Welcoming the competition

Is it important how big your customers are? Is developing warehouse schemes easier in Western Europe than in Poland? We discuss these questions with Hans van Luijken, the ProLogis Vice-President responsible for Central Europe and the head of the company in Poland

What is your opinion of the Polish market in the long and short term?
I am very optimistic.

I think with joining the EU there's going to be a lot of foreign investment coming here and a lot of western European companies will enter this market. There is great potential: not only in the industrial but also in the warehouse sector. I would expect a second wave of investment.

But some analysts say we shouldn't expect too much, because any companies that wanted to invest in Poland are already here.
Some are. But Poland has now passed the point of no return and that may encourage other foreign companies to come to this country. I think that some firms may now actually focus on Poland and Central Europe. The other point is that the enlargement of the EU allows businesses to expand. So those companies already here will probably invest more than they did before.

Among those firms coming to Poland may well be a new developer. Aren't you afraid of the possible increased competition?
I take all my competitors seriously, it doesn't matter if they're new or existing. Competition is always good for the market.

In Poland you are the biggest warehouse developer....
But that doesn't necessarily mean we are the best.

But you are still the biggest. This position may well change when somebody new comes to the market. Do you have such a strong position in any other country?
Well, we're still first throughout Europe and the States, which is why I say we never underestimate the competition. As long as you do that you can try and stay ahead of your competitors. Because when you say that you are the biggest and you can do anything you want, you stop improving yourself.

Can you compare tenants' expectations now, considering the quality of warehouse schemes, with when you entered the Polish market?
In the beginning, what was most important was that a customer had "a roof above their products". Now, efficiency is as important as the quality of the properties, so that maintenance costs might be reduced.

You tend to deal more with western companies. Does this mean that Polish companies can't afford to lease your schemes?
We co-operate with western companies because we have a global network of clients, that's obvious. But this doesn't mean that we don't deal with local companies. We do. We have a number of Polish tenants, for example in ProLogis Park Warsaw. And believe me - there are a lot of rich Polish companies which can afford to do business with us. But I see no point in making a distinction between Polish and foreign companies. You can find good partners anywhere. When the firm is looking for a warehouse - or any other product - the most important factor is the combination of quality and price. And management as well, because I think that the way we "care" for our property is important for tenants. Every company that signs with us is dear to me.

But isn't doing business with large companies your major aim?
No, we have customers who take up 3,000 sqm and 40,000 sqm but also 300 sqm.

Though when you sign a pre-lease agreement with a big customer you can start construction on the new scheme. So one would have thought you'd prefer dealing with them.
It is not a matter of who you prefer. Normally we start construction before signing any contracts. That's what is happening right now in Błonie and that's how we work everywhere. We are building schemes without first signing tenants. We buy a piece of land, build a building and then try to lease it.

It rarely happens on the office market that construction is started without a contract being signed.
But they need a lot more time for construction. We need only four to five months to complete the building. And it's up to the market - in Warsaw or in Poznań we are sure that the customers will come, so for us the risk is minimal. In the Central European market you don't lease until the building is up. Clients want to know how it looks.

Most of your schemes are based in central and southern Poland. Don't you plan to develop any in the eastern part of the country?
Potentially. We are following our customers, so if we see that there is demand in that part of Poland, we will develop a scheme over there. But I don't think of Poland as a hub, so the location near the eastern border is not that attractive. Poland is a big country with a strong internal market. Maybe its hub position will become more important, given its location between Germany and Russia, but the roads and infrastructure need to be improved. In my opinion, the Czech Republic is rather the local hub in this part of Europe.

You are considering developing schemes in Wrocław and Gdańsk. When could this happen?
We have learnt that in this part of Poland we need to find the customers first. Now we are finalizing the negotiations, so the market will see us moving in very shortly.

The Warsaw real estate market has been called "the dollar market" because this used to be the most popular currency here. What about the warehouse sector?
The prices in the Polish warehouse market were fixed in dollars because the first developers were Americans. Now with Poland entering the European market, it's much easier to quote in Euro. We started with dollars but we are in Europe and we are a European fund so we've gone from being a dollar to a Euro-denominated fund.

Do you believe that one day, developing schemes in Poland will be as easy as it is in Western Europe?
I never said it was easy. You know, everything is relative. In Western Europe developers also have to face problems such as bureaucracy and others. Otherwise, everybody would be in this business. But for us it's quite easy because we do it 24 hours a day, seven days a week. Some companies, for example logistic operators, prefer to develop schemes on their own. I have a lot of respect for them as I think it takes them a lot of time but I think regular developers could help them to avoid some problems. It's easier for us.