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The Warsaw Voice » Real Estate » October 1, 2010
The Real Estate Voice
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Balance in Poznań
October 1, 2010   
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The real estate market in Poznań is balancing out after the crisis. Unlike in other cities, developers in Poznań did not go overboard in terms of new projects when the economy was booming.

Poznań, the capital of Wielkopolska province, located on the Warta and Cybina rivers, is Poland’s fifth largest city in terms of population and sixth largest in terms of area. It covers almost 262 sq km and is inhabited by over 550,000 people. The city is a major road and rail junction and has an international airport, Ławica.

There are eight state-run universities in the city, including the Poznań University of Medical Sciences, University of Life Sciences, Adam Mickiewicz University, University of Economics and Academy of Fine Arts, and 17 private universities and colleges. Almost 133,000 students are enrolled at these colleges.

Offices: Too Few, Too Expensive
“Unlike in several other cities, the period when the economy was booming did not result in major projects in Poznań that the market today would be unable to absorb. Poznań has a modern office space of 207,000 sq m compared to 235,000 sq m in Katowice, which is a much smaller city,” says Anna Bartoszewicz-Wnuk, director of the research department at real estate services company Jones Lang LaSalle. “With almost 9 percent of office space vacant, it is a sound and balanced market for the developer. The situation looks worse from the point of view of the tenant, who would like to have a wider choice. An important factor for companies looking for at least 1,000 sq m of office space is the number of lease options available, including existing space and projects that will be completed by the end of the year. In Poznań, we have six or seven such options now. The figure is close to the nation’s average and comparable with the figures for Wrocław and the Tricity area. But if tenants look only at rents and space availability, Poznań does not seem very attractive.”

Rental rates in the best locations in Poznań range from 14 to 16 euros per square meter, the same as in Wrocław, according to data published in March by real estate services company CB Richard Ellis. In comparison, rates range from 13 to 16 euros in Cracow, from 12 to 15 euros in Katowice and from 12 to 14 euros in ŁódĽ.

With high rents and little vacant space, office developers are eyeing Poznań as a good location for new projects. More than 40,000 sq m of modern office space is now under construction in the city. The A-class Skalar Office Center building will soon be put on the market by its investor, Górecka Projekt. The building provides 15,000 sq m on six stories and an underground car park for over 200 vehicles. The building is provided with a modern climate control system. “Skalar is an intelligent building,” says Agnieszka Grzmil, vice-president of Grójecka Projekt. “A special system will control heating, air-conditioning and air humidity inside the building. Each tenant will be able to adjust the temperature.” The building is monitored by a closed-circuit television system and an access control system with an intercom.

The second stage of Malta Office Park on Baraniaka Street, a project being carried out by the Echo Investment company based in Kielce, is to be completed by the end of the year. Two five-story buildings and one six-story building with a total space of 15,000 sq m will be constructed in this stage. Construction of the Malta Office Park project started in August 2007. The first stage – two five-story buildings – was completed in December 2008. Construction of the third and last stage of the project is already beginning. The whole complex will provide almost 31,000 sq m of office space for tenants. Rafał Mazurczak, director responsible for finding tenants for offices and hotels at Echo Investment, has high hopes for the Poznań office market. “Poznań is one of the largest, dynamically expanding regional markets in Poland,” he says. “In 2010, there was no significant increase in supply on this market because few investment projects were being carried out. And although statistics indicate that the amount of vacant space is on the rise in Poznań, we are not feeling that in regards to our project. Among our tenants are Roche Polska, Mentor Graphics and Kennametal Polska. This shows that large international corporations are interested in opening offices in Poznań and the number of them is steadily growing.”

Smaller tenants will likely be interested in Murawa Office Park. In its five three-story buildings on Murawa Street near Cytadela Park, to be completed by the end of the year, developer Alco Investment will provide more than 4,000 sq m of office space.

Meanwhile, the third stage of a development on Andersa Square by Von der Heyden Group is also under way. When completed in late 2011 or early 2012, the Andersia Business Center will offer tenants 14,500 sq m of office space. The first building developed by Von der Heyden Group on Andersa Square was the Poznań Financial Center, completed in 2001. The building, providing 18,500 sq m, was sold in 2004 to AIB Polonia Poperty Fund S.a.r.l. Andersia Tower, a multi-function building of 35,000 sq m providing office, hotel, retail and service space, was built in the second stage. In January 2008, the building was sold to Deka Immobilien real estate fund, owned by DEKA Bank Group. Andersia Silver will be the fourth and last building to be developed by Von der Heyden Group on Andersa Square. The value of the project is estimated at 90 million euros. Andersia Silver will provide 30,000 sq m of space and will be the highest building in Poznań. The developer has obtained planning permission and a permit from the Civil Aviation Office to construct a 116-meter-high building.

Retail Space: Malls Aplenty
Poznań has many pluses. The city is a large university center and is situated not far from the Polish-German border, a location which attracts the interest of German investors. Poznań is the best place to live in Poland, according to a league table compiled by the Przekrój weekly last year. Przekrój took into account such criteria as the number of places provided in preschools, educational standards, the unemployment rate, the state of local roads and crime levels.

Poznań offers a number of attractive spots where people can meet, have dinner and go shopping. One of the most interesting places of this kind is the award-winning Stary Browar (Old Brewery) Shopping, Arts and Business Center. Completed in November 2003, Stary Browar is situated in the city center at 42 Półwiejska St. The building, covering around 130,000 sq m, is housed in a converted old brewery. The investor was the Fortis company, owned by Grażyna Kulczyk. The building is home to around 210 stores and restaurants.

“Poznań is now relatively well saturated with retail space, especially after Galeria Malta opened last year,” says Bartoszewicz-Wnuk of Jones Lang LaSalle. “It has 516 sq m of modern retail space per 1,000 inhabitants and is no. 1 in the country in this respect. There is a similar situation in Wrocław, which has 515 sq m per 1,000 population. This does not mean, however, that new retail projects in Poznań are unprofitable. On the contrary, demand parameters, such as buying power—5,983 euros per person annually—are very strong in the city. And a project’s commercial success depends increasingly on its location and a new retail format.”

That is probably why shopping center developers are not scared of Poznań. The Inter Ikea Centre Group is working on the Bulwary Poznańskie project. This will be an open-air shopping complex of 40,000 sq m plus an Ikea store of 30,000 sq m. The stores will be located along streets lined with trees. There will be squares, open-air cafes and restaurants for visitors.

A new rail station with adjoining retail space is to be built in the run-up to the Euro 2012 soccer championships. The rest of the shopping center will be completed a year later. The Investor is TriGranit Development Corporation. The rentable retail space will be 58,000 sq m in total, with around 250 stores and numerous restaurants and services.

“We are sure the project will be a success,” says Aleksander Kowalski, director for space lease at TriGranit Development Polska. “One can hardly find a better location in the city. The rail station in Poznań is visited by around 11 million people a year. Retail chains also appreciate the importance of this place – no tenant we have been talking to so far has said ‘no’. The fact that locations in the center of a large city and close to a railway station are successful is proven by such projects as Złote Tarasy in Warsaw and Galeria Krakowska in Cracow.”

In terms of the most important retail premises in Poznań, Bartoszewicz-Wnuk points to King Cross Marcelin with 45,500 sq m and the Plaza shopping center with 30,500 sq m in the Pi±tkowo district.

“King Cross Marcelin is now being re-leased. It has a good position on the market so interest from tenants is high. Our customers often prefer existing shopping centers because opening a store in such a center involves lower risk,” Bartoszewicz-Wnuk says. “As regards Plaza, this is a shopping mall which is highly popular among local residents. They go there to do the shopping and go to the cinema. Poznań residents like to spend their time at Plaza.”

Warehouses: Tenants Value Poznań
In contrast to shopping malls, there is no oversupply of warehouse space. Poznań has always been a highly valued location on the logistics market because the city is well developed economically. Another important factor is the A2 freeway which runs near Poznań and is part of the international E-30 route from Berlin to Moscow.

In the first quarter this year, Poznań’s modern warehouse space totaled 753,000 sq m, according to CB Richard Ellis. More buildings are being developed in the Panattoni Park Poznań I distribution center in the village of G±dki, 13 kilometers from downtown Poznań next to the A2 freeway. The H&M clothing company, which has occupied 50,000 sq m in this location since 2007, has decided to rent another building at Panattoni Park Poznań I – a build-to-suit (BTS) facility of 30,000 sq m. The building, which is now under construction, will be the first facility in Panattoni’s portfolio with a wide range of environment-friendly features. Solar panels for heating water will be installed on the roof of the building. The building will be provided with a rainwater collection system. No PVC or foamed polystyrene will be used in the construction of the facility.

Panattoni Europe recently started the construction of another building at Panattoni Park Poznań I – an 11,400 sq m build-to-suit logistics center for the Neuca Group, which operates on the pharmaceutical market. Also among tenants at Panattoni Park Poznań is the Piotr i Paweł grocery chain and logistics companies Navo, Gefco and Dachser.

Homes: Buyers Remain Prudent
Poznań residents are stable in their preferences—nearly 35 percent of them would like to live in the Old Town, more than 20 percent in the Grunwald district and 21 percent in the Nowe Miasto district, according to the Home Broker real estate agency. Some 13.8 percent of Poznań residents would prefer to live in the Jeżyce district and more than 7 percent in the Wilda district. Home Broker has also reported that those surveyed are ready to spend zl.280,000 on average to buy a home. Prices of apartments on the Poznań market are stable and fell by a mere 1.4 percent last year. In August, the average apartment price per square meter in Poznań was zl.6,897, according to Home Broker.

Michał Dziarmaga, director of Metrohouse’s Poznań bureau, says that the city’s residential market is stable and resistant to speculation. “After the latest boom, developers who have maintained the high prices of that period have seen very slight interest in their projects. The same is the case on the secondary market – there is demand for properties which have market prices that suit the wallets of local buyers,” Dziarmaga says. “As in other regions, the largest number of deals is recorded on the secondary apartment market. Two- and three-room apartments delivered on a turn-key basis with a separate kitchen, to be occupied by the owner or rented out to students, are especially sought after. Jeżyce, Grunwald and Polanka are the most expensive locations, while Dębiec, Zawady and Plewiska are the cheapest. Poznań is open to investors and so developers are busy.”

Developer PBG Dom is completing another investment project in Poznań: the final finishing works are underway at Złotowska 51, a housing estate in the western part of the city. Located at the junction of Miastkowska and Złotowska Streets, the estate is a complex of multi-family buildings and service outlets with a total space of 3,450 sq m. It has 63 apartments, ranging from 29 sq m to 78 sq m in space in three two-story buildings, an underground garage with 62 parking spaces and storage rooms. The price per square meter is zl.5,990.

PBG Dom has started construction work on another project in Poznań – Quadro House. Located on Smardzewska Street in the Grunwald district, the housing estate will be composed of two residential complexes, each with four apartment buildings. The project will comprise 74 apartments, some of them on two levels. Each apartment will have a spacious balcony, wooden terrace or small garden. Quadro House will be a fenced estate with around-the-clock security and surveillance. The project is scheduled for completion at the beginning of 2012.

In early 2012, the first occupants will also move into apartments in the Rataje Inflancka estate, the latest project by UWI Inwestycje SA. The estate will be located on the outskirts of the Rataje district near the Malta lake. The lowest price per square meter is zl.6,341. The residential complex will provide 184 apartments with terraces and will be constructed in three stages. First, 56 apartments will be completed in building A. The remaining buildings will be completed by the end of 2012.

That year will be a good one for Poznań residents, who are now complaining of a shortage of apartments on the residential market. Nickel Development will also complete its residential project, Kamienica przy Teatrze, in 2012. The six-story building on D±browskiego Street will have 160 apartments. Prices start from zl.6,500 per square meter.

Magdalena Fabijańczuk

Anna Bartoszewicz-Wnuk, director of the research department at real estate services company Jones Lang LaSalle:
“Unlike in several other cities, the period when the economy was booming did not result in major projects in Poznań that the market today would be unable to absorb.”
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