Thesis and antithesis

Investors are still viewing the Polish property market, and that usually means Warsaw, quite optimistically. When we compare Warsaw to other cities in the CEE region, it continues to come out on top. Comparing the Polish capital to the unquestionable stars of Western Europe, such as German cities (Munich, Berlin), Paris and London (even though the opinion is growing that properties over there are overpriced and the retail space sector is struggling), Warsaw looks good against this background - this was the appreciative view of Joe Montgomery, the CEO of the Urban Land Institute, an industry organisation that has just opened its Polish office, as he opened this meeting of the office sector. Over 140 people gathered at Warsaw's InterContinental hotel on April 11th for the conference, which was chaired by Nathan North, deputy editor of 'Eurobuild CEE' (English version).
If the market is doing as well as the representative of ULI made out, the conclusion is simple: developers are building, tenants are renting and investors are buying. However, in order for the entire chain to work you need to find the financing for new projects. Skanska Property and Echo Investment's approaches respectively involve employing own funds and bond issues: two companies and two different solutions. Which of them is easier to implement, cheaper and more popular? Agata Skowrońska-Domańska (Skanska Property Poland) discussed the advantages (which include land purchases at any given time) and disadvantages (freezing the funds for at least a few years, taking on the risk of the construction process) of the own capital solution. This was followed by the pros (using a mechanism similar to a working capital facility) and cons (much effort invested in acquiring the business entities interested in the purchase, the return of the funds with no possibility of rolling, the high cost of the capital acquired) of bond issues, which were presented by Grzegorz Iwański (Echo Investment). A discussion, on the topic of financing property enterprises followed, which was moderated by Anna Duchnowska (Colliers International), after which the other experts on the panel, Michał Popiołek (BRE Bank) and Joanna Tlak, (Peakside Polonia Management), agreed that while the form of financing is insignificant, the most important thing is to obtain it.
To secure the first tenant and be able to apply for external financing you need a good product. What do tenants expect? How to build in order to satisfy their tastes? Tablet, Android, iPod, iPhone - this is not a child's Christmas wish list but some of the devices that have left their mark on the office sector. The experts participating in the debate entitled 'An Office for Generation Y' emphasised that the growing popularity of mobile devices is being accompanied by the growing need for mobile offices. Izabella Anuszewska (Millward Brown) pointed out that the first step should involve getting to know and describing the group the product is targeted at - in this case the product being an office. In her opinion the key issue is not the question what?Generation Y (which could turn into Generation Z tomorrow) expects and needs, but considering the changes that have been taking place in society in general. The developers present, Mariusz Frąckiewicz (Avestus Real Estate), Peter Chatfield (SwedeCenter Poland) and the moderator Jonathan Cohen (Colliers International), as well as Artur Czerwiński (Cisco Systems Poland), who represented the tenant's point of view, admitted that some new trends have emerged, such as green solutions and the fact that tenants want to move from business areas to relaxation areas in offices more easily. However, the crucial thing is to build in the flexibility needed to be able to react to any changes in needs. And how to choose between two offices in similarly located buildings, which are equally flexibly designed and have a similar rent level? Is an office building or developer with a better image able to decisively sway our decisions? Urszula Kostrzewam (Kostrzewa PR), Tomasz Czuba (Jones Lang LaSalle), Wojciech Gepner (Echo Investment) and Mariusz Filip (FAMA Agencja?Reklamowa) talked about how to build and strengthen the brand of an office building. The conversation, which was enlivened by the running gag that it is not the brand that matters when choosing an office but a location that is close to... the boss's home, was moderated by Radosław Górecki ('Eurobuild CEE'). The experts emphasised that it is better to build a brand from scratch than to try to create an image for a building that is already a few or even a dozen or so years old. What to do, though, if you have an older facility in your portfolio? Changing the tenants, converting the service area into office space, implementing eco-friendly solutions, as well as modernising and redeveloping the interiors - these were only a few of the possibilities for increasing the value of an older office building mentioned by Karol Bartos (Tristan Capital Partners), whose presentation was a case study of the Warsaw Financial Center.He joined the next panel, To Buy and Increase Value', where more ideas were suggested by other experts: Artur Morawski (Hochtief Facility Management Polska), Rafał Mateusiak (Estate Fellows),Artur Winnicki (Reesco) and Wojciech Sztuba (TPA Horwath Poland). But how will such a polished-up older building fare against the huge number of new projects that are to enter the market in the next year or two? The competition is likely to be tough because developers could have more difficult times ahead of them. The pessimistic vision of the development of the market that was given by Jos Tromp (CBRE) is only one point of view, though. Tomasz Buras (Savills) clashed with his counterpart by outlining an optimistic prognosis. A quick poll of the audience was taken, in which a substantial majority voted for the more optimistic version of events. But there was no outright winner between the two views in the subsequent expert discussion, joined by Katarzyna Gerl (Ernst & Young) and Katarzyna Oleksińska (Yareal Polska). The conclusion was that it is not optimists or pessimists that we should be, but realists.