pt urban issues no. 008

No. 008 / 7th April 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

Newsletter Editor: Adam Zdrodowski

[email protected]

tel. +48 504 182 308

INVESTMENT MAR-KET W. P. Carey has acquired the Lipowy Office Park complex in Warsaw from CA Immo for €115 million page 2

OFFICE Echo Investment has obtained bank financing for a major Katowice project page 3 SwedeCenter has got a building permit for its planned Business Garden Wrocław offices page 3 New office supply in Warsaw discussed at the Primetime Warsaw II conference organized by Poland Today page 3

RESIDENTIAL Yareal has got the go-ahead for a new residential project in Warsaw page 4

LOGISTICS Goodman is developing a new BTS scheme near Poznań page 4

INTERVIEW Poland Today talks to John Banka, partner, head of Development Advisory Service at Colliers International page 5

LATEST LEASE DEALS IN BRIEF Recent lease transactions in the office, retail and warehouse sectors page 6

COMING & GOING Katarzyna Michnikowska, Colliers International page 6

Facts &Figures Largest completions, largest lease deals and rents in the commercial property market in 2013 page 7

The skyscraper is one of the best recognizable buildings in Warsaw Photo: CBRE

Rondo 1 tower sold for Rondo 1 tower sold for Rondo 1 tower sold for Rondo 1 tower sold for €300 million€300 million€300 million€300 million The landmark Warsaw skyscraper changed hands in what was the largest single-asset office transaction ever closed in Poland page 2

Partnerzy medialniOrganizatorzy Partnerzy

Środa, 9 Kwietnia 2014, Villa Foksal, ul. Foksal 3/5, Warszawa

8.30 -11.30

weekly newsletter # 008 / 7th April 2014 / page 2

INVESTMENT MARKET

Landmark Rondo 1 Landmark Rondo 1 Landmark Rondo 1 Landmark Rondo 1 tower in Warsaw sold tower in Warsaw sold tower in Warsaw sold tower in Warsaw sold for for for for €300 million€300 million€300 million€300 million

Two funds managed by Deutsche Asset & Wealth Management have acquired the Rondo 1 office tower in downtown Warsaw from Blackrock Europe Property Fund II for almost €300 million. Designed by the renowned Skidmore, Owings and Merrill architectural studio and completed in 2006 by Hochtief Development Poland, the skyscraper stands 192 metres tall and comprises almost 60,000 sqm of office space and approximately 5,000 sqm of retail areas. BlackRock acquired a 50% interest in Rondo 1 in 2006 and assumed full ownership of the property two years later. The building was the largest asset in the Blackrock Europe Property Fund II portfolio. Since the acquisition, BlackRock increased the oc-cupancy at Rondo 1 from 50% to 95%, enabling the asset to be brought to market for sale, Marius Schoener, head of the German and Polish real estate business at the company, said in a statement. The deal involved the sale of the best office asset in Warsaw and was the largest single-asset office transaction ever closed in Poland and one of the biggest in Central and Eastern Europe, said Mike Atwell, Head of Capital Markets, CEE, at CBRE. He added that with a number of investors currently planning further office building acquisitions, the to-tal commercial property investment volume in Po-land should in 2014 comfortably exceed the volume recorded last year.

Deutsche Asset & Wealth Management currently manages €850 million worth of assets in Poland. “We will be looking for further development oppor-tunities in the region,” Gianluca Muzzi, real estate director, Europe, at the company, said in a state-ment. BlackRock Real Estate, the dedicated real es-tate investment group within BlackRock, manages more than $23 billion of private and public real es-tate equity and debt on behalf of investors world-wide.

The Rondo 1 tower is widely regarded as the best office asset in Warsaw and one of the best in CEE

Image: BlackRock

INVESTMENT MARKET

W. P. Carey acquires W. P. Carey acquires W. P. Carey acquires W. P. Carey acquires Lipowy OffLipowy OffLipowy OffLipowy Office Park in ice Park in ice Park in ice Park in WarsawWarsawWarsawWarsaw

Two affiliates of the global net-lease real estate in-vestment trust W. P. Carey have jointly acquired the Lipowy Office Park complex in Warsaw from CA Immo for approximately €115 million. Developed in 2009 by Hochtief Development Poland, the com-plex is located on ul. Żwirki i Wigury, the main route from the Warsaw Chopin Airport to the downtown of the Polish capital, and serves as the headquarters of Bank Pekao, the second largest bank in Poland. “The transaction fits well with our strategy of ac-quiring critical assets with strong covenants in thriving, well-connected locations,” Jeffrey Lefleur, managing director of W. P. Carey, said in a state-ment. He added that the acquisition of the Lipowy Office Park complex also reinforces the position of W. P. Carey as an active investor in European prop-erties which benefit from in-place, long-term net leases. New York Stock Exchange-listed W. P. Carey spe-cializes in corporate sale-leaseback financing, build-to-suit construction financing and the acqui-sition of single-tenant net-lease properties. In July last year, the entity announced the acquisition of an over 83,300-sqm H&M distribution centre in Poznań, one of the largest logistics markets in Po-land, from a fund managed by Invesco Real Estate for approximately €64 million. The centre is subject to a long-term triple-net lease.


OFFICE

Echo Investment gets Echo Investment gets Echo Investment gets Echo Investment gets financing for Katowice financing for Katowice financing for Katowice financing for Katowice officesofficesofficesoffices

A4 Business Park will feature three buildings Image: Echo Investment

Warsaw Stock Exchange-listed developer Echo In-vestment has obtained more than €30 million in bank financing from BNP Paribas Bank Polska for its A4 Business Park office project in Katowice in Silesia. The loan will be earmarked for the devel-opment of two phases of the scheme which, when fully developed, will comprise three office buildings with a total of around 31,000 sqm of leasable space. Echo Investment delivered the first phase of the development in the first quarter of this year. The seven-floor building comprises 9,000 sqm of GLA and has already been fully leased out to IBM. Con-struction is currently underway on the second phase of the A4 Business Park investment. The ten-floor building will deliver approximately 9,000 sqm of office space in the last quarter of this year.

OFFICE

SwedeSwedeSwedeSwedeCenter with Center with Center with Center with building permit for building permit for building permit for building permit for Wrocław office schemeWrocław office schemeWrocław office schemeWrocław office scheme

Developer SwedeCenter has obtained a building permit for its planned Business Garden Wrocław office project in Wrocław. Construction on the scheme is scheduled to launch later this year. Within the first phase of the Business Garden Wro-cław investment, three office buildings comprising a total of approximately 37,000 sqm of leasable space, along with accompanying infrastructure, will be developed.

The complex will comprise 110,000 sqm of GLA

Image: SwedeCenter

The complex has been designed by the APA Wo-jciechowski architectural studio and is expected to comprise eight office buildings and a hotel with a total of 110,000 sqm of leasable space when it is fully developed. The development is the first office project of SwedeCenter in Wrocław and its third

Business Garden-brand scheme. The developer previously delivered the first phase of Business Garden Warszawa and will complete the first phase of Business Garden Poznań early next year.

OFFICE

The growing developThe growing developThe growing developThe growing developer er er er competition in the competition in the competition in the competition in the Warsaw office marketWarsaw office marketWarsaw office marketWarsaw office market

Poland Today held its Primetime Warsaw II con-ference in the Polish capital last week

Image: Poland Today

The large supply of new office space in Warsaw remains a challenge for developers but should not prove a major threat to the market, said participants in the Primetime Warsaw II conference organized by Poland Today in the Polish capital last week. The total modern office stock in Warsaw currently amounts to more than four million sqm and is ex-pected to reach five million sqm within the next two to three years. Approximately 300,000 sqm of


new space will be delivered annually in the upcom-ing years. Jarosław Zagórski, commercial and business devel-opment director at Ghelamco, argued that in the short-term perspective the market will not be able to absorb such a large amount of new office space. He stressed that financial institutions will have an important role to play as natural market regulators. “I hope that banks will be selective in financing new office schemes,” Zagórski said.

Deputy Prime Minister Elżbieta Bieńkowska was a keynote speaker at Primetime Warsaw II. A full report on the conference will be published in the next issue of Poland Today, due out next month

Image: Poland Today

Tomasz Rusak, procurement and financial director at Hochtief Development Poland, admitted that there is more and more competition among devel-opers in Warsaw. They have to offer something more than just regular office space to attract ten-ants, Rusak said. Rafał Mazurczak, head of the of-fice and hotel department at Echo Investment, was more optimistic. He noted that the planned projects

are at various stages of the investment process and will not be delivered at the same time. Jarosław Bator, managing director for real estate at Polish State Railways (PKP) pointed out that the existing office buildings in Warsaw are now getting old pretty quickly. “New buildings will find their place in the market,” Bator said. In his opinion, the public sector will also start to generate considerable demand for office space in the Polish capital in the near future. Today public sector entities most often occupy old office buildings delivered before 1989 but this will, sooner or later, change, Bator said.

RESIDENTIAL

Yareal with building Yareal with building Yareal with building Yareal with building permit for new permit for new permit for new permit for new Warsaw projectWarsaw projectWarsaw projectWarsaw project

Developer Yareal Polska has obtained a building permit for its planned Londyńska 5 multi-family residential project in Warsaw. The scheme will be located in the Saska Kępa neighbourhood of the Praga Południe district of the city and will deliver 27 apartments. The housing units in the three-storey development are priced from 13,600 zloty per sqm. Saska Kępa is one of the most prestigious and most expensive residential locations in the Pol-ish capital. There is a considerable buyer interest in the in-vestment. Yareal Polska has already signed reserva-tion agreements for over 30% of the apartments in the project, said Katarzyna Rauber, sales director at the company. Construction on the scheme, which has been designed by the adaptic-architekci

Rzucidło Kołodziej Spółka Partnerska studio, is ex-pected to launch in the summer and finish toward the end of next year.

Londyńska 5 will deliver 27 apartments

Image: Yareal Polska

Yareal Polska is currently also selling apartments in two other new residential developments in War-saw. The Brylowska 2 project is located in the Wola district of the city and will deliver 74 apartments in the first quarter of next year. For its part, the Rezy-dencja Konstancińska investment is located in the Sadyba neighbourhood of the Mokotów district and will comprise 97 housing units. It is scheduled to be completed in Q1 2016.

LOGISTICS

Goodman developing Goodman developing Goodman developing Goodman developing new builtnew builtnew builtnew built----totototo----suit suit suit suit project near Poznańproject near Poznańproject near Poznańproject near Poznań

Industrial space developer Goodman has an-nounced it is developing a 14,790-sqm built-to-suit


warehouse in Niepruszewo near Poznań for a global leader in digital media technologies. The building is scheduled to be completed next month. “Despite the construction work being undertaken in the win-ter months, we are on track with the strict devel-opment schedule to deliver this high-quality facil-ity,” Błażej Ciesielczak, regional director, Central and Eastern Europe, at Goodman, said in a state-ment. The warehouse is located within the Goodman Poznań Logistics Centre where the company previ-ously developed a warehouse for household appli-ances provider Amica which comprises 30,000 sqm of space. The developer also owns another logistics park site, Poznań Airport Logistics Centre, in the same area where up to 52,000 sqm of built-to-suit warehouse and light production space can be de-veloped.

INTERVIEW

Property owners Property owners Property owners Property owners seekingseekingseekingseeking opportunities opportunities opportunities opportunities to optimize returnsto optimize returnsto optimize returnsto optimize returns

Poland Today talks to John Banka, partner and head of the Development Advisory Service group at Col-liers International, about the redevelopment and repositioning of existing office and retail buildings in Poland. Poland Today: Poland Today: Poland Today: Poland Today: AAAA number of major existing conumber of major existing conumber of major existing conumber of major existing com-m-m-m-mercial properties in Poland are expected to be mercial properties in Poland are expected to be mercial properties in Poland are expected to be mercial properties in Poland are expected to be redeveloped and repositioned in the upcoming redeveloped and repositioned in the upcoming redeveloped and repositioned in the upcoming redeveloped and repositioned in the upcoming years. How significant is the trend and what is years. How significant is the trend and what is years. How significant is the trend and what is years. How significant is the trend and what is the main driving force behindthe main driving force behindthe main driving force behindthe main driving force behind it?it?it?it?

John BankaJohn BankaJohn BankaJohn Banka: Actually, I would not call this a trend, but rather part of a normal asset management cy-cle, if you wish. It is a permanent feature of the real estate market. Redevelopment is as old as the build-ing industry itself. Buildings age and the market eventually changes. This may be new to Warsaw because of the commercial history of the city but it is nothing new to the real estate market as such. The economic factor is at work here. In Warsaw, for instance, you have many buildings which were built in the 1990s and are in very good locations but need work to be made more efficient and thus more competitive in the market. Unless we are talking about a newly completed building, there can always be some work to do, its type depends on the loca-tion of the property, the qualities of the property and the strategy and expectations of the owner.

Poland Today talks to: John Banka, partner and head of Development Advisory Service at Colliers International

What What What What are some of the challenges and risks iare some of the challenges and risks iare some of the challenges and risks iare some of the challenges and risks in-n-n-n-volved in these kinds of projects?volved in these kinds of projects?volved in these kinds of projects?volved in these kinds of projects? That depends on the degree of the intervention in a given property but, generally speaking, the inter-ruption in cash flow is a major challenge – after all a building is a box for generating cash flow, it has to perform. Then, there is the technical challenge – how to intervene in a property, you may not be able to carry out all the changes that you have planned and if we are talking about the demolition of a building, that may be extremely difficult, depending on the location. In which sectors are the redevelopment and rIn which sectors are the redevelopment and rIn which sectors are the redevelopment and rIn which sectors are the redevelopment and re-e-e-e-positioning of existing properties the most widpositioning of existing properties the most widpositioning of existing properties the most widpositioning of existing properties the most wide-e-e-e-spread?spread?spread?spread? You see extensive face-lifting in the retail sector in which you have, generally speaking, two types of assets: daily convenience projects, to which people will come anyway to do their daily shopping, and fashion-oriented malls to which people go for en-tertainment and inspiration. In the case of the latter type of projects, you have to constantly maintain the attraction, make sure that the offer is wrapped up in a nice package to ensure that the footfall is maintained. Are such schemes only financially justified in Are such schemes only financially justified in Are such schemes only financially justified in Are such schemes only financially justified in downtown Warsaw, or are they also feasible in downtown Warsaw, or are they also feasible in downtown Warsaw, or are they also feasible in downtown Warsaw, or are they also feasible in nonnonnonnon----central locations and in the regional cicentral locations and in the regional cicentral locations and in the regional cicentral locations and in the regional citttties?ies?ies?ies? This always depends on the cost-benefit analysis of the particular case. I am not aware of any big office building renovations in the regional cities. With certain exceptions of course, there is probably not much pressure for that due to the availability of “greenfield” sites. When it comes to demolitions – Polish State Railways will be demolishing a major


building in Katowice and Echo Investment has ac-quired redevelopment property in Kraków. Do you expect more property owners to aDo you expect more property owners to aDo you expect more property owners to aDo you expect more property owners to an-n-n-n-nounce redevelopment planounce redevelopment planounce redevelopment planounce redevelopment plans in the upcoming ns in the upcoming ns in the upcoming ns in the upcoming years?years?years?years? Absolutely. We can expect demolitions and rede-velopments of entire retail projects – Galeria Kabaty anchored by Tesco in the Ursynów district of Warsaw is a good example here. There are other big-box retail buildings in Poland which are under-performing or not taking advantage of their loca-tions. We are working with Carrefour which has been keeping us busy… We will see more interventions in the office sector too. There is certainly potential for redevelopment and repositioning in downtown Warsaw and in Mokotów – much of the stock in these districts still features properties from the 1980s and 1990s – like-ly no longer competitive in today’s occupier mar-ket. These buildings represent opportunities for re-development and optimizing returns.

JOHN BANKA John Banka established the Development Advisory Service group at Colliers International after working as a commercial investment broker in Poland for more than ten years and leading and/or participating in property transactions in the country valued at a total of nearly €1 billion. Banka has an extensive back-ground in economic development and urban design in cities including Chicago, New York, Barcelona and Warsaw. He holds a master’s degree in city planning from the University of Illinois and an MBA degree from the Kellogg School at Northwestern University.

LATEST LEASE DEALS IN BRIEF

Online retailer Merlin.pl Merlin.pl Merlin.pl Merlin.pl has taken up approxi-mately 13,000 sqm of logistics space at the Good Point Puławska distribution centre near Warsaw. Developer Panattoni Europe brokered the lease transaction. The Good Point Puławska centre is lo-cated 25 kilometres from the downtown of the Pol-ish capital and comprises 43,500 sqm of warehouse and office space. The property is owned by AEW Europe. Telecom operator NetiaNetiaNetiaNetia has extended its lease of around 13,000 sqm of office space at the Marynar-ska Business Park complex in Warsaw. Cushman & Wakefield and CBRE respectively represented the landlord and the tenant in the lease negotiations process. Marynarska Business Park is located in the Mokotów district of Warsaw and comprises four of-fice buildings offering a total of approximately 43,000 sqm of leasable space. The property is owned by the Heitman European Property Partners IV investment fund. Stores of the clothing brands of the LPP GroupLPP GroupLPP GroupLPP Group will take up a total of approximately 4,200 sqm of retail space at the Tarasy Zamkowe shopping centre which Warsaw Stock Exchange-listed real estate company Immofinanz is now developing in Lublin in south-eastern Poland. The Tarasy Zamkowe mall is scheduled to be completed in the first quarter of next year and expected to deliver approximately 38,000 sqm of leasable space. The investment is valued at 480 million zloty. WebInterpret PolskaWebInterpret PolskaWebInterpret PolskaWebInterpret Polska, Vanquis Bank Limited Vanquis Bank Limited Vanquis Bank Limited Vanquis Bank Limited and BWP PBWP PBWP PBWP Polska olska olska olska have taken up a total of 1,100 sqm of office space at the Atrium International Business

Center building in downtown Warsaw. Located at the intersection of Al. Jana Pawła II and ul. Grzybowska, Atrium International Business Center comprises 12,000 sqm of office space. Savills is the exclusive leasing agent of the property.

COMING & GOING

Katarzyna Katarzyna Katarzyna Katarzyna MichnikowskaMichnikowskaMichnikowskaMichnikowska

Katarzyna Michnikowska has joined Colliers Inter-national as a senior analyst at the research and con-sultancy department. She specializes in researching and analyzing the retail property market. Mich-nikowska has 18 years of experience in the com-mercial real estate market in Poland. In her career she has been involved in a number of major retail projects, including Stary Browar in Poznań and Galeria Katowicka in Katowice.

weekly newsletter # 008/ 7th April 2014 / page 7

FACTS & FIGURES

LaLaLaLargest industrialrgest industrialrgest industrialrgest industrial projects delivered in 2013projects delivered in 2013projects delivered in 2013projects delivered in 2013

Location Project Developer Area

(sqm)

Wrocław Panattoni BTS Lear Panattoni 32,300

Silesia SEGRO Business Park Gli-

wice Building B SEGRO 31,700

Warsaw Tulipan Park Warszawa

Bulding B SEGRO 24,000

Silesia SEGRO Industrial Park

Tychy B SEGRO 18,300

Wrocław Prologs Park Wrocław V Prologis 18,282

Source: Colliers International

Largest office projects delivered in 2013Largest office projects delivered in 2013Largest office projects delivered in 2013Largest office projects delivered in 2013


(sqm)

Warsaw Konstruktorska

Business Center HB Reavis 48,300

Warsaw Miasteczko Orange Bouygues Immobilier 43,700

Warsaw Plac Unii BBI Development

/Liebrecht & wooD 41,300

Warsaw Marynarska 12 Ghelamco 40,000

Wrocław Sky Tower LC Corp 28,100


LaLaLaLargest retailrgest retailrgest retailrgest retail projects delivered in 2013projects delivered in 2013projects delivered in 2013projects delivered in 2013


(sqm)

Gliwice Europa Centralna Helical Poland 67,000

Kraków Galeria Bronowice Immochan 60,000

Poznań Poznań City Center TriGranit 58,000

Gdynia

Centrum Riviera

(Wzgórze

– extension)

Mayland Real Estate 70,500

Katowice Galeria Katowice

Meyer Bergman

European Retail

Partners/ Neinver

42,000


Selected Selected Selected Selected large investment transactions large investment transactions large investment transactions large investment transactions in 2013in 2013in 2013in 2013

Sector

Project

Value

(EUR mil-

lion)

Seller

Buyer

Retail Silesia City

Center

412 Immofinanz Allianz, ECE

Retail Galeria

Kazimierz 180

Globe Trade

Center,

Aventus

Invesco RE

Retail Galeria Domini-

kańska 151.7 ECE

Atrium

European Real

Estate

Office New City

127 ECI

Hines Global

REIT

Office Mokotów Nova

121 Ghelamco

Tristan Capital

Partners

Office Senator

120 Ghelamco

Union

Investment

In-

dustrial

H&M ware-

house

64 Invesco RE W.P. Carey

Indus-

trial Żerań Park II 43.2

Area Property

Parners,

Apollo Rida

Poland

SEGRO


LLLLargest office lease dealsargest office lease dealsargest office lease dealsargest office lease deals in 2013in 2013in 2013in 2013

Location Tenant Area(sqm) Project

Warsaw Polkomtel 22,680 Konstruktorska 4

Warsaw Getin Holding 18,850 Wola Center

Warsaw Urząd Rejestracji Leków 13,000 Adgar Park West

Warsaw Bank Zachodni

WBK 11,800 Atrium 1

Wrocław Getin Holding 11,700 Sky Tower


Retail rents (EUR/sqm/month), Q3 2013Retail rents (EUR/sqm/month), Q3 2013Retail rents (EUR/sqm/month), Q3 2013Retail rents (EUR/sqm/month), Q3 2013

20

30

40

50

60

70

80

90

ŁódźWrocław

Tri-citySzczecin

PoznańKraków

Warsaw (out of town)Silesia

Warsaw (city centre)

Source: Cushman & Wakefield

Office rents (EUR/sqm/month), Q3 2013Office rents (EUR/sqm/month), Q3 2013Office rents (EUR/sqm/month), Q3 2013Office rents (EUR/sqm/month), Q3 2013

Source: Cushman & Wakefield

10 15 20

25

Gdańsk

Szczecin

Katowice

Poznań

Kraków

Wrocław

Warsaw (non-central)

Warsaw (CBD)

Largest industrial lease deals in 2013Largest industrial lease deals in 2013Largest industrial lease deals in 2013Largest industrial lease deals in 2013

Location Tenant Area(sqm) Project

Wrocław Amazon 123,500 Goodman Wrocław South

Logistic Center

Poznań Amazon 100,653 Panattoni Poznań

Wrocław Amazon 100,653 Panattoni Wrocław

Poznań supermarket

chain 82,385 -

Central Po-

land Castorama 49,961 Panattoni Park Stryków


pt urban issues no. 008

Documents

warsaw page

office tower

poland page

landmark warsaw skyscraper

pozna page

downtown warsaw

warsaw photo

primetime warsaw