Do It Yourself

The Allianz Polska Group will move into the Topaz building, developed by Globe Trade Centre. Ernest & Young are taking their offices to Rondo 1, developped by Hochtief Project Development. Compensa decided to cooperate with Karimpol and chose the Mistral office building. Those three large rental contracts in Warsaw, respectively 11,000, 11,000 and 4,500 sqm, have in common the fact that they were concluded without an estate agent. Andrzej Lany, Karimpol Marketing Manager remarked that he treats that rather as a coincidence and not an expression of developer disgust towards agents. To which Jarosław Gorzko, Skanska Property Poland Marketing and Sales Director, retorted that it was no accident and added that he knows of several lease deals to be soon signed, also without estate agents.

He who knows the market

Jarosław Zagórski of Cushman & Wakefield Healey & Baker says he is able to imagine one reason why a developer might avoid working with an agent when concluding a lease - and that is the need to pay a fee for performed service. But he added that he cannot understand why tenants avoid agents. The presence of a consultant guarantees that a contract is negotiated at market level, i.e. the tenancy fee which will have to be paid will be at a level comparable with rents for similar spaces in similar buildings. An agent can also ensure tenant security in the contract. In addition, the consultant has experience in negotiations and has greater opportunities to receive a better offer than a customer who does not deal in such matters daily. Paweł Dangel, Head of Allianz Polska Group stated that when he decided to move his firm from Europlex to Topaz he did not employ agents because he knows the Warsaw office property sufficiently well. But he added that agents assisted when choosing the company's present premises in 1998, which resulted in him getting to know more than a dozen buildings in Warsaw.

Do It Yourself

The Allianz head said that the nightmare of six years ago when he was flooded with offers and proposals from developers, was justified in the final account since it let him acquire a knowledge of the market. If one adds that the department responsible for searching for a new office annually signs and manages dozens of leases in Allianz buildings throughout the country, the antipathy he feels for cooperation with agents is understandable. Paweł Dangel went on to say that he feels that lengthening the chain of persons occupied in the processing of rental space is not conducive to the rapid conclusion of contracts. Jarosław Zagórski of C&W H&B openly opposes such a point of view. He retorted that increasing the number of persons involved in a transaction does not extend the decision-taking process. Agents are usually not paid for the hours they work but rather for the final effect, which is why they want to get contracts finalised as quick as possible. They frequently encourage their mandators to speed up their decisions.

An agent often guarantees substantiation of intent...

Jarosław Gorzko of Skanska Property Poland highlights the fact that companies looking for offices are often "doomed" to cooperate with agents. Some large firms - he remarked - have written in their regulations that consultant services must be used when selecting office premises. In theory that ensures an unbiased choice of the best offer on the market. Jarosław Zagórski of C&W H&B is of much the same the opinion, stating that the use of an agent can ensure his mother-company that the whole transaction has been properly performed. Should any criticism be expressed as to this or that decision concerning a firm's location, that can be directed at the consultant.

...but he gets the money.

Both Andrzej Lany of Karimpol and Jarosław Gorzko of Skanksa Property Poland contest the claim of Jarosław Zagórski of C&W H&B that a tenant cannot lose on employing an agent. Their remark is that both the tenant and developer benefit when concluding transactions without agents. The developer does not have to pay for consultant services, designating the savings to creating a better offer for the tenant. But that is significant only when agents demand large remuneration, which was the case recently on our market - added Andrzej Lany. How much does an agency want for its services? If it is collected from a developer it usually fluctuates around the value of a one-month rent. But if the agent represents a tenant, then it all depends on individual decisions. None of the agents we interviewed agreed to tell us exactly how much their services cost, but returned the ball by calculating just how much it would cost a tenant to look for an office on his own. An agent who wished to remain anonymous said that were the president of a whole insurance group engaged to a certain extent in a transaction between Allianz and GTC, also his assistant to a large extent, as well as the director and employees of the administration department, the total cost would amount to several hundred thousand zlotys - taking their daily duties and earnings into consideration.

But is there no place for outsourcing?

We have to admit that the contract between Allianz and GTC aroused the greatest comments by agents among all the transactions mentioned at the beginning. Ernst & Young who independently negotiated the contract with Hochtief Project Development has a property department which renders consultancy services to third parties as well. But Allianz's principal operations are related to something completely different. The person we talked to said he cannot understand why a firm which usually farms out all services has decided to go through, on its own, a process of choosing a new main office which is of such importance. What certainty can the Allianz management have that the best possible conditions have been negotiated? Paweł Dangel, President of Allianz Polska group thinks that using a developer's services is the purest form of outsourcing. That apart, negotiations on space renting are normal business negotiations. GTC offered the lowest rental price, together with service charges. The building met the company's requirements as regards space. "It is situated near Galeria Mokotów which ensures the workers adequate catering and service facilities. We shall also have parking lots in our building, with workers being able to use the garage in this shopping centre," - enumerates Paweł Dangel - while also drawing attention to an unusually important element: GTC is not getting rid of its office properties which means the firm will be able to plan daily existence with it for the next 10 years. And we also enjoy the right of pre-emptive purchase should the office building every be offered for sale - the final remark delivered by the Board President of Allianz Polska.

But cooperation does exist

Despite the mentioned cases of concluding contracts directly with tenants, developers do not turn their backs on cooperating with real estate agents. Andrzej Lany of Karimpol admits that he rented independently around 30 percent of the space in his buildings, the rest being filled by agents. The Karimpol marketing manager added that agents perform valuable work in consulting both tenants and developers.