The worst was the uncertainty

Tomasz Cudowski, Eurobuild CEE: In what kind of mood has Hines come out from the epidemic freeze?

Wojciech Rumian, vice-president of the management board, Hines Polska: It’s difficult to say that we are now coming out of that situation. Unlike many who are predicting that the epidemic will quickly recede into memory, I believe that its effects will still be seen for a long time. This is to some extent going to alter our everyday lives and also our work lives are still being changed. Despite this we are looking at the market and actively working on a number of projects, which includes both acquisitions and constructing new buildings.

What was the biggest challenge for you during the lockdown?

In the first stage of the lockdown the most difficult thing was probably the need to switch to remote working – luckily these changes were helped to a large extent by the nature of our work and a number of software tools. After that we waited for how the market would react and any possible adjustments in the price of properties. At that time we found out about the first tenants that were suspending their leases. Generally speaking, there was uncertainty and because of this it wasn’t a good time to speak with investors. The situation is now slowly improving, but from what I see, this is more about people returning to their normal work and increasing the number of meetings they hold, rather than an actual rise in the number of transactions.

How has the office market changed over the last few months? What kind of changes in behaviour have you seen among your tenants?

It’s still too soon to talk about a permanent change. Up to now we’ve seen some tenants stop looking for new offices – of course this is only in those case where their current lease terms allow for such decisions to be put off. When such decisions can’t be delayed because the schedule is fixed in stone, what we’re seeing is less optimism among tenants looking for extra space to accommodate a possible future expansion and more reluctance on their part to sign leases with terms that are longer than five years. I believe that tenants will be looking for more flexibility as well as solutions to their local needs, which will be met partly with space in their own offices and partly with serviced office or co-working space. Landlords may come up with new contractual clauses to protect themselves against unforeseen events such as the present pandemic. These may include increasing the service charges in the rent. As a result during the pandemic the importance of having a real partnership between the landlord and the tenant increased. At Hines this is something that we have always taken very seriously and now it is paying off – not long ago we signed up a new tenant for our Ambassador Office Building and also TPA Poland has decided to increase the size of its office lease in Wola Center.

What new challenges has Hines faced as a property manager?

The biggest new challenge was sometimes having to implement contradictory rules and preventative measures for the pandemic. On the one hand we had to follow new government regulations, and on the other we had to deal with the fears of individual companies and their international corporate guidelines. The epidemic was accompanied by fear and other powerful emotions and they are not always conducive to finding the best solutions. We make use of both the experience we have from abroad and from the best practices that have been formulated locally and as a result working with our clients and their administrative departments went very smoothly. However the truth is that during this time our buildings were practically empty and the tenants who reaped the benefits of our actions were a relatively small group.

How is the pandemic affecting the investment market? Do you thing that investors in Poland will be able to get close to the kind of investment figures we’ve seen over the last few years?

We’re not able to fully answer the question of to what extent the entire economy is going to suffer. If there is a recession, regardless of how long it lasts, making investments in the first stage of the slowdown would be seen as premature, unless there were to be a major price correction. I think that transaction volumes in the office, hotel and retail sections will fall, however the logistics sector should cope with this year very well. In large cities we can also expect a decrease in the number of individual residential transactions made as an investment and as a result developers will be looking for an exit from their projects by offering package deals or entire residential projects for rent. Summing up it is difficult for me to imagine that 2020 is going to break any records for investment on the real estate market in Poland.

In this current situation, are you thinking about getting any rest this summer at all? How do you plan to “recharge your batteries” for the rest of the year?

This year I did manage to escape for a while to the Swiss Alps, where I have many favourite spots. This was an active form of rest, but also safe, because there are so many paths and trails you can take there that it never gets crowded. Maybe I’ll also be able to spend some time in the Tatra Mountains in the autumn.