Teenage development

Slovakia is soon to celebrate its 15th birthday. It is now regarded as a country that has successfully transformed itself into a modern economy, with impressive annual growth in GDP of around 7 pct

The country has already stolen a march on its CEE neighbours by becoming a member of the European Exchange Rate Mechanism (in the region, only the Baltic states have also joined), and is planning to enter the Eurozone at the beginning of 2009.

Slovakia has a population of 5.38 mln, of which 450,000 live in the capital Bratislava. The only other city in the country with more than 100,000 people is Kosice (235,000 inhabitants) in the relatively impoverished east of the country. Banska Bystrica, which lies between, is Slovakia’s third city, with 81,300 people. Unemployment is high, standing at around 12.8 pct (only Poland has a higher rate in the EU). On the other hand, average salaries are the lowest in the CEE region.

The office sector

Bratislava is the only city in the country which is currently regarded to have class ‘A’ office space, of which it could boast around 432,950 sqm at the end of 2006. This amount of space is rapidly expanding, with an extra 280,000 sqm expected to come onto the market by the end of 2009.

One feature of the Bratislava office market is the strong showing of local developers such as J&T Global, IPR and HB Reavis. It is the latter of these that will be responsible for a great deal of the new stock coming to the capital, as it is planning to develop 20 buildings over the next 10 years with a combined area greater than 250,000 sqm. This year it completed the development of the first 2 buildings of the City Business Centre on Karadzicova street in Bratislava’s CBD, bringing 39,000 sqm on to the market, with Slovak Telecom having recently signed a leasing agreement for 11,000 sqm. The next 2 buildings in the complex are scheduled for completion in 2008, adding another 67,000 sqm to the capital’s office stock. In the same year, HB Reavis is also hoping to complete Aupark Tower (29,130 sqm and part of the developer’s Aupark shopping and entertainment complex in Bratislava 5) and Apollo II (30,000 sqm) on Prievozska street in the CBD. The developer has also just begun the development of the 185,000 sqm Twin City multifunctional centre to the east of the CBD, of which 55,000 sqm is to be office space, as well as 66,000 sqm of retail and 21,000 sqm of apartments. This project is expected to be completed in 2011.

But there is also a foreign contingent of developers that have been attracted on to the Bratislava office market. In the Nove Mesto district of the city, TriGranit of Hungary has begun the EUR 52 mln phase 1 of its EUR Lakeside Park complex – a 20-storey tower which will provide 24,800 sqm upon its expected completion in 2009. The company claims that the entire complex will eventually contain 90,000 sqm of office space. Irish developer Ballymore has also started work on phase 1 of the Eurovea International Trade Centre. This phase of the multifunctional project to regenerate the city’s harbour area is expected to be finished in 2009 and is to cost EUR 270 mln. As well as 23,000 sqm of office space, the project will feature the country’s largest shopping centre and a Sheraton hotel. Another mixed-use development is soon to come from UK-based Europa Capital’s Slovak partner, Convergence Capital. This is the Park One complex on Kollar Square in the city centre, and is to be completed this year, adding 12,650 sqm of office space to the capital’s supply.

The retail sector

Slovakia currently has around 600,000 sqm of modern retail, 300,000 sqm of which lies within Bratislava, which also has 200,000 sqm under development. Amongst these pipeline projects is the 14,000 sqm second phase of the Aupark shopping complex is soon to be opened, which together with the existing space (the centre was opened in 2001) will have a leasable area of 43,900 sqm. HB Reavis is now planning to develop a chain of Aupark centres across the Slovakia’s secondary cities, and already has a pipeline project in Zilina in the north of the country – Aupark Mall. This 24,000 sqm centre is likely to be ready in 2009. The frimhas also bought land in Kosice, Trencin, Ruzomberok and Piestany.

Hanno Soravia’s Palace Shopping Centre, which opened in 1995, is currently being extended to 88,000 sqm (including the Tesco supermarket), with the new section to be opened in 2008. Also next year, Yosaria Plaza – by the developer of the same name – is to open in the Ruzinov district of the city, which is to hold 33,000 sqm of leasable space and 250-300 retail/leisure units. Further into the future, the shopping centre that forms part of the Eurovea project – Pribina Galleria – will bring 55,000 sqm of space to Bratislava’s retail market in 2009, as will IPR’s shopping section at the city’s main railway station in 2010. In the same year the developer Lordship is hoping to complete the 40,000 sqm Kamenne Square centre between Rajska, Spitalska, Dunajska streets, construction work on which is to begin in 2008.

As with office projects, Slovakia’s major retail schemes are concentrated in the capital, on top of HB Reavis’ plans for retail, there are now signs that these are going to come to provincial cities in a more significant way, after the largest retail project to date in the regions opened this year – the 37,500 sqm Europa Shopping Centre in Banska Bystrica from VAV Invest/Europa SC.

The logistics and industrial sector

Mirroring many of the countries in the CEE region, Slovakia’s industrial and logistics developments tend to cluster in the west of the country, taking advantage of the greater proximity to more established EU markets – and in this country’s case, close to Bratislava. At the end of 2006, the stock of existing warehouse space stood at 420,905 sqm for the Bratislava region, out of 805,405 sqm for Slovakia as a whole.

In the town of Malacky, which lies on the D2 motorway between Bratislava and the Czech border, HB Reavis has begun the development of the Eurovalley industrial and technology park, which will have more than 1 mln sqm of space. Closer to the capital in Trnava, the same developer has also started work on a 240,000 sqm complex. Pinnacle/Merrill Lynch is also developing the Westpoint D2 Distribution Park nearby, which will provide another 85,000 sqm of logistics space.

Along the D1 motorway to the north of the capital can be found HB Reavis’ 35,000 sqm logistics park in Svaty Jur, which opened this summer. But it is the town of Senec 25 km from the capital that is attracting the most interest from industrial developers. Here ProLogis has completed app. 115,000 sqm of ProLogis Park Bratislava (34,000 sqm was added in July), and now has a further 26,000 sqm under construction. Karimpol also has a 65,000 sqm project in the town. In addition to this, UBM of Austria last year finished the development of 15,000 sqm of Senec Cargo, which has the possibility to be extended to 50,000 sqm over the next 2 years.             n

Nathan North