Where to set up shop

Targ Sienny and Targ Rakowy, Młode Miasto (Young City) on the site of the former shipyard and the birthplace of the Solidarity movement, and the warehouse centre in Gdańsk’s port are the pearls in the city’s investment crown. This coastal city will soon become one huge building site

Synergia 99 is the company responsible for managing the land of the former shipyard and the Targ Sienny and Targ Rakowy. Either site could be the location of Gdańsk’s most important multi-functional development yet.
Młode Miasto, the project to create a new district on the site of the former-shipyard, where shopping, residential, hotel and office buildings could all emerge from a sea of projects. All the land is already covered by development plans; while Synergia 99, which was previously the sole-owner of the plots, has found new partners.
Janusz Lipiński, president of the Synergia 99 – supervising operations for the former shipyard land – elaborates on the current situation: “We are negotiating the sale of 27-ha to the Baltic Property Trust
– a Danish investor; discussing a further 10-ha with the shipyard authorities; around
3 ha is held by Aluship Technology; 12.5-ha have been handed to the city for infrastructural and other public investments; and we are still left with around 20-ha of the 73 which we had when we started.” He is also negotiating with developer over the sale of around 2-ha in the industrial and services zone for a retail development. Helical Poland informed us that the letter of intent related to this had already been signed last year.
Janusz Lipiński estimates that developers will invest around EUR 300 mln in Młode Miasto over the next 10 years.

No plans to raze the lot
The first land-purchase agreements with the Baltic Property Trust were signed in April, and now thorough stock-taking on the bought land is currently under way. Revitalization is the main problem that the new owner of the most attractive section of Młode Miasto has to tackle.
Tomasz Tromer, director in Poland of the Baltic Property Trust group, adds that: “The easiest way would be just to raze everything to the ground and put up new buildings on the empty space. But our group intends to make explicit reference to the specific history of the city and retain as many of the old buildings as is humanly possible.” BPT will be investing in Gdańsk in two stages. The first move will be to purchase a 4.4-ha plot on which multi-functional buildings will be constructed. The second stage will be to buy independently operating firms that manage 22.3-ha of land used for various purposes.

Dave Gilmour Show
BPT is also looking for partners for commercial ventures. The fund’s central strategy is to sell interested developers plots for residential and hotel investments. Tomasz Tromer remarks: “Since the Młode Miasto project is of an open nature for both local and international developers, we are systematically analysing and talking to the best among them. It is BPT’s practice not to reveal who it is presently negotiating with, one reason being that a number of these companies are registered on the Stock Exchange.” He envisages that the final stage of the process for finding partners will begin in the second half of September and conclude at the year’s end. One such company will probably be TK Development, with which Synergia 99 signed a letter of intent in 2005 for a joint investment on this land.
It is still impossible to set a precise date for the on-site work to start and for a  timetable for the construction of individual buildings. Some investment executives have even jokingly remarked that the most interesting and important event for Młode Miasto was the concert by Dave Gilmour, a member of the legendary Pink Floyd group, held in Gdańsk on August 26th.

If not Młode Miasto...
It might prove to be more feasible to start developing a multi-functional complex at Targ Sienny and Targ Rakowy, which would give body to what ING Real Estate has been planning for years. The developer signed the first letter of intent to develop the property in 2000. The plan was to develop for example 60,000 sqm of retail space, 23,000 sqm of offices and 14,000 sqm of residential space on the 6 ha site. At present the city has set out the details of the investment with the PKP (Polish State Railways). The local spatial development plan has also been approved, with the tender to be announced probably by the year’s end.
Alan Aleksandrowicz, manager of the Gdańsk Business Services Centre reveals that: “We are currently preparing the competition materials, which will take about another 2 to 3 months. Our desire is for investors taking part in the tender to be given a clear picture of what they will have to do and what they can expect. We decided that no special invitations would be sent to investors and so anyone who wants to will be able to take up the gauntlet.” ING Real Estate, AIG Lincoln and TriGránit of Hungary have all expressed an interest in this investment.

Any customers?
The two locations are enormously attractive, being near the Old Town and the crowds of tourists it attracts. But will the effort involved be really worthwhile?
Marek Noetzel, a negotiator in Cushman & Wakefield’s retail department, believes that: “The success enjoyed by the Madison mall, which does not have as much to offer as other shopping centres, is evidence of the huge need for such modern shopping space in this part of the Tricity. And it must be borne in mind that Gdańsk should never be treated as one city since it constitutes a single entity together with Gdynia and Sopot. I am sure there is still room for one more large shopping mall, even of the scale of Galeria Bałtycka. But should two centres appear situated too close to one another and of similar functions and scale, it may prove to be just too much for the purchasing power of Tricity residents. In my opinion each such centre should be targeted at completely different customers, one of which could be designed as a retail park.”
There is around 360,000 sqm of modern shopping space in the Tricity at present, 230,000 sqm of which is in shopping centres. The largest of these are Madison, Alfa and the Ikea retail park Matarnia in Gdańsk and Klif in Gdynia.
Marek Noetzel adds that: “According to our estimates, these three new projects: Galeria Bałtycka developed by ECE, buildings on the former shipyard and Targ Sienny and Targ Rakowy, will supply a further 190,000 sqm of space to the market. These figures surely speak for themselves.”

Warehouses picking up
The local powers-that-be also wish to create a logistics centre of around 130 ha, between ul. Sucharskiego and the sea, to be built by Hochtief under contract to the GTC Gdańsk Deep-Water Container Terminal in Port Północny.
Gdańsk city council, the Pomeranian Special Economic Zone, the port and a group of British developers from DTC, signed a letter of intent this April for this purpose. Alan Aleksandrowicz explains why: “We want to create a warehouse back-up facility for the container terminal under construction. The letter of intent says this land is to be included in the SEZ as well as a duty-free area. The British developers are now carrying out the necessary geodetic work on this spot. After that we shall have to draft a cost estimate.”
Investors are no longer frightened off by the impoverished Tricity warehouse market. The first company to boldly tackle the problem was Biuro Inwestycji Kapitałowych, which is developing a complex near Gdańsk.
Michał Koszany, the board president of Biuro Inwestycji Kapitałowych describes the history of this project: “We purchased land in Pruszcz Gdański in 2001, but we are only now noticing interest on the market. There is no modern warehouse market here at present. The boom which began in the country’s centre and then reached southwards has arrived here at long last. The construction of the A1 motorway will also have a positive impact on this land.”
Prologis is also entering the fray in the Pomeranian region and has bought a plot in the region of ul. Kartuska and ul. Maszynowa. The corner stone should be laid in September, after which a park with 5 buildings will be built, providing more than 88,000 sqm of warehouse and office space.
   z Ewa Andrzejewska
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