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The Warsaw Voice » Real Estate » February 23, 2010
The Real Estate Voice
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Banking on Quality
February 23, 2010   
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DTZ is a consulting firm, not just a broker, and its main asset is the high quality of its services, Patrick Delcol, who in February became head of the company in Poland, tells Magdalena Fabijańczuk.

Why did you decide to accept this challenge and, after working for many years on the developer side, switch to consulting?
I have known DTZ in Poland for over 15 years. It was the first agency I worked for after arriving in Poland. When I was offered the position of country head, I couldn't ignore it. Managing the biggest real estate consulting company in terms of the number of employees is a serious challenge. My decision was also influenced by the company's size and reputation.

How have 18 months of crisis changed the way that real estate advisors and agents work?
First of all, it needs to be said that Poland was less hit by the crisis than any other country in Europe. Today we have very good prospects and the entire financial world knows there are good opportunities for new investment projects here. That doesn't change the fact that we all felt the slowdown of the last 18 months, including consulting companies providing their services on the real estate market. One issue that started gaining in importance during the crisis is service quality. We at DTZ are not typical brokers who seat business partners at a table and work on finalizing a transaction. We are advisors, and quality is the most important aspect of a consulting company's work. When the market was heated, when it was growing and developers were building, leasing and selling their projects very fast, real estate consulting companies often forgot about quality and acted quickly, only as brokers.

Another trend on a market that is short of tenants is that developers entrust the process of finding users of office buildings, warehouses and malls to several agencies at once. Meanwhile, an exclusive agent can show greater commitment to a project, if only by tasking people from its team solely with the responsibility for finding tenants. But clients have a growing tendency to hire several agents, believing this will intensify the work on finding tenants and bring speedier effects. I think one of the reasons for this is that clients in Poland tend to treat agencies as brokers, not advisors.

You are the founder and president of the Polish Council of Shopping Centers (PRCH), you were a director and member of the board at ING Real Estate, and before that the president of Centrum Development and Investments. Is the fact that you have been involved in retail real estate for years mean that DTZ has special plans with respect to this market segment?
There is no real link between my appointment as country head and DTZ's extensive operations in retail real estate. DTZ was already committed to retail real estate management. This was a consequence of the 2007 decision on a merger with Donaldsons. This is not about services such as cleaning, security or catering, but asset management, which is management aimed at increasing the value of buildings or an entire real estate portfolio. It needs saying that managing a shopping mall takes much greater experience than is required for office buildings or warehouses. We are among the leading companies, providing management services to 11 shopping centers and almost 20 other commercial projects. As far as my own experience is concerned, I have worked not only at companies that build shopping malls, though this has been the case over the past few years, but also office buildings, and before that in the hotel sector.

Based on your knowledge and recent experience, what is your view about the development of retail space in Poland in the coming years?
The first thing that is typical of the Polish retail market is that 73 percent of retail space is concentrated in modern shopping malls and centers. This means that there are almost no shopping streets here, whereas in Europe they usually account for about 50 percent of overall retail space. Polish people are getting wealthier all the time, so I believe and hope that local governments will change their policy and start planning the development of such streets within the next few years, motivating retailers to open their stores there. The lack of shopping streets is one reason why exclusive brands like Gucci or Prada are hesitating to enter Poland.

Warehouses are the worst hit market segment. Office space has fared a little better during the slowdown of the economy, but even on this market developers are still waiting before starting new projects. In a year or two, are we in danger of having a shortage of modern office space?
In Warsaw, which is home to 65 percent of the country's modern office space, we have just 7 percent of vacant space. To me, this is neither dangerous nor a crisis situation. I think 5-10 percent of vacant space is a healthy market equilibrium, and even 5 percent is the proper moment for developers to start building because the market is ready to absorb a few new projects.

To answer your question, I think that maybe not this year, but in 2011 the amount of vacant space will start decreasing. That's why developers with the necessary courage and funds who start building this spring should not have any major problems with finding tenants. On the other hand, today is also the best time for tenants to sign leases, because rents per sq m of office space in Warsaw are the lowest for many years.
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