Shedding an image

Logistics investments have finally come to Gdańsk. The location had been avoided like the plague by warehouse developers, but is now beginning to attract them at last

Gdańsk has only been able to look on enviously as the modern warehouse market grew rapidly in Poznań, Wrocław and, recently, in Łódź. But the situation may soon change with Gdańsk having an opportunity to grow into a logistics Mecca – at least so claim the city authorities.

 According to Alan Aleksandrowicz, the mayor of Gdańsk’s authorized deputy for serving businesses: “The city boasts excellent pre-war warehousing traditions, which have been pushed into the background in recent years. But I feel sure we will soon no longer envy Wielkopolska, Silesia and Łódź, since an increasing number of modern warehouses are being developed in the Gdańsk conurbation, for example by LPP, DHL and the Polish Post Office. Investors are also showing an increasing interest in developing projects for leasing.

Kokoszki gets the nod

 The logistics complexes of Biuro Inwestycji Kapitałowych (BIK) and ProLogis are two investments that now provide modern warehousing space. BIK purchased land in Pruszcz Gdański back in 2001, but only last year felt that the market had matured enough for it to begin the planned development.

Mirosław Koszany, the president of Biuro Inwestycji Kapitałowych, brings us up-to-date with their Gdańsk investment: “We have just completed the project in Pruszcz Gdański. Following the recent signing of another contract for 3,700 sqm with Crown Packaging Polska, we are left with only 2,800 sqm unoccupied of the 10,000 sqm total space.

I think we should award high marks to the leasing process since, in my view, Silesian and Kraków developments are generating greater interest.”

ProLogis was the second operator to brave the TriCity market, announcing in 2006 that it had purchased land for EUR 5.6 mln in the Kokoszki district near ul. Maszynowa and ul. Bysewska. The cornerstone was laid in September 2006 for 2 halls with a total space of 35,800 sqm. The eventual target is to build an 88,000 sqm logistics park at a cost of EUR 36.4 mln.

Wojciech Kosior, ProLogis’ leasing manager, reveals that: “We delivered two buildings in March, more than 16,000 sqm of which have also been leased to 5 customers, with negotiations well advanced with 4 more customers, and the talks expected to conclude within a matter of weeks. Since the demand for ProLogis Park Gdańsk’s warehouse space continues to grow, the construction has gone ahead of two more halls with combined space of 35,800 sqm. The location of the investments has proved to be spot on.”

Good neighbours

 Gdańsk’s powers-that-be are convinced that the investment of this international player will energize the region and become  a magnet to other developers interested in warehouse projects.

Alan Aleksandrowicz points out that: “The ProLogis centre has raised the value of land in Gdańsk situated near the TriCity circular highway. The city owns land near this centre, an area of around 57-ha reserved for a special economic zone. But we are now considering whether some plots should be sold for warehouse investments.”

Containing excitement

 A really valuable jewel being polished by the Gdańsk authorities is the so-called Pomeranian Logistics Centre, on around 200-ha of land near the under-construction Deep-Sea Container Terminal situated between ul. Sucharskiego and the sea. The parties interested in this project, i.e. the city, DTC of the UK, the Pomeranian Special Economic Zone and the Gdańsk Maritime Port authorities, signed a letter of intent last year. The plan is for the centre to be taken by the Pomeranian Special Economic Zone, while a duty-free area would operate within it.

The official representative of Gdańsk city states that: “The land where the large warehouse facilities for the Deep-Sea Terminal being under construction in Gdańsk is the city’s property, though it is within the port’s administrative borders. The port has the right of pre-emptive purchase of this land, but I cannot imagine them being used for any purpose other than as a logistics complex.”

The DTC Hub company of Gdańsk is presently surveying the land and is to present its findings to the city by the end of this month. The City Office will then evaluate the site, while a feasibility study of the project will be undertaken on the basis of the estimates. In practical terms, the first investors could begin work before the end of the year.

Biuro Inwestycji Kapitałowych’s president explains, however, that: “The key issue will be the form of ownership of the delivered sites. 10-, 20- or even 30-year leases are sure to cool investor enthusiasm. The reason is simple – problems with financing the venture. Banks are unwilling to deliver funds should the company not possess suitably secure rights to the land.”

The matter must remain open for the moment, since the city authorities have not yet decided on the form that the land transfers are to take.

In the opinion of Alan Aleksandrowicz: “If these are so-called virgin properties, then sales cannot be excluded. If investors are interested only in sites with technical systems ready for investments, then we shall attempt to rather lease or set up joint ventures, thereby creating a target company in which the city will give the land as its contribution. No matter what, we will try to be flexible.”

A public-private partnership could represent another possible foundation for cooperation with private capital – an idea that was suggested during negotiations with developers.

A Slough Estates Polska official, remarks that: “The growth of Dublin port regions can serve as a fine example of how a city’s neglected coastal areas can be developed. Slough Estates Polska has for a long time been expressing interest in land in the Gdańsk region.

Błażej Ciesielczak, the head of development of Slough Estates Polska, stresses that: “The TriCity is a really interesting region as regards logistics and has been treated for years as a window on the world of trade, although its poorly developed road infrastructure has effectively cut it off from the rest of the country. I am sure that the investments from the one or two developers already present in the region will not saturate the market and we shall see rapid growth, in terms of both supply and demand.”

Important infrastructure

 The funds obtained by the city for the Pomeranian Logistics Centre project will be used to additionally finance the development of the Trasa Sucharskiego route linking Port North with national highways and the A1 motorway. The project is also to include the construction of tunnel under the Martwa Wisła river,  which will connect both port sections and cut the travel time through Gdańsk. The majority of the finance required for such a huge investment will come from EU funds, but between 15 and 25 pct of the costs will have to be covered by the city. Construction of Trasa Sucharskiego will probably get underway in 2008.

But that is only one of the key investments needed to ensure the success of the PLC project. The building of the A1 motorway section will also be of fundamental importance (to be carried out by Transport Ministry finance) as well as railway links.

Alan Aleksandrowicz reveals that: “This year we shall be finishing the construction of a ramp at the loading terminal. PKP Cargo is also interested in contributing to the development of the Pomeranian Logistics Centre.”

Making Hamburg and Rotterdam uneasy

 However it will be the container terminal itself, which is now nearing completion, that will play the major role in the whole project. It will handle its first container vessel in June. Expectations are high for the growth of the terminal and it is expected to account for a large slice of the cargo handling cake which is currently the preserve of Hamburg and Rotterdam. Paweł Piasecki, development director of Lambert Smith Hampton, expresses another opinion: “The plan is ambitious and I think Gdańsk will not find things easy, to say the least. In my opinion, Port Północny (Gdańsk’s north port) is not and will not be the best place for retailing goods.

A more optimal location would be central or southern Poland.” But at the same time he admits that the local market does generate a demand for modern warehousing.

Paweł Piasecki also offers the opinion that: “The ultimate warehouse potential of the whole of the TriCity is some 350,000 to 400,000 sqm. Considering that only two modern projects exist in the region, the expansion possibilities are certainly substantial.”