400 recorded in 2015. Three buildings have been delivered to this market since January 2017, including a 20,000 sq m BTS scheme DL Invest Debica developed or Hutchinson. Bialystok, which has no existing warehouses, is a promising market as Panattoni Park Bialystok (33,600 ) is expected to be delivered there. TAKEUP In Q1Q3 2017, the leasing activity totalled 39,700, o which 86% was let under new lease agreements. Expansions amounted to 5,700 with no renegotiations recorded in this period. By comparison, the leasing volume averaged 63,000 per annum in the years 2012 2016. SUBCARPATHIA 2,085,300 POPULATION PLN 3,656 LUBELSKIE 2,109,900 POPULATION PLN 3,853 PODLASKIE 1,156,400 POPULATION PLN 3,807 The vacancy rate has remained relatively low since the end o 2016. In September 2017 it stood at 2.1%, down by 4.9 percentage points compared with yearend 2016. By comparison, this region s vacancy rate has ranged between 1.1% and 13.8% over the last ive years. (Q1Q3 2017) 200 000 150 000 50 000 7.6% UNEMPLOYMENT RATE orecast 6.4% UNEMPLOYMENT RATE 2012 2013 2014 2015 2016 2017 5.4% UNEMPLOYMENT RATE 1 1 1 1 Tenant Lease type Property Conidential Centrum Logistyczne Tokarska 14,000 Stokrotka Expansion MLP Lublin 5,700 DPD CTS Logistics Panattoni Park Białystok Waimea Cargo Terminal Rzeszow Jasionka 3,800 3,100 Jakub Kurek, The highest concentration o warehouse space in the Rzeszow region is in the vicinity o the RzeszowJesionka airport and the A4 motorway. Most o Lublin s warehouse schemes are located in the eastern part o the city. This region constitutes a bridge or tenants between Central and Eastern Europe.

Tricity 434,000 Developer activity remains irm in Tricity with 25,000 o warehouse space delivered to the market in two schemes in the JanuarySeptember period. Goodman Pomeranian Logistics Centre (36,800 ) is under construction. By comparison, the annual supply or 2012 2016 averaged 38,700. POMERANIA 2,285,900 POPULATION PLN 4,589 TAKEUP Leasing activity remains strong in Tricity. Since the beginning o 2017, it amounted to 139,100, which is 22,000 more than last year s total. New leases accounted or nearly 50% o the leasing volume, while expansions and renegotiations made up 18,300 and 52,000, respectively. 70 000 60 000 4.6% UNEMPLOYMENT RATE orecast 1 1 In comparison with the end o 2016, Tricity s vacancy rate ell by 2.0 p.p. to 3.9% (16,700 ) at the end o September 2017. Since 2012, it has ranged between 2.2% and 10.4%. 50 000 40 000 30 000 20 000 10 000 (Q1Q3 2017) Tenant Lease type Property Omega Pilzno Conidential Pomeranian Logistics Centre Prologis Park Gdansk Airport DC1a 12,200 10,200 Conidential Hillwood 7R Gdansk 2 10,000 MAG Prologis Park Gdansk Airport 7,800 Jakub Dudkiewicz, Tricity attracts largely global logistics tenants. The recent expansion o the Deep Container Terminal (DCT) is likely to urther stimulate occupier activity in this region. Headline rents stand at EUR 3.5 per.

Cracow 361,000 The Cracow market has maintained a strong momentum since 2015. In the irst three quarters o 2017, new warehouse completions included two schemes: 7R Krakow Kokotow II (13,900 ) and 7R Krakow Kokotow III (5,800 ), developed or Tekanne, compared with last year s total supply at 45,300. Large schemes under construction include Panattoni Park Krakow IV (33,000 ) and 7R Krakow Kokotow VI (26,000 ). TAKEUP From January to September 2017, leasing activity amounted to 77,500, accounting or more than ouriths o the total takeup recorded in 2016. New leases made up 76%, while 18,500 was transacted through renegotiations with no expansions noted in this period. By comparison, the leasing volume averaged 56,600 per annum in the years 2012 2016. The vacancy rate has edged down since the start o the year. At the end o September 2017, it stood at 6.7%, up by 1.4 percentage points on the average or 2012 2016. LESSER POLAND 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 3,340,800 POPULATION PLN 4,392 4.1% UNEMPLOYMENT RATE orecast 1 1 1 1 1 (Q1Q3 2017) Miłosz Borkowski, Tenant Lease type Property Velvet Care (BTS) 7R BTS Velvet Care 20,600 Conidential AUTO GUM Conidential (BTS) Goodman Krakow Airport Logistics Centre 7R Logistic Krakow Kokotow BTS Goodman Skawina 7,300 7,100 5,700 Cracow is one o Poland s most expensive locations, largely due to high land prices. Headline rents stand at EUR 3.5 4.0 per. Key tenant destinations include Skawina, located in the western part o the city and close to the A4 motorway, and Kokotow in the east.

Bydgoszcz and Torun 265,000 More than 112,800 o modern warehouse space was delivered in Bydgoszcz and Torun in the period rom January to September 2017, accounting or nearly 43% o the region s total industrial stock. The largest completions were BTS schemes: Panattoni BTS Kauland (45,700 ) and Panattoni BTS Carreour (38,000 ). Stock under construction includes Waimea Logistics Park Bydgoszcz (16,200 ), which will provide approximately 90,000 once ully built out. TAKEUP In the irst three quarters o 2017, the leasing volume amounted to barely 8,800 transacted through two renegotiations: PHUP Gniezno and MBS Logistics renewed their leases at Logistic & Business Park Bydgoszcz. By comparison, last year s total takeup hit 130,800, most o which (97%) was leased under new contracts. Robust supply pushed the vacancy rate up to 7.4% at the end o September 2017 compared with the average o 9.5% or 2012 2016. Due to the relatively low industrial stock, the vacancy rate in Bydgoszcz and Torun is likely to luctuate as it has between 1% and 25.4% since 2012. KUYAVIAPOMERANIA 120 000 80 000 60 000 40 000 20 000 2,060,100 POPULATION PLN 3,868 6.00% UNEMPLOYMENT RATE orecast 3 25,00% 2 15,00% 1 5,00% (Q1Q3 2017) Adam Szyller, Tenant Lease type Property PHUP Gniezno MBS Logistics Tabemax S.J. Boruta Zachem S.A. Logistic & Business Park, Bydgoszcz Logistic & Business Park, Bydgoszcz Waimea Logistic Park Bydgoszcz Waimea Logistic Park Bydgoszcz 4,650 2,870 650 650 Bydgoszcz and Torun attract manuacturing companies in particular. This market continues to grow beneiting rom supportive measures rom local authorities and a large labour pool. Headline rents stand at EUR 2.90 3.40 per.

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DEFINITIONS Deinitions Industrial stock Total modern industrial and warehouse space available on a market and delivered ater 2000. Volume o industrial and warehouse space delivered to a market in a speciied period. Proportion o vacant space to the total industrial stock at the end o a speciied period. Gross takeup Synonym: leasing activity Total volume o space leasing in a speciied period, regardless o the actual occupancy, comprising new leases, expansions, renewals (renegotiations). Leasing activity also includes new prelets signed or schemes under construction, planned or undergoing reurbishment. Net takeup Asking rent Base rent Eective rent BuildtoSuit (BTS) scheme Prelet Total volume o space leasing, excluding renegotiated renewals. Monthly rent per square metres o leasable space expected by the owner at an early stage. Monthly rent per square metre o leasable space based on the actual lease terms and conditions. Base rent less various inancial incentives being the subject o negotiations between the tenant and the landlord. Eective Rent = (total rent ree rent cash allowances) / lease term / rentable space. Industrial or warehouse scheme developed to meet speciic tenant requirements such as location, area, technical and use speciications, usually agreed beore construction begins. Prelet agreement signed prior to construction or during development (beore an occupancy permit is obtained). SOURCES AND VALIDITY OF DATA: Population: size o population in each region, Oxord Economics orecast at yearend 2017. Unemployment: unemployment rate as deined by the ILO (International Labour Organization), Oxord Economics orecast at yearend 2017. Salary: average monthly salary in the enterprise sector in a voivodeship, Central Statistical Oice o Poland (as at September 2017). This report has been produced by experts o Cresa Polska Sp. z o.o. and cooperating entities on the basis o publicly available data and inormation which have been veriied exclusively to conirm their accuracy without examining whether they are true or genuine. Thereore, Cresa Polska Sp. z o.o. does not make any warranty or take any responsibility or any damage suered as a result o decisions made on the basis o the content and conclusions o this report, which is provided or inormation purposes only and does not substitute individual advisory service. All copyrights to this report and its individual elements are reserved a prior written consent o Cresa Polska Sp. z o.o. is required beore this report can be used or commercial or promotional purposes in whole or in part.

BOLESŁAW KOŁODZIEJCZYK, PhD, MBA, MRICS Head o Research & y +48 661 111 070 boleslaw.kolodziejczyk@cresa.com TOM LISTOWSKI Partner, Head o Industrial & Warehouse, CEE +48 509 510 429 tom.listowski@cresa.com CRESA POLSKA SP. Z O. O. Warsaw Financial Center ul. Emilii Plater 53 00113 Warsaw tel: +48 22 470 70 70 cresa.com REGIONAL OFFICES Wrocław Pegaz, ul. Grabarska 1 tel.: +48 731 347 070 Gdańsk Olivia Business Centre, al. Grunwaldzka 472 tel: +48 732 987 070