Remake, remodel

In Western Europe, particularly in the Netherlands and Germany, many examples of successful conversions of old office buildings into luxury apartment buildings or hotels can now be found. In Poland we are also starting to think about such redevelopments projects, due to the growing competition on the office market and the technical condition of old office buildings. Administrative buildings constructed for state companies in the 1960s, 1970s and 1980s were often built in good locations as ‘infills’ between existing buildings. Such buildings can be demolished, but some can be redeveloped. And money can even be earned from this in a quick and relatively inexpensive way. Particularly considering the fact that the architecture of those years, after changes to the façade, can successfully be passed off for a new building – since both architectural styles are mostly based on richly adorned and glazed cuboids.

Polski Holding Nieruchomości has such a property and it is not planning to sell it. The nine-storey office building owned by PHN is located at al. Jana Pawła II 34 in Warsaw, at the junction of ul. Elektoralna and between other such socialist realist buildings. Remodelling would give it a useable and service area of 4,300 sqm. PHN is looking to invest PLN 20 mln in the project. The current preliminary redevelopment concept has been prepared by the Warsaw-based Stoprocent Architekci studio. A new five-storey section is to be constructed behind the existing building. The apartments will have balconies, in contrast to similar examples of conversions. The old building already possesses these and loggias have been designed for the new section. Balconies do not usually feature in other examples of remodelling, mostly due to the technical issues and costs. The building will comprise 97 higher standard apartments. It will also offer 71 parking spaces on existing underground floors. The construction of the Jana Pawła 34 project should be completed in a few years.

It was the fiercely competitive office market that led PHN to opt for changing the function of the building. This part of Warsaw’s downtown is full of examples of prime office space – and PHN itself is preparing an office project on the corner of al. Jana Pawła II and ul. Świętokrzyska. The costs of redeveloping a building for residential use are also lower than for modernising the office space up to the standard needed for it to be able compete against neighbouring facilities.

New hotel in just a few months

A hotel project on ul. Piotrkowska in Łódź is another example of this new trend in Poland. The hotel, which is to include a restaurant, will be opened on ul. Piotrkowska this year. Such rapid construction for a hotel project is only possible because the company is converting the existing office building on the site, instead of demolishing it and building a hotel from scratch. City Center purchased the nine-storey 1960s office building, along with an additional plot, on ul. Piotrkowska, opposite the City Center Rooms hotel it operates. The future four-star hotel will offer 144 rooms. The entire project should be completed by the end of 2017 at an estimated cost of app. PLN 50 mln.

Apartments in a post office

A development company active in Lithuania is also employing the conversion concept more familiar to Western investors. After acquiring an unused office building from the Lithuanian Post in a tender, Novalex has drawn up plans to adapt it into small apartments with areas ranging from 24 sqm to 40 sqm, which could be joined together to create larger ones. The apartments are divided into three classes, depending on the floor and, in fact, the view from the windows. The upper storey flats feature views onto the entire Vilnius old town. Prices per sqm for the apartments naturally depend on their class. The building at 23 Vivulskio street will also have a service and retail area on the ground floor. The apartments should be completed in Q3 2016. Novalex has already completed more than a dozen residential projects in Lithuania, but up until now these have exclusively involved the construction of buildings from scratch.

Under the watchful eye of the preservation officer

Domotel has also opted for the remake, remodel approach. The multi-functional Amber Tower building is situated on ul. Szafarnia in Gdańsk. The former office building on the banks of the Motława river is a listed monument, even though it was built in the 1970s. For this reason, any major interference with its façade was impossible. Apartments for rent are on upper floors – from the 5th to the 9th – and can be accessed through a separate entrance with a reception. Offices and a restaurant are located on other floors of the building.

‘Mordor’ with a human face

In Warsaw’s Służewiec office district, sarcastically nicknamed ‘Mordor’ by those who work there, there are also some ideas to remodel some of the buildings, even though they are not as old as the examples given so far. Walter Herz, which is in charge of the leasing process for an office complex at ul. Postępu 3, is thinking about changing the function of a section of the project. The building, which has been leased to Polkomtel for the last ten years, is a class ‘B’ office building that was completed in 2005. It comprises two seven-storey buildings connected by a glass passageway. According to a report published by Walter Herz, it would be possible to convert one of the buildings, which has an area of app. 6,000 sqm, into a hotel. The other building will still be leased as offices. The owner of the complex is WAN. Further details about the hotel have yet to be disclosed.

Searching for a model

Examples of office buildings that can be converted can be found in the portfolios of former and current state companies, such as the successor to Telekomunikacja Polska, Orange Polska. “We have had many proposals for the properties in our portfolio, which are particularly attractive because of their good locations. One example is our building on ul. Nowogrodzka in Warsaw. It was constructed in 1964, it has a modernist façade and after revitalisation it would re-integrate with its surroundings once more,” explains Paweł Buchman, the real estate director of Orange Polska. Other buildings with such potential are located on ul. Armii Ludowej, ul. Stępińska, ul. Broniewskiego and ul. Bieniewicka – all could be converted into hotels or residential buildings.

To live in a glassworks

P.A. Nova of Gliwice – a developer famous for the construction of retail facilities and which has residential projects in its portfolio – has also decided to try its hand at remodelling. It found a seemingly worthless 1960s office building on the site of a former glassworks in Krosno, which it then purchased. Before the end of the year, the developer is planning to begin pre-sales for the building, which is to include 40 apartments

From banks to flats

Such redevelopments are also planned in Poland by 6b47. So far the developer has only been active on the Austrian and German markets, where it has a dozen or so projects of this kind under its belt. Now it is thinking of bringing this experience to Poland. The company is currently looking for buildings suitable for being adapted. “We have just entered talks over the purchase of three buildings in Warsaw. They are old office buildings currently owned by banks. I cannot reveal any other details, but they are office buildings located in Wola, Mokotów and Ursynów districts. We are also looking at other buildings like this across the city,” says Mirosław Januszko, the president of 6B47 Poland, the Polish branch of the Viennese development group. “From our point of view the market in Poland is definitely tougher than in Vienna, for example, where we have completed a few such projects. In Vienna old office buildings can be bought for EUR 1,000 per sqm and we can sell apartments at EUR 3,000–4,000 per sqm. In Poland an office building for conversion sometimes costs around EUR 3,000 per sqm. And apartments cost app. EUR 4,000 per sqm, just like in Vienna. That’s when a project ceases to be profitable. We cannot increase the price of the apartments if the building is too expensive, so we give up and look for another one,” explains Mirosław Januszko. What certainly increases the cost of a project is the lack of an underground car park in such an office building. “The local zoning plan often stipulates that residential projects in a given place should have an underground car park. Digging under the building would send the cost sky-rocketing and render the project unprofitable,” adds the president of 6B47 Poland.

Higher standards

Another developer, this time from Szczecin, is also focusing on conversion projects. The 35-storey former office building of TVP and Polskie Radio Szczecin is to be converted into apartments. The television studio moved out of the building in 2004. It is located slightly out-of-the-way, on the corner of ul. Niedziałkowskiego and ul. Wojska Polskiego, but it has good access to the city centre, 17 floors and, unsurprisingly, offers a view onto the city centre and the river Odra. The two lowest floors of the redeveloped building are to be used as offices. The project will be developed by Idea Invest, with the modernisation work to be launched in about two years’ time.

Unfulfilled dreams

A similar project was also planned in Katowice. In 2007 Green House Project was preparing the development of an exclusive residential project, Rezydencja Parkowa, in a building that had originally been designed for offices but had stood unfinished for three years at the time. However, the residential project did not work out and in 2008 the building was completed by GHP as an office building. It is now called Jesionowa Business Point.

This new trend is becoming more and more evident, partly because of the reduced costs for such projects, but primarily due to the locations of the buildings. According to Rafał Szczepański, the vice-president of BBI, if a building is in a good technical condition and has a good location, this kind of project is most certainly worth considering. However, there are also a few sceptics when it comes to this approach. The pessimism mainly creeps in after an analysis of the building’s technical condition. “The Germans can afford this. There is a technical gulf between their ‘B’ and ‘C’ class office buildings and ours,” we heard from one of the developers involved in the revitalisation of historic buildings. However, let’s stay optimistic. In the meantime was can wait for future examples of this kind of project that should have a positive impact on our cities.

Grażyna Kuźma

legal adviser, BSJP

Legally not so easy

It has to be admitted that real estate remodelling is not an easy process in legal terms. The terms of the local zoning plan could prove to be a serious obstacle. Sometimes, the provisions have to be amended in order to change the function of the building. Fortunately, these plans’ provisions quite often give a great deal of leeway when it comes to the usage of the real estate. The process then becomes much easier. Nevertheless, you still need to go back to original development conditions documents, the building permit, and obtain all the required permits as if starting from square one. It’s normal that such a process would take up to a maximum of twelve months.