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The Warsaw Voice » Special Sections » February 23, 2012
The Real Estate Voice
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The Market Still Has Potential
February 23, 2012   
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Peter Obernhuber, member of the board at developer UBM Polska Sp. z o.o., and Jacek Luzar, the company’s director for sales and marketing, talk to Michał Jeziorski.

UBM has been operating on the Polish market since 1993; that’s 19 years of experience. Where did this interest in the Polish real estate market come from?
Peter Obernhuber: Poland is simply a very attractive and promising market. We thought so at the start of our operations and we still think so today. Our flagship projects in Poland included the construction of hotels - Holiday Inn and Intercontinental - as well as an office building in the very heart of the capital, namely the Warsaw Financial Center. UBM in Poland is active on the commercial, hotel and retail real estate market and in residential real estate too. Currently UBM’s biggest project is the Poleczki Business Park office complex in Warsaw. This is one of the largest projects of its kind in Poland. Poleczki Business Park is Poland’s first business park combining multiple functions in one place. The complex includes office buildings, a hotel, an advanced conference and logistics center and a freestanding parking garage. Each office building also has separate storage space and parking spaces on an underground level.

Jacek Luzar: The cornerstone for Poleczki Business Park (PBP) was laid exactly a week after Lehman Brothers went bankrupt. The ceremony was attended by about 250 guests and half of them looked at us with unconcealed surprise that we were starting the project at such a time. In the project’s first stage we built two buildings with 45,000 sq m of total space. They were completed in March 2010 and are now 90-percent leased.

This encouraged the board to decide on the launch of the project’s second stage. Right now the facade is nearing completion and we will receive permission of use at the end of May. We have leased out more than 40 percent of space in the new buildings under pre-lease contracts signed while they were still under construction. By the end of this year we would like to see about 75 percent occupied.

Everyone is talking about the crisis but you say that office space is being leased out faster than it is being built.
P.O.: It’s true that 2008 saw a noticeably weaker interest on the market. However, we assumed that the best strategy for the crisis would be not to wait but to act. That was when we decided to launch our biggest investment in Poland. Anti-cyclical investing is our strategy. Thanks to this kind of approach we are simply quicker than our competition. When everyone waits, we build. The status and pace of occupancy of the office space we offer confirms that our strategy has been the right one.

Who are your main tenants right now?
J.L.: Our biggest client is the Agency for Restructuring and Modernization of Agriculture which occupies almost a whole building. The agency is renting as much as 17,000 sq m of space. This was one of the three biggest transactions on the Polish office space rental market in 2009. Pharmaceutical companies are showing a lot of interest in modern office space. One of our first clients was US Pharmacia, a manufacturer and distributor of medications. Another client from the medical sector is U.S. company Stryker, and our third client from the medical sector is Astellas Pharma. Poleczki Business Park is also home to companies such as KONE, Sharp, Kapsch, World Courier and PORR.

What does a business complex have to offer to attract clients?
P.O.: There are two fundamental factors that tenants consider: the price and the standard. Companies are economizing, so only main headquarters, head offices, the headquarters of company management are located in city centers. This is also where insurance and auditing companies are based. All the back offices, meaning all the operations of companies or institutions that don’t involve direct contact with clients, such as manufacturing, accounting, human resources and warehouses, are being moved to cheaper locations. To our attractive prices we also add a genuinely high standard. We apply environment-friendly technical solutions, our buildings are energy-efficient and all office spaces have access to daylight. Poleczki Business Park is the first office facility in Warsaw with LEED CS Gold environmental pre-certification. We also make sure we use high-quality finishing materials.

J.L.: Location is an important criterion for choosing an office. Poleczki Business Park is situated right next to the airport. This is important because when you look at the list of our tenants, most of them are companies with international shareholders whose employees travel a great deal. In the second half of this year, the S2 (connecting to the A2 freeway) and S79 (part of Warsaw’s beltway) highways will be completed close by, linking the airport to Puławska and Marynarska streets. Moreover, at our tenants’ request we run a free shuttle bus from Poleczki Business Park to Metro Imielin station. Poleczki Business Park is also a great location for companies thinking about their long-term development. As they grow, our tenants can rent new office space in successive buildings. This is an extremely important argument. Brokers often say moving is as bad as a fire. That’s why it’s better not to move too often but to develop within a single large park.
UBM is in the middle of a big residential project. Could you tell us about it?
P.O.: We are building an estate of single-family houses, Oaza Kampinos, in Małocice near Warsaw. On 32 hectares of land, we will build 209 high-standard single-family homes ranging in size from 190 to 230 sq m of living space. The latest technical solutions will be used. Among other things, all the buildings will have solar systems, wooden windows with high heat insulation parameters, wooden indoor windowsills and front doors fitted with anti-burglary systems. Oaza Kampinos is really a small town. Apart from homes it will also include recreational facilities like tennis courts and a gym, a health clinic, a preschool as well as stores and service outlets. This is a proposal for clients aware of the value of a high standard.

The scale of investment is impressive. It’s clear you look toward the future with great optimism. Do you predict an end to the slowdown on the residential market?
P.O.: We should try not to magnify the crisis, though of course we shouldn’t make light of the risks. The tendency now is that people who have money prefer to invest it in real estate rather than keep it in the bank as deposits. People invest in real estate for the same reasons they invest in gold or precious stones. Pessimism is never in great demand. Problems are there to be solved, and we should have this motto in mind also with regard to the crisis.

J.L.: We are pleased because most of our investments so far have been a success. There is still huge potential lying dormant on the Polish real estate market. In Warsaw we are slowly approaching 4 million sq m of modern office space. Vienna, a city comparable in size, has 10 million sq m of such space. If we compare Warsaw with London, the difference is several times greater. Poland is still short of 1.5 million homes. Even the next generation of developers will have their hands full.
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