The 25-year-old start-up

Rafał Ostrowski, ‘Eurobuild CEE’: You are about to complete arguably your most notable project so far: the Warsaw Spire. The opening will be on May 12th. Do you feel relieved that all this work is now coming to an end?

Jeroen Van der Toolen, Ghelamco’s managing director in the CEE region: I am above all unbelievably proud of the Warsaw Spire. I believe it is the best project in Warsaw – and feel this not only about the office scheme itself, which has been very well done architecturally, but also about the surrounding area we have created together with it, namely plac Europejski.

This project has had its tricky moments though, hasn’t it?

When it was under development, it was the biggest office project under construction in the whole of Europe. To confirm this we asked the agencies about the countries where 115,000 sqm office projects were being built. It is also the fourteenth tallest skyscraper in the EU right now. But to answer your question, every project has its tricky moments and this project was no different, not least because of its scale. It required a lot of work in terms of coordination, planning, financing and also commercialisation.

At some point, maybe after signing the first tenant or two, the leasing seemed to cease completely. We thought that you might have been having problems leasing all of it out.

You must remember that the project is twice the size of Rondo 1. First we signed Frontex for building B, but for the tower building we initially wanted to acquire anchor tenants for larger surfaces. We wanted to avoid the sort of situation where there are few neighbouring levels available for such types of clients because the space has already been partly occupied by a smaller tenant. We had to sign the anchor tenant for the tower first, and then the next tenants would follow.

And it was difficult to find such anchors, right?

Not really. It was rather all down to the long negotiation process with Samsung, who needed time to define exactly what their requirements were in terms of area and location in the tower. In the end Samsung chose the lower levels of the tower – and from the moment they signed, we started signing the leases for the rest of the space. It was twelve months ago that Samsung signed, and since that time we have leased another 60,000 sqm. So the commercialisation turned out to be extremely successful. When you consider that we have leased more than 80 pct before the completion of the project, the figure is much better than we had anticipated in the feasibility study. And also regarding a future sale, we have designed the project in such a way that we can sell every building individually. Right now money on the international market is very cheap, there is a lack of core product on the investment market and there are also funds from different parts of the world that are dedicating money towards Europe. So there are many more potential buyers than we had anticipated at the beginning of the project. Things have turned out looking better than we thought they would be. Right now is a very good time to sell.

Golub GetHouse’s Prime Corporate Center in Warsaw was recently sold just a few weeks ago at a record low yield of app. 5.2–5.3 pct, obviously representing a very high price. Is this good news for you?

Yes, it is. I even wish that they had sold it for an even better price, because when our competition does well, we also do well. It works both ways. I believe – and this is also underlined by the main real estate agents – that Warsaw’s core and landmark office projects like the Warsaw Spire should trade at yields close to those of core office in Frankfurt or Paris. When we can achieve this it will be good news for the entire Warsaw core office market.

You recently sold this project to one of the companies from your own group. That looks like preparation for a sale. When will the real sale happen?

The process has already started, that is, the first meetings are being held with potential buyers. We are also analysing which projects have been sold to whom recently, which allows us to see that money is not only coming from Europe but also from different parts of the world, such as South Korea, Malaysia, the US, South Africa and China. This diversity is good for the real estate market in Poland.

Will there ever be another project from Ghelamco as prominent as this one?

The truth is that it would be difficult to do something exactly the same as Warsaw Spire. The beautiful surroundings of plac Europejski, with all the nice fountains, the greenery with 14,000 plants, the Art Walk, the bars and the five restaurants, including one operated by one of the two Michelin star owners in Poland – is all quite exceptional. Przemek Stopa, who is responsible for the interiors, was recently awarded a Red Dot award for the floor he designed for the Warsaw Spire. We have custom designed chairs, custom designed glass. When you look at those details, which nobody else has, it is all unique.

Was it a difficult decision for you to choose this particular site for the Warsaw Spire?

No, it felt like the obvious thing to do. This was a 2 ha plot designated by the city for high-rise construction. There were not many centrally located plots like this available. We made our bid for the site eight years ago and we really wanted to have it. And also on the subject of its location, we foresaw that the city centre would not expand towards the river and Praga, but that it would rather develop towards the west. Today it is clear that we were right. Rondo Daszyńskiego is now not only the new CBD but the new centre of gravity in Warsaw as well. After we started the Warsaw Spire, many other developers bought plots all around it, which is a good thing for this project and for the entire area. This is the place to be.

How do you think this area will develop?

Towarowa is a street that nobody today regards as beautiful, but it is a wide street with many plots along it ideal for development. Compared to al. Jana Pawła II, for example, with its old residential blocks, there is access to much more light. People are not impressed when you tell them that al. Jana Pawła II is part of Warsaw’s CBD. You also don’t hear people saying that they are proud to be working on this street. Now, I think it is very important – and this is why we are discussing this with the city – to change Towarowa into the most modern boulevard in Warsaw with modern buildings and well designed public urban areas all along it. It would be great to have some snazzy cycle path down it, so that when you pass Towarowa, you go: “Wow! This is modern Warsaw.” And this is possible because all the investors have come here. We have Griffin, who will develop a large shopping centre; we have Karimpol with an office project; we have Skanska, our Sienna Towers and Spinnaker Tower and some other projects; we have Norblin, not far from this area. So I believe that when all the urban space design is done in a coherent way, it will become a highly valued area for the city, for the people who work there, who live there and also for the 1 mln visitors to the Warsaw Uprising Museum every year.

What is the outlook for Warsaw compared to other capital cities?

I think that Warsaw is bound to grow significantly compared to other European capitals. Because the most difficult thing, attracting foreign companies to the city, has already been done. For a company to decide to move a big department from London to Warsaw is a time consuming decision-making process, with the question of whether to go to Prague, Warsaw or some other place. But once they are here, adding another 100 or 500 people is much easier. Now these companies are expanding faster than people expected. Secondly, I also expect that at some stage government related organisations will start moving from old buildings into modern ones. Some are going already into ‘B’, some to ‘B+’ and some to ‘A’ class buildings. And these are changes we have already seen in Western European cities, where governmental bodies are upgrading their space purely for the functionality of today’s way of managing people. And this is a lot of square metres that will potentially come in what I would say is five, seven or ten years, which will also provide additional growth for the office market. Another thing is that the quality of enjoyment from spending the weekend in Warsaw is improving a lot as well as the public transport and cycle paths.

It is the 25th anniversary of Ghelamco’s launch in Poland. Could you provide us with some numbers to give us an idea of what you have done during this time?

Our Polish office has 160 employees. We have developed over 1 mln sqm of modern space, over 60,000 people work in Ghelamco buildings; and we have sold projects to big institutional investors for more than EUR 1.3 bln (PLN 5.5 bln), while our income in the next 18 months is projected at over EUR 700 mln. We now have 300,000 sqm under development. We have carried out seven residential projects, eight warehouse projects and one small retail project, but more important than the numbers is the quality and the satisfaction of our clients.

What first brought you to Poland?

Paul Gheysens, the owner of the company, came to Poland 25 years ago to buy construction materials for the Belgium market. When he was here, he saw that rents were USD 45 per sqm, much higher than in Belgium, while the construction costs were obviously much cheaper. It occurred to him that he should be doing business in Poland instead of expanding in Belgium. But back then certain components, such as façades or HVAC systems, were not available, so the company brought all of these to Poland. So for the first building, Green House on ul. Banacha, which comprised app. 4,000 sqm, such components were almost entirely brought from Belgium.

How was the market at that time, when you first came here?

It was much more difficult than today – because it wasn’t so transparent. The legal situation over plots was much more complicated than today. At that time you also had to get involved in claim procedures or restitution issues. Twenty years ago you didn’t even know if you were buying the land from the real owner. Another problem was the lack of skilled people. How do you explain to somebody who has never seen a modern office building or a modern warehouse or a western European residential building what sort of building we want designed? So we started with architects from Belgium working closely with architects in Poland. And then came the new generation, who very quickly wanted to adapt and were very eager to learn how things were done in Western Europe. But in general, right from the beginning people in Poland were very open to working with foreigners. And this, I think, was one of the biggest advantages of Poland. It was very open when it came to taking knowledge from abroad – and this accelerated the country’s development.

Do you still put all your trust in foreign architects?

Sienna was designed by AMC Chołdzyński, Gdański Station by the Polish division of Sud Architectes and Spinnaker tower by Projekt PBPA. Our residential projects are also designed by Polish architects. So I wouldn’t say that we are sticking with foreign architects – and actually our main architect in the past was Konior, who studied in Kraków but moved to Brussels in the eighties. So we had an architect in Belgium, but he was Polish and was fluent in Polish. That was a very nice combination at that time.

How important are the people in Ghelamco’s business?

All the people in Ghelamco’s team are key. From the shareholder to the receptionist. We have a core team of people that has already been working for a long time for the company. Loyal professional people who are looking to make improvements all the time. We look for people who want to grow, who think of it as a start-up organisation. They have a lot of responsibility, they really want to fight for introducing new types of things – because this is what drives the growth of the organisation. So, yes, when you have people with the experience you need for carrying out a new project plus those who are also drivers of innovation, this is the sort of combination that makes it possible to “create our future today”, as our company’s motto says.

But it’s not easy to maintain this start-up spirit after 25 years of activity, is it?

It isn’t, but it’s important, and I think many organisations are trying to discover this formula. After all, where is Nokia today? Where is Kodak? Where are many of those companies that were once huge organisations? They missed the boat because they didn’t innovate. They thought their products were like cash cows and that they would be around forever. But they are not here anymore. Nothing should be taken for granted.

What will the next 25 years be like for Ghelamco? What will the portfolio of the company look like by then?

I don’t think any organisation is looking that far ahead. I have no idea what will have happened in 25 years’ time.

So what kind of event-horizon can we talk about then?

What I hope to see in the next ten years for Ghelamco in Poland is that the area around Towarowa will have been fully developed by us. We will have completed Sienna and Spinnaker and other projects, and there will be some from our competitors as well. I hope to see this whole district developed into the most modern area in the city – one that we can be proud of and that will have added some value to the city and its inhabitants. I also hope that we will have completed the total redevelopment of Gdański Station, as well as many other substantial projects in other cities in Poland. And I hope that people will really appreciate and like what we have done for them and for the urban fabric.

Ghelamco’s leading man in the CEE region

Jeroen van der Toolen started working for Ghelamco in 2003 as the managing director for Poland and three years later was appointed managing director for Central and Eastern Europe. Prior to joining Ghelamco, he worked for Unilever Moscow and DTZ. In 1997 he participated in a project implemented by Rabobank in Ukraine. He majored in business economics at the Vrije University in Amsterdam.