Rising stars?

Lubuskie is not in the national economic premier league, but should be regarded as a \\\'half-full glass\\\', where there is much to be done and money to be made

Gorzów Wielkopolski and Zielona Góra are respectively Lubuskie province\\\'s national administration and local government capitals and also its principal economic centres. They are similar in many respects, even to the extent of being represented by two identical stars in the region\\\'s coat of arms. Their strong points are their proximity to Poland\\\'s western border, their well developed and maintained road network, and their educated and inexpensive specialist personnel, as well as the friendly local authorities who welcome every investor warmly and enthusiastically.

Major shopping malls poised to enter
Both cities contain hypermarkets and small shopping centres, with the latter mainly having been brought into existence by local investors.
Three supermarket chains have already established themselves in Zielona Góra: Auchan, Tesco and Carrefour, each retailing on an average shopping area of around 8,000 sqm. There are also several small shopping centres (for example, Meteor, Grafit and Ramzes), which mainly house boutiques. Generally these are in 2 or 3-storey buildings with an average total area of 3,000 sqm.
There are two Tesco hypermarkets and several shopping malls in Gorzów (Panorama, Park 111 and Galeria Młyńska) of a size approaching those in Zielona Góra.
But large shopping malls are poised to enter both cities. Caelum, an Irish company, was given a building permit a month ago to develop an Askana shopping and entertainment centre in Gorzów. The history of this project began a year ago, when the RTC Mysłowice company belonging to Raiffeisen Evolution Project Development of Austria was given permission to develop a centre to be called Ferio in the same location. However, the project never saw the light of day, and RTC - as well as the land and the building permit - were bought by the Irish investor. Jacek Semeniuk, REPD\\\'s marketing director was more than a little vague when explaining the reason for pulling out of the investment: "The Caelum-designed shopping centre was more attractive and contained elements which had no place in our plans. And it must be stressed that Raiffeisen Evolution, as a developer, sells investments at various stages of implementation."
Galeria Askana will have a total space of 46,000 sqm and will contain 7 interconnected shopping and service buildings, a car park for more than 500 vehicles and an internal, glass-roofed passage-street of 3,000 sqm. It is being constructed on the place where a defunct meat-processing plant belonging to the Province Agro-Industrial Enterprise once stood, and is scheduled to open in the autumn of 2007. Agnieszka Tomczak-Tuzińska, Caelum\\\'s marketing director, informs us that: "The demolition work by Interbud-West of Gorzów has now been carried out. We shall start work on the building site when the winter finally lets up." The investor had already closed the tender for the general contractor when this issue of Eurobuild Poland was going to the press, but refused to say who had been chosen. We have learned, however, that the developer of the PLN 120 mln investment is the Ewaco company. Ms Tomczak-Tuzińska also informed us that the commercialization of the mall is almost finished. A 5-screen cinema with 1,200 seats is to be opened by Kinoplex, there will be a Bomi delicatessen store (2,100 sqm), and the centre will house around 100 retail outlets, as well as 10 cafés and restaurants. Places for the top chains have been reserved in the tenancy plan, as well as for local businesses.
A 2-level shopping centre is also going to be built in Zielona Góra - also on the ruins of a behemoth  dating from the time of the People\\\'s Republic of Poland (the Polska Welna textile mill). This is Focus Park Zielona Góra, with a total area of 48,000 sqm and with 600 parking lots. Agnieszka Drucis, marketing and PR director of Parkridge CE Retail tells us that: "The centre will have 30,000 sqm of rentable space, of which 60 pct has already been commercialised." The Alma supermarket (2,200 sqm) and the Cinema City multiplex chain (2,300 sqm) will be the principal tenants. The cornerstone laying ceremony for the investment valued at EUR 43 mln is planned for this month, although in March it had still not been given a building permit. Halina Łowejko, the Zielona Góra city architect, assures us that should the documentation be complete and should no unforeseen circumstance occur, the city office will need no more than 2 to 3 weeks to issue the permit. The investor is also giving assurances that Focus Park will open for business in 2007.

Super-fine finish
At present, no office buildings for rent are being constructed in Lubuskie province. New, small-scale office space is being built at shopping centres or is being accessed by companies that have excess space in their own office quarters. Properties dating to the 1970s and 1980s, which once belonged to large state-owned enterprises, still dominate the office sector. These have usually been fundamentally upgraded but, when compared with office centres in larger Polish cities, can only be classified as being of average standard at the best. The rents for such space in both cities are between PLN 12 and 15 per sqm (plus media). Jerzy Strzelczyk, director of the property management office of the Zielona Góra based Zastal works, once a world leader in railway-wagon production, stresses that: "We reserve the right to introduce annual increases in rent value in the contracts we conclude, but have not done so for the past 3 to 4 years." The company presently occupies 2 levels of its 8-storey office building, renting out the remaining 1,700 sqm. The Gorzów \\\'Stilon\\\' artificial fibres plant is in a similar situation, earmarking the whole of its 7-storey office building (2,400 sqm) for renting. The most modern Gorzów office space (around 1,000 sqm each) is in 2 shopping centres commissioned at the turn of 1999 - Park 111 and Kaskada. The only skyscraper in Gorzów, known as the Watral Centre, is the only typical modern office building in the entire Lubuskie province. Ryszard Watral, a local businessman, bought the then dilapidated student hostel building of the Physical Training Academy from the city, and went on to open a 15,000 sqm, 12-storey building in 1999 on the same spot. The tenants have access to a 1,100 sqm underground car park, with 2 further storeys earmarked for commercial trading (5,000 sqm), while the remaining space is taken up by offices. In 2002, the JDI company with American capital purchased the property, renaming it the Atlantic office building. Jacek Oraczewski, the manager of the Atlantic building, informs us that: "The net rent per sqm is PLN 25 plus media."
Average occupancy in Gorzów office buildings is around 50 pct, whereas the lower supply of such space in Zielona Góra means that the occupancy there is much greater, in fact between 90 and 95 pct. However, there is a large number of vacant offices in lower and smaller buildings in both cities, with space being easily available in tenement buildings for PLN 10 to 15 per sqm.

Anything goes
There is a dire lack of homes in Zielona Góra. The primary market is sluggish with individual several-storey blocks of flats being only sporadically constructed, in which the apartments are sold as soon as they appear. In one case, a property with 30 apartments developed by the Zacisze housing cooperative was sold out within one hour this January. Zacisze\\\'s vice-president Andrzej Nyćkowiak reveals that: "1 sqm costs around PLN 2,300 gross, which was PLN 100 more than in the block sold last September." Other local developers put a price of between PLN 1,800 and 2,700 net on their living space. The high demand for homes has brought a virtual state of siege to the secondary market as well. Sales offers are snapped up immediately in estate agencies as soon as they appear, with the best being sold exclusively under the counter. The data we were shown by the Lubuskie Estate Agents Association shows that the price per sqm last year rose 30 pct and today is around PLN 2,000 on average. The per sqm price for a second-hand home can approach and, in some cases, even exceed that for a new apartment.
The Gorzów market is almost identical. Ewa Jusiel-Bujnowska, owner of the AD Dr±gowski agency comments that: "The price per sqm of a good-standard apartment in a new block (less than 5 years old) reached PLN 2,500 and 2,000 in older prefabricated-concrete buildings." As in the case of Zielona Góra, local developers are erecting single buildings mainly in already existing estates. Górczyn, one of Gorzów\\\'s largest housing cooperatives last year developed a single block with 55 flats (PLN 1,900 sqm gross in an unfinished state) and intends to construct another one this year. Tadeusz Piotrowicz, president of Górczyn housing cooperative, remarks that: "We sell half of the flats while the building has still not emerged above ground, with the rest going during the next 8 to 10 months."
Jolanta Herma, head of the Construction Administration Department of Gorzów City Council, claims the supply of new space is insufficient since local developers do not have sufficient capital for large investments, the finance generated by selling flats in one block being immediately invested in the next building. In Zielona Góra, too, sufficiently affluent investors just do not exist, with the problem of the city\\\'s location causing another headache: Zielona Góra is 46 pct afforested, with woods surrounding the city on all sides. Since most forest glades have already been developed, larger constructions require substantial funds for the felling of large amounts of timber.

Secure development zones
There is a noticeable lack of modern warehouse and logistic properties available for rent in Lubuskie Province. Companies either commission buildings for their own use or rent space in existing facilities, mostly within large production plants.
The most recently constructed industrial plants in Gorzów are mainly in the Kostrzyń-Słubice Special Economic Zone, which has existed since 1997 and includes locations in eight Lubuskie cities and seven in two other regions in the provinces of Wielkopolskie and West Pomerania. This Special Economic Zone occupies a total area slightly more than 800-ha, with around 350-ha still waiting for tenants. The Zone offers investors both land with comprehensive technical media systems and tax concessions. Artur Rosiak, a specialist employed for the marketing and promotion of this Special Economic Zone, summarizes the present state of affairs: "A total of 100 operating permits have already been issued - 4 this year and 24 throughout the whole of last year. 32 companies have already started doing normal business." The total cost of all investments made within the Zone is estimated at more than PLN 1 bln, the largest investors being the ICT Poland paper consortium and Podravka (Kostrzyń Subzone) of Croatia, as well as Inter Groclin Auto (Nowa Sól) and Volkswagen Polska (Poznań).
The Economic Activity Zone of Zielona Góra has existed for more than a year and covers 75-ha of land. The zone is excellently situated at the intersection of national highway no.3 (future motorway A-3) and the city\\\'s northern ring road. The land has been equipped with all the necessary technical media systems and divided into plots by the city, to be immediately leased to 10 companies established by tender. A local company Stelmet became the largest client and has opened a plant manufacturing garden architecture elements on an area of 30-ha. The land proved so commercially attractive that Zielona Góra\\\'s city authorities have opened negotiations with the State Forests Head Office to clear a further 200 to 300-ha to allow the Zone to grow. Should the City Council approve the project to increase the Zone\\\'s size before this year\\\'s spring season ends, the city will be able to apply for an EU grant to purchase and equip the land with media systems, and then to start work on further investments.

Tomasz Cudowski