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The Warsaw Voice » Real Estate » September 24, 2008
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Professional and Predictable
September 24, 2008   
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Grzegorz Dudziak, managing director of DTZ Management Polska, talks to Agnieszka Domańska.

DTZ has provided consulting services and managed properties across the country for many years. What is your opinion of the changes that have taken place on the Polish real estate market in recent years?
DTZ has been in Poland since 1994, which means we came here shortly after the political system had changed. Today we provide our services in the largest metropolitan areas as well as smaller cities and towns, from Mazovia to Wielkopolska, to Upper and Lower Silesia, to Małopolska and the Baltic coast. As for management, we take care of 33 commercial facilities, including 11 shopping centers, and we are committed to enlarging our portfolio. Just two years ago, we managed 300,000 square meters of space. Last year, after our merger with the Donaldsons company, the figure grew to 600,000 sq m, and now it is nearing 1 million sq m.

Almost everything has changed on the Polish real estate market in the past several years. Looking at the office space segment alone, the first thing you notice is the rising standard of newly constructed buildings. Most of them are A-class projects, not only in Warsaw, but in other large cities as well. This category makes a world of difference. These are intelligent buildings fitted with state-of-the-art infrastructure, including high-capacity telephone and IT systems that enable as many servers as necessary. Then there are advanced electronics which offer very high service standards in terms of security, maintenance, cleaning, failure-free operation and so on. On the other hand, tenants are much more demanding these days and while just a few years ago many companies were happy to rent space in B-class office buildings, or even C-class in less frequent cases, nowadays anything below A-class is out of the question, especially for multinational companies. This, of course, reflects the country's economic progress and the growing interest in Poland as a place to invest capital, with an influx of capital from the West into all sectors. Tenants expect greater utility and capacity from properties as well as more comprehensive and professional services from businesses which manage the buildings. In other words, companies like DTZ are facing higher expectations with regards to the efficiency and quality of services, employee qualifications and knowledge of the market, current trends, legal regulations and so on.

Enormous changes have also taken place on the market for shopping centers. The newly built centers are different in character. Hypermarkets were in prevalence a few years ago, while now, from the point of view of customers, they are merely an addition to a whole range of stores, usually chain stores, located in shopping malls. This necessitates modifications in planning for shopping centers. Marketing strategies are changing too, as are many other aspects of such properties' functioning.

Shopping centers are growing rapidly in smaller towns with populations under 100,000. Are there any regional differences in investing in shopping centers across the country?
Such projects are developing as a result of the growing absorption capacity of the market. Just a few years ago, it was believed that a new shopping center would pay off only if at least 100,000 people lived within its catchment area. Today, even three such shopping centers can thrive in a town of just 50,000.

We do not see any regional differences. Our approach to business is determined by what our customers expect. These expectations are becoming homogenous for the simple reason that shopping chains seek to extend operations across Poland. Stores and service outlets are operated by agents and franchisees who follow uniform standards and requirements. What is interesting is that, as shopping center managers, we encounter different requirements depending on certain cultural differences. Attitudes toward business vary among investors from different nations. Things look different with Germans, Britons and the Dutch. For example, German and Austrian investors pay the most attention to the technical aspects of construction, while the British primarily focus on commercial aspects such as relations with tenants, appropriate marketing and the positioning of their shopping centers. Of course, these are just nuances of the business. In 70 percent of cases we maintain uniform standards for all investors.

What factors helped your company establish its leading position in real estate market consulting and property management in Poland?
I believe this is chiefly due to our long-term experience and the comprehensive services we provide in all sectors of the real estate market. A vital impulse, if not a turning point, was our merger with the Donaldsons company in July 2007. The services provided by the two companies complemented each other perfectly. DTZ specialized in the management of office buildings and logistics facilities and provided services as an agent. Donaldsons, in turn, were experts in shopping centers.

The merger resulted in a versatile business handling professional consulting and the management of office space, retail space and logistics centers. We are also a leader in property management, which testifies to our comprehensive services, the ability to "guide" a building through all stages of its life cycle, from supervision of the entire construction process to the management of the completed building, to strategic planning and programming the building's future increase in value. This year DTZ's property management department is marking its tenth year in business.

What is the difference between property management and facility management?
Facility management is the narrowest term, comprising the servicing of properties, that is cleaning, security and maintenance. Property management, in turn, is a broader term involving administration, relations with tenants and technical maintenance, including marketing for shopping centers, and comprehensive financial services. Asset management is a range of value-added services to make sure the value of a property increases with time. This includes professional consulting, market and competition research, tenants engineering and the positioning of shopping centers on the market, complete with improvements in the functionality of such facilities. In other words, asset management covers a wide range of services to provide investors with appropriate income from property and opportunities to resell it in the future at a profit. This kind of consulting is something only professionals can provide, as it takes profound knowledge of the market. You need to have a sense of the market to be able to predict various changes. You have to know the expectations of local customers and consequently ensure the right tenant mix. DTZ in Poland represents eight business lines, including agencies to handle offices, warehouses, retail space and evaluation, investment consulting, market consulting and research, construction and investment consulting and property management. This structure allows cross activity between the departments, which leads to a synergy effect where we assign tasks concerning different market sectors to specialists from several departments. In this way, we can take up even the most difficult challenges.

Are there any special new challenges facing your company, any new trends that might modify the range and nature of your services?
The real estate market keeps presenting new and interesting challenges such as the restoration and redevelopment of former industrial areas. Examples include the Silesia City Center built within the compound of the former Katowice coal mine, and the Manufaktura mall in ŁódĽ. Another new trend are Polish private investors who form groups and act as developers to build shopping centers whose standards are no inferior to those provided by international developers. Prominent Polish businesses such as WP Investment in Gdynia and Rank Progress SA are expanding their shopping center chains and are thus becoming competition for foreign developers. However, without enough experience and operating standards to match foreign companies, Polish businesses are much more keen to use consulting services, which gives us even more opportunities for the future. We want to expand our range of services, mainly in asset management, and are constantly improving the quality of our services. So far we have been doing very well in this area, as shown by the Transparent Company certificate that DTZ recently received for publishing thorough financial reports and forwarding them to a credit information agency. This makes us a professional and predictable partner that everyone can rely on.
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