And the winners of the skyscraper race are…
Office & mixed-use developmentAdvertisement
Radosław Górecki
POLAND Skyscrapers have captured the imaginations of Warsaw developers once again. Almost all of the major players on the market now have a tower block or two in the pipeline.
At first glance, the current situation on the office market in Warsaw resembles that of 2007, when a large number of new high-rise projects were being announced. That was when developers, encouraged by almost unlimited access to financing, kept on launching bigger and bolder projects. Some of the tower blocks were even planned to be up to 200m in height – one such colossus was to have been built on the site of the Robotniczy Klub Sportowy Skra labour club, while a 250m skyscraper was being planned for a site next to the Warta Tower. But what has actually been built since then? “Actually, no new office projects of this sort have been built in central Warsaw since that time. A skyscraper project is generally a difficult enterprise. On the other hand, skyscrapers in central locations, which are well-designed and efficiently managed, can be among the best facilities a city has for years to come, such as the Warsaw Financial Center or Rondo 1,” remarks Daniel Bienias, the director of the office agency at CBRE.
More than just intentions
The construction of all these skyscrapers was put on hold by the global financial crisis. The major developers active in Warsaw have, by and large, weathered the effects of the credit crunch. Admittedly, new office towers may have not been built since that time, but the amount of office space has been steadily growing. At the end of Q3 this year, Warsaw had more than 4 mln sqm of offices. It is estimated that an area in excess of 600,000 sqm is to be delivered this year, i.e. as much as in 2012 (over 246,000 sqm has already been finished). But more spectacular projects are still to come with developers once again launching skyscraper projects. Two huge developments have already reached the construction stage in the city centre. Ghelamco Poland is developing a complex of three buildings including the Warsaw Spire between ul. Towarowa, ul. Łucka, ul. Wronia and ul. Grzybowska in Wola district will offer 100,000 sqm of offices. So far an area of app. 15,000 sqm has been leased. Importantly, the financing has been secured. Four banks have clubbed together to provide a gigantic loan of PLN 904 mln: Pekao, Bank Zachodni WBK, PKO Bank Polski and BRE Bank. Meanwhile, the construction of Echo Investment’s flagship project the Q22 skyscraper is moving into gear closer to the city centre (at the junction of ul. Grzybowska and al. Jana Pawła II). These two projects are obviously on their way, but what about the others? Polski Holding Nieruchomości in a joint venture with Hochtief is developing a tower at ul. Świętokrzyska 36. The partners already have planning permission. The project is likely to
be developed in the next four or five years. Things are at a similar stage for a project by UBS – the company is planning to deliver app. 60,000 sqm to the market in a new tower block built on the site of the existing Ilmet building near the ONZ roundabout. HB Reavis wants to build a skyscraper complex a few hundred metres away, on ul. Chmielna. The project, which consists of a number of buildings (the tallest will be app. 140m), would offer almost 95,000 sqm of offices. Another player in the skyscraper game is Skanska, which is planning a tower block at the ONZ roundabout and is currently planning a large office complex on a plot next to the Warsaw Spire. In fact, the planned supply is so high that tenants must already be rubbing their hands in glee.
The day of the tenants
“The current moment is a good one for tenants. In effect we have not had such a situation for a long time,” claims Daniel Bienias. It is estimated that another half a million sqm of office space is to be finished in the city by the end of 2015. The vacancy rate will start growing and could reach up to 12 pct at the beginning of next year, but at the end of 2014 developers will be faced with vacancy of around 14 or even 16 pct. “The following year, 2015, has a question mark hanging over it. If the vacancy is not filled with tenants, the pressure on rents will intensify, which will result in a decrease in development activity,” forecasts Daniel Bienias. So who is going to launch another high-rise project following Plac Unii, Atrium 1, Warsaw Spire and Q22? “In order to start the construction of a large office tower block you need to have a prime location, with direct access to an underground station (e.g. in the vicinity of the ONZ roundabout). Only seasoned developers succeed in building and marketing tower blocks. The demand for office space in such projects is mostly limited to global corporations from the financial, banking or consulting sectors, who are able to afford a prestigious location on the upper storeys. I believe that we will have to wait for some time for another skyscraper. However, some players might have a surprise in store for us soon,” suggests Daniel Bienias.
More than just intentions
The construction of all these skyscrapers was put on hold by the global financial crisis. The major developers active in Warsaw have, by and large, weathered the effects of the credit crunch. Admittedly, new office towers may have not been built since that time, but the amount of office space has been steadily growing. At the end of Q3 this year, Warsaw had more than 4 mln sqm of offices. It is estimated that an area in excess of 600,000 sqm is to be delivered this year, i.e. as much as in 2012 (over 246,000 sqm has already been finished). But more spectacular projects are still to come with developers once again launching skyscraper projects. Two huge developments have already reached the construction stage in the city centre. Ghelamco Poland is developing a complex of three buildings including the Warsaw Spire between ul. Towarowa, ul. Łucka, ul. Wronia and ul. Grzybowska in Wola district will offer 100,000 sqm of offices. So far an area of app. 15,000 sqm has been leased. Importantly, the financing has been secured. Four banks have clubbed together to provide a gigantic loan of PLN 904 mln: Pekao, Bank Zachodni WBK, PKO Bank Polski and BRE Bank. Meanwhile, the construction of Echo Investment’s flagship project the Q22 skyscraper is moving into gear closer to the city centre (at the junction of ul. Grzybowska and al. Jana Pawła II). These two projects are obviously on their way, but what about the others? Polski Holding Nieruchomości in a joint venture with Hochtief is developing a tower at ul. Świętokrzyska 36. The partners already have planning permission. The project is likely to
be developed in the next four or five years. Things are at a similar stage for a project by UBS – the company is planning to deliver app. 60,000 sqm to the market in a new tower block built on the site of the existing Ilmet building near the ONZ roundabout. HB Reavis wants to build a skyscraper complex a few hundred metres away, on ul. Chmielna. The project, which consists of a number of buildings (the tallest will be app. 140m), would offer almost 95,000 sqm of offices. Another player in the skyscraper game is Skanska, which is planning a tower block at the ONZ roundabout and is currently planning a large office complex on a plot next to the Warsaw Spire. In fact, the planned supply is so high that tenants must already be rubbing their hands in glee.
The day of the tenants
“The current moment is a good one for tenants. In effect we have not had such a situation for a long time,” claims Daniel Bienias. It is estimated that another half a million sqm of office space is to be finished in the city by the end of 2015. The vacancy rate will start growing and could reach up to 12 pct at the beginning of next year, but at the end of 2014 developers will be faced with vacancy of around 14 or even 16 pct. “The following year, 2015, has a question mark hanging over it. If the vacancy is not filled with tenants, the pressure on rents will intensify, which will result in a decrease in development activity,” forecasts Daniel Bienias. So who is going to launch another high-rise project following Plac Unii, Atrium 1, Warsaw Spire and Q22? “In order to start the construction of a large office tower block you need to have a prime location, with direct access to an underground station (e.g. in the vicinity of the ONZ roundabout). Only seasoned developers succeed in building and marketing tower blocks. The demand for office space in such projects is mostly limited to global corporations from the financial, banking or consulting sectors, who are able to afford a prestigious location on the upper storeys. I believe that we will have to wait for some time for another skyscraper. However, some players might have a surprise in store for us soon,” suggests Daniel Bienias.
