The Heart of the matter

On Tuesday, May 28th, the cream of the Polish and European office market came together in the thought-inspiring interiors of The Heart on the 38th floor of the Warsaw Spire, to listen to the most eminent experts in the field and discuss the current situation for offices. And although the views of Warsaw from the windows of The Heart were breathtaking and the stage featured an arrangement of Bene furniture that was in no way less spectacular, the speakers and panellists didn’t have the slightest trouble when it came to holding the attention of the almost 200 guests.

The first panel, ‘Investors Still Queuing Up’, was moderated by Paweł Skałba, the director of the office agency at Colliers International, who provided confirmation if any were needed that the market had matured and stabilised. “We are at the top of the cycle. There are, however, some indicators suggesting there’s going to be a slowdown by the end of the year. This year will not be as record-breaking as the previous one,” forecasted Soren Rodian Olsen, the capital markets director at Cushman & Wakefield. “A negative trend can be seen on the horizon: the investment volume is not as high as it was in 2018,” cautioned Mariusz Frąckiewicz, the national director for Poland of Avestus Real Estate. When asked about other products worth investors’ attention, the panellists agreed that these certainly include student halls and hotels. Justyna Bauta-Szostak, a tax advisor and partner at MDDP, remarked that in the future these products could easily be converted into homes for the elderly, thus helping to fulfil the needs of an aging society. Paweł Skałba also raised the question of the investment potential of older office buildings, and the panellists agreed that the location and quality of the buildings are the most important factors in this respect. Matt Lunt, the operational director at Tristan Capital Partners, pointed out that a good location always looks after itself.

The opening panel was followed by the first presentation, or rather, lecture. Tomasz Sobierajski, a sociologist at the University of Warsaw, outlined the results of research into the professions and working conditions favoured by the younger generations on the job market and how the attempts so far to combine the working styles of generations X, Y and Z under one roof have worked out. “Up to 76 pct of millennials say that the interior design has an effect on their work. However, for their parents’ generation, the baby-boomers, this was only a significant factor for 39 pct of those surveyed,” revealed Tomasz Sobierajski. “Around 70 pct of millennials make career decisions based on the work place, whereas only 41 pct of the previous generation regard this as an important factor,” he added.

The subject of the next presentation also touched on these issues – Oskar Kasiński, the CEO of the HR Design Group, introduced the audience to ways of using the workplace as a recruitment tool. “What matters most in the war for talent is where and in what conditions the candidate is going to work,” he insisted. “Open office space is a total failure in this context: the research shows that the efficiency of employees decreases by 20 pct in such space and by as much as 35 pct if it is noisy,” pointed out Oskar Kasiński. “Flexible offices, on the other hand, are the future of the sector, as are hi-tech offices. And this doesn’t mean that remote work will not also become more important,” said the expert.

The panellists in the next discussion, focused on how the office sector should brace itself for the expected slowdown, also looked at the implications of the ongoing demographic changes. “What steps should we take to avoid being taken by surprise – would it help to start cutting costs, to enter new markets or maybe to put a freeze on investment?” – asked the moderator of the discussion, Piotr Szafarz, partner and the head of the Polish real estate law team at Dentons. “The method is simple and difficult at the same time: follow the latest trends and build in line with tenants’ expectations,” suggested Roger Andersson, the managing director of Vastint Poland. “I believe in the potential and strength of coworking operators – they will be setting the trends on the market in the next few years,” added Peter Pecnik, the CEO of HB Reavis Poland. “We must take into account generational changes – and not just design our products for presidents and CEOs but for ordinary employees. And the youngest generation entering the labour market – which is more interested in community creation, sharing experiences and in meeting up – should have the right conditions to do all that,” argued Jeroen van der Toolen, the managing director for the CEE region at Ghelamco.

The next part of the conference was a live question session. And it was Nicklas Lindberg, the CEO of Echo Investment, who was put through the wringer. It was possible to ask questions electronically or conventionally, and so the range of subjects was dizzying. But Echo’s CEO was far from flustered by all this and managed to give perfect answers when questioned about the company’s plans (“We are still going to invest in unique, city-forming projects, such as Browary Warszawskie and Towarowa 22”), as well as about his personal preferences (“The view from Q22 is probably better than from Warsaw Spire...”) and skills (“I’m tall, so my ambition at one point was to be basketball player, but it turned out that I was more cut out for other purposes”).

The ‘Architect vs. Investor’ sparring session, which took place for the second time, was also revealing and entertaining. Sergiusz Gniadecki, the CEO of Allcon Investment, and Błażej Hermanowicz, architect and co-owner of the HRA Architekci studio, took their seats in opposite corners. As it turned out, both agreed almost to the letter on most subjects. “Designing for the tenants or the future owners?” This, they insisted, is a false dichotomy: the tenant’s interest is also that of the owner at the same time. “A unique vision and shape – or a design that fits into the local environment?” In an era of strong competition between office buildings, you have to combine both otherwise tenants will give the project a wide berth, they agreed. The two men even gave a surprisingly consistent answer to the question: “How many kilometres do I have travel to work and how do I commute?” They revealed that both of their homes are about a kilometre away from where they work, but added with some regret that due to their frequent business trips they have to drive there. Still, they both cycle in their free time.

Another presentation was the ‘WeWork Growth Story’, about the rapid development of the flexible office giant, which was given by Piotr Lagowski, the head of growth for Eastern Europe at WeWork. The first coworking offices opened by WeWork were in 2010 in New York. These were intended mainly for start-ups, whereas today the largest tenants of the chain include Microsoft, Citibank, Facebook and IBM. There are now more than 480 WeWork locations in 106 cities in 28 countries – enough for more than 440,000 people. But it was perhaps the most apparently insignificant slide in Piotr Lagowski’s talk, which appeared on the screen for a mere split-second, that in fact caused the greatest stir: this was an announcement of the opening of the first Polish WeWork offices outside Warsaw, which is to take place in Kraków next year, although the chain has yet to officially comment on these plans.

The final discussion panel was centred on the prognosis for the Polish office market. What will our offices look like in 5, 10 or 15 years’ time? Will office buildings even be needed at all? But if so, in what form? Interestingly, the composition of the panel, which was moderated by Eurobuild CEE’s deputy editor-in-chief Tomasz Szpyt, was – for the first time in the history of the conference – partially selected through a business card lottery. Anyone attending the event could put themselves forward for this. “We already think that buildings, after their technical demise, should not be wasted but instead used as a source of building material for subsequent projects. Buildings can also be designed in such a way that after a dozen or so years they can be converted at little cost, such as from an office building into a hotel,” argued Agnieszka Kalinowska-Sołtys, the director of APA Wojciechowski Architekci. Patryk Czernik, the main leasing specialist at Archicom, believes that buildings are not set for any dramatic physical changes. Office buildings are already crammed with technology and will simply be even more integrated with this in the future. “Technology can create the need to redesign entire buildings. We are already witnessing drone taxi tests, which will force us to design in a new way. The development of technology related to the conquest of space could also affect the way we will build on Earth,” he added. “However, before we fly to Mars, the basic question the owner of an aging building faces is: how can it be improved, altered or leased at lower rates?” wondered Magdalena Gutowska, the business development director of the Quadrature Group. “Office buildings will be opened up with public space and so the boundary between the public and private could become blurred. Technological innovations could also bring with them changes that we may not yet be aware of, but that will transform our everyday lives. Remember how the smartphone changed our lives? It’s still just twelve years since this device was launched,” remarked Radosław Górecki, Ghelamco Poland’s communication manager.

The final part of the conference was the workshop, specifically for those eager to learn more about relations with tenants and placemaking. Aleksandra Grabarska and Tomasz Olkiewicz, legal counsels at the MDDP Olkiewicz and Partners law firm, where on hand to tell us when the friction is worst between the owner and the tenant as well as the most contentious areas of leasing contracts; while Marta Trakul-Masłowska of Fundacja Na Miejscu told us all about how to plan the placemaking process in an office project, how much it costs and what benefits it provides.

In a year’s time we will be embarking upon another decade in the history of Eurobuild’s annual office conferences. Consider yourself invited! ν