How to calculate the profitability of a warehouse investment?

The profitability of a warehouse investment cannot be reduced to a single number. Yield, ROI, cash flow and cap rate answer four different questions, and only together do they give a full picture of whether a given warehouse property is a good investment.

In the previous article in the series I compared the BTS model with a speculative warehouse. Regardless of the model chosen, though, every investor sooner or later asks the same question: does this particular property pay off? Below I try to show how to answer it in practice.

Why one metric is not enough

Each of the four metrics measures something different.

• Yield tells you what percentage of your invested capital you earn per year, on a pure income basis
• Cap rate tells you how the market values a property based on the income it generates
• ROI tells you the total return on invested capital, including the change in value and the financing structure
• Cash flow tells you how much cash is actually left in your pocket each month, after loan payments and all costs

A property can have a great yield and a negative cash flow at the same time, if it carries a lot of debt, or a modest cap rate and a very good ROI, thanks to value growth over time. That is why experienced investors look at all four metrics together, not at one taken out of context.

Yield: what percentage of the property’s value you earn per year

Yield is the ratio of a property’s annual income to its market value or purchase price. In market practice a few variants are distinguished: initial yield (at the time of purchase), running yield (during ownership) and exit yield (assumed at the time of sale).

Formula: Yield equals annual net rental income divided by the property’s value, multiplied by 100%

For warehouse properties in Poland, the typical yield range is between 4% and 8%, depending on location, tenant quality and lease length. For the best, large Class A warehouses with a long term lease, so called prime warehouses, the market is pricing yields today at around 6.25% to 6.75%, with the lower end sometimes seen for the best projects in the Warsaw area.

Cap rate: how the market values a property based on its income

Cap rate is a close cousin of yield, but calculated differently. It is the ratio of annual net operating income (NOI) to the property’s current market value, rather than to the historical purchase price. At the moment of purchase, cap rate and yield are equal, but over time, as the property’s value changes, the two figures start to diverge.

Formula: Cap rate equals NOI divided by the property’s current market value

NOI, or Net Operating Income, is a property’s annual income minus operating costs, but before loan repayments, income tax and capital expenditure (capex). This distinction matters, because NOI shows a property’s ability to generate income independently of how a particular investor financed it.

Cap rate translates directly into valuation. The lower the cap rate, the higher the property’s value for the same NOI. A difference of as little as 25 to 50 basis points in cap rate can shift the valuation of a large warehouse asset by several million zloty, which is why every basis point is fought over in transaction negotiations.

Approximate prime cap rates in Poland around the turn of 2025/2026:

These figures are indicative, based on publicly available reports from advisory agencies (Savills, CBRE, JLL, Colliers, AXI IMMO, Knight Frank), and should always be verified against a specific transaction.

ROI: total return on invested capital

ROI, or Return on Investment, is a broader metric than yield or cap rate. It accounts not only for current rental income, but also for the change in the property’s value and, when calculating leveraged ROI, for the effect of debt financing.

Simplified formula: ROI equals investment profit minus investment cost, divided by investment cost, multiplied by 100%

There is a key distinction here. Unleveraged ROI calculates the return as if the whole investment were funded in cash, showing the pure profitability of the property itself. Leveraged ROI includes the loan, and can be significantly higher than unleveraged ROI, because the investor commits less of their own capital and keeps the difference between the cost of debt and the property’s income. The same asset might show an unleveraged return of around 8%, while ROI calculated on the equity actually committed, once debt financing is added, can reach well into the teens or even the low twenties percent. It is worth remembering that leverage cuts both ways: it magnifies losses just as much when property values fall or vacancy rises.

Cash flow: how much is actually left in your pocket each month

Cash flow is the most tangible of all four metrics. It shows the real money left in the investor’s account after all obligations have been paid.

Formula: Cash flow equals NOI minus debt service (principal and interest) minus capital expenditure (capex)

This is the metric that matters most to individual investors and smaller funds, because it determines day to day liquidity. A property can have an excellent yield and a rising value, but if the loan payment absorbs nearly all of the NOI, the investor will not see real cash for years, despite the investment looking good on paper.

How these metrics work together: a worked example

The example below is purely illustrative and does not reflect a real transaction.

Assume a 5,000 sqm warehouse, leased for 10 years at a rate of EUR 4.50 per sqm per month.

• Annual rental income: 5,000 sqm times EUR 4.50 times 12 months, approximately EUR 270,000
• Operating costs (assuming 10% of income): approximately EUR 27,000
• NOI: 270,000 minus 27,000 equals EUR 243,000
• Purchase price of the property: EUR 3,600,000

Yield or cap rate at the time of purchase: 243,000 divided by 3,600,000, approximately 6.75%

If the investor finances the purchase with 60% debt (EUR 2,160,000) at an effective interest rate of 6%, with an annual principal and interest payment of around EUR 155,000:

Cash flow: 243,000 minus 155,000, approximately EUR 88,000 per year

Leveraged ROI (on the equity committed of EUR 1,440,000): 88,000 divided by 1,440,000, approximately 6.1% per year

That figure comes purely from cash flow. On top of it there is the potential increase in the property’s value over the holding period, which adds to total ROI at the time of sale.

Looking only at yield (6.75%), this asset looks good. Looking at cash flow after leverage, it is still positive, but noticeably lower. Only the full set of four metrics gives the complete picture of profitability.

Table: yield, ROI, cash flow and cap rate compared

Where these metrics stand in the Polish warehouse market today

The first quarter of 2026 shows that the warehouse sector remains one of the most active segments of the Polish commercial real estate market. Tenants leased more than 1.6 million sqm of warehouse space in that period, up 47% year on year, and the warehouse sector accounted for 44% of the total investment volume in Poland’s commercial real estate market. This confirms warehouses’ position as one of the most important asset classes for both institutional and private investors.

At the same time, cap rates for the best assets have remained relatively stable following the decompression period of 2022 to 2024, meaning warehouse valuations in 2026 are more predictable than they were two or three years ago, which makes it easier for investors to plan ROI over a longer horizon.

How Polish yields compare with Western Europe

For an investor coming from Germany or another Western European market, the numbers above look considerably more attractive than what is available at home. Prime logistics yields across Germany’s major hubs (Berlin, Frankfurt, Munich, Hamburg and the Rhine Ruhr area) have stabilised at around 4.5%, and the wider pan European prime average sits in a similar range. Against that backdrop, a prime Polish warehouse priced at 6.25% to 6.75% offers roughly 175 to 225 basis points of additional yield for a broadly comparable, institutional grade asset.

This spread is one of the main reasons western capital keeps flowing into Polish logistics, and it is particularly relevant for a location like Świecko, sitting directly on the German border along the A2. This is exactly the framework we use when evaluating individual modules at the Gateway A2 project for prospective tenants and investors: comparing achievable rent against acquisition or construction cost to arrive at a realistic yield, cap rate and cash flow projection before any capital is committed.

What foreign investors should know before buying in Poland

Poland’s EU and EEA membership generally allows companies and individuals from EEA countries and Switzerland to acquire commercial real estate, including warehouses, without the special ministerial permit that applies to buyers from outside the EEA. That said, Świecko sits directly in Poland’s border zone, a legal category that can bring additional notification or permit requirements into play depending on the exact property and structure of the deal. Because the rules here are genuinely case specific, we would always recommend confirming the requirements for a given transaction with a local advisor before signing, rather than relying on a general rule of thumb.

It is also worth budgeting for the fact that Polish transaction costs, such as notary fees, the civil law transaction tax (PCC) or VAT depending on how the deal is structured, follow a different logic than in Germany or the Netherlands. We are happy to walk foreign buyers through this step by step as part of an initial conversation.

FAQ: how to calculate warehouse investment profitability

What is the difference between yield and cap rate?

Yield is calculated relative to the purchase price (or sometimes current value), while cap rate is always calculated relative to the property’s current market value. At the time of purchase the two are equal, but over time, as the property’s value changes, they start to differ.

What is a good cap rate for a warehouse in Poland?

For the best Class A warehouses in Poland (prime assets), the market is pricing cap rates today at around 6.25% to 6.75%. Higher rates apply to older buildings, weaker locations, or shorter leases.

What is the difference between leveraged and unleveraged ROI?

Unleveraged ROI calculates the return as if the investment were funded entirely in cash. Leveraged ROI includes the loan and is calculated on the equity committed. Thanks to financial leverage it can be significantly higher, but it also carries higher risk.

Why can a property with a good yield have negative cash flow?

Because yield does not account for debt service. If the loan payment is high relative to NOI, cash flow, the real cash left after covering obligations, can be low or even negative, even though the yield itself looks attractive.

What is NOI and why does it matter so much?

NOI, Net Operating Income, is a property’s annual income minus operating costs, but before loan repayments, tax and capital expenditure. It is the base figure used to calculate both yield and cap rate.

Summary

Assessing the profitability of a warehouse investment requires looking at four metrics at once. Yield shows income relative to invested capital, cap rate shows how the market values the property based on its income, ROI shows total profitability including financial leverage and value growth, and cash flow shows the real cash available to the investor day to day. None of these metrics on its own gives the full picture. Only together do they let you judge whether a given warehouse property truly pays off.

If you are evaluating a warehouse acquisition in Poland, including a module at Gateway A2 in Świecko, get in touch with EcoProperty for a yield, ROI and cash flow analysis built around your specific numbers.

What’s next

In the next article in the series I move from numbers back to location, to Świecko and western Poland, and answer the question: Why is the Świecko area strategic for European logistics? I will also show how the metrics from this article play out in practice for projects built near the German border, such as Gateway A2.

Sources used in this article

Eurobuild CEE, “Warehouses accelerate on two fronts”. Data on net take-up in Q1 2026 (over 1.6 million sqm, up 47% year on year) and on the warehouse sector’s share of the total investment volume in Poland’s commercial real estate market (44%).

https://eurobuildcee.com/news/63461-magazyny-przyspieszaja-na-dwoch-frontach

Wskaźniki Branżowe, “Cap rate: property capitalisation rate. Formula and interpretation”. Definition and formula for cap rate, definition of NOI, approximate prime yields for logistics, office and retail assets in Poland around the turn of 2025/2026.

magazyny.pl, glossary of terms. Definition of yield, typical yield range for warehouse assets in Poland (4 to 8%), distinction between initial, running and exit yield.

https://magazyny.pl/slownik/yeld

Dwell Properties, “Commercial property cap rate. Formula, market data and practice in 2026”. Cap rate methodology, the effect of cap rate changes on property valuation, market data sources (Savills, CBRE, JLL, Colliers, AXI IMMO, Knight Frank).

https://dwellproperties.pl/artykuly/stopa-kapitalizacji-cap-rate-nieruchomosci

Vulppo Real Estate, “Cap rate”. Distinction between cap rate and yield, and between leveraged and unleveraged returns.

http://vulppo.pl/tag/cap-rate/

Savills, “The Experts View: European Industrial and Logistics Real Estate Market, 2026”. Data on prime logistics yields across Germany’s major hubs stabilising at around 4.5%.

https://en.savills.de/research_articles/259694/386469-0

Ministry of Interior and Administration (MSWiA), gov.pl. Official guidance on the permit requirement for property acquisition by foreign nationals and companies, including the general exemption for EEA and Swiss citizens and businesses.

https://www.gov.pl/web/mswia/uzyskaj-zezwolenie-na-nabycie-nieruchomosci-akcji-udzialow-przez-cudzoziemcow

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