PL

Always on the tenant’s side

Leasing
They were told the cake had all been sliced up and there was no room for another real estate advisory, but in just over two years they have managed to join the top league. Eurobuild spoke to Cresa Poland partners Artur Sutor, Piotr Kaszyński and Tom Listowski (pictured left-to-right) about the benefits of a flat organisation, representing only tenants, and what it really takes to be an advisory firm

Tomasz Cudowski, ‘Eurobuild CEE’: Let’s begin with a recent headline deal you acted on – Allegro taking up over 16,000 sqm in Norblin Factory. Can you shed any more light on this story?

Artur Sutor, partner, head of the office department, Cresa Poland: This transaction is the latest confirmation that Cresa is an important player on the advisory services market. I represented Allegro about five years ago. It gives me immense satisfaction to see them continuing to work with us and to appreciate the advantages of exclusive tenant representation. We can’t disclose details of the transaction for obvious reasons. Another of our achievements was last year’s largest transaction in Poland, as we represented mBank in their lease of 45,600 sqm in Mennica Legacy Tower. It’s worth emphasising that Cresa started out three years ago. At that time, everybody had vivid memories of all the consolidations of real estate advisories and was saying that the market had already been divided up and there was simply no room for another such firm.

When Cresa entered the Polish market with a new business model, it was said that you mainly brokered small leases.

AS: It wasn’t easy, but we had to start with something (laughs). After the large transactions I had handled in my previous companies, I was suddenly back to square one. But we had strong faith in the success of our new undertaking and, even more importantly, we had experience. Like any new business, we did in fact begin with small transactions. And, as a matter of fact, we don’t avoid them even now. You know what I’ve recently been proud of in particular? We advised the American Chamber of Commerce in Poland in the renegotiation of their relatively small lease, helping them to make considerable savings, which is important today. This was a prestigious tenant who chose Cresa and our model of operation ahead of among many US companies on the market.

Cresa is based on an interesting concept – you only represent tenants. How did you come up with this idea?

AS: It’s the only concept that guarantees the full transparency of a transaction. Cresa is a brand with almost 30 years of experience and is the world’s largest commercial real estate advisory that exclusively represents occupiers. As a consequence, we run a conflict-free business. Studies on conflicts of interest have been carried out in the US. If legal ethics prohibit a law firm from representing both the landlord and a tenant in a lease, how can the divergent interests of those same parties be adequately represented by the same real estate firm?

Aren’t you limiting your client portfolio and putting a cap on your income by representing occupiers only? Especially considering recent months and the economic slowdown.

Tom Listowski, partner, head of the industrial and warehouse department for Central and Eastern Europe, Cresa: We are gaining something much more important: the confidence of the clients that we are entirely on their side. This results in more mandates from occupiers, who are convinced that we provide unbiased and objective tenant representation. We are quicker at completing the internal procedures of compliance departments that monitor potential conflicts of interest. We have now completed more than 150 transactions in the warehouse and logistics sector in Poland since we began our operations. I’m particularly proud of the fact that we have returning clients who also recommend us to their business partners.

Speaking of which, you’re also active on the warehouse market, which appears to have been the only beneficiary of the pandemic. Don’t you think that when the pandemic is over – as it will be at some point – logistics and warehouse centres will slide down the attractiveness rankings once again?

Tl: It’s true that warehouses have been the big winner out of the current situation, and the sector is now growing at a rapid pace. Tenants, developers and investors are all active. The pandemic has been a catalyst for change, accelerating the growth of e-commerce. Looking at the global trends, there are no reasons why this sector should begin to shrink back after the coronavirus pandemic. Lots of companies have recently established their online distribution channels and won't be closing them anytime soon. There’s a large, new group of customers who have done online shopping for the first time and for sure many have taken to it. The expanding e-commerce market also means increasing space requirements from courier and logistics companies for order fulfilment within the shortest time possible, and for returns management, both in large regional hubs and in smaller urban facilities as part of last-mile deliveries. Investor demand for logistics and warehouse assets is naturally growing, investment volumes are setting new highs, and all the signs are that this is going to be a long term trend.

What other sectors, apart from e-commerce, are fuelling the growth of the warehouse market?

Tl: Mainly logistics operators and retailers who are closely connected to e-commerce. But we shouldn’t forget about the growing space requirements for light manufacturing. Additionally, producers who have experienced global supply chain disruptions are now reorganising their operations and looking for locations closer to their target consumer markets, including in Poland. This trend is expected to intensify. In addition, the warehouse market has been going through a period of technological change in recent years. Modern warehouse buildings are now focused on efficiency, process synchronisation, minimising their carbon footprint, and enhancing employee well-being.

Will the growth of e-commerce weaken the prospects for traditional retail?

Piotr Kaszyński, managing partner, Cresa Poland: Retail will operate in a different form, reflecting the latest shopping patterns and the needs of the younger generation. Some segments have been doing very well during the pandemic, for example food, health & beauty and also DIY stores have been spreading their wings as large numbers of people started refurbishing their homes during the lockdown. Retail parks, including small parks in residential areas, are now featuring prominently on investors’ radars – since these assets have strengthened their position. Shopping centres won’t give in easily – their owners are already allocating sizeable budgets to extensions and the remodelling of existing malls.

Let’s go back to Cresa for a moment. While others are laying off staff, you are hiring. You must really believe in the best possible scenarios…

PK: …the best example of which is the intense activity of our HR department. We are taking advantage of the opportunities on the labour market, where many interesting names have now appeared. Many faced a glass ceiling in their previous jobs, but they can develop their careers with us. Our model of operation and exclusive tenant representation has proven to be successful – we offer superior service quality, which translates into the trust our clients place in us.

How do you operate on a daily basis?

AS: Our competitive advantage is that we act quickly and effectively. The partners in our company actively participate in all projects. And the important thing is that we do it with pleasure – this is our raison d’être and it’s in our DNA. In the endless meetings with clients and the brainstorming sessions in our company, we simply just have great fun. And we tailor our services – following a full analysis of the market we make the best choices together with our clients.

Well it certainly took me some time to arrange an appointment with all of you. The pandemic must have led to some changes in the way companies operate.

Tl: Please, don’t take it personally (laughs) – we’re all simply making up for the lockdown and the summer holidays. There’s immense pressure on returning to the previous reality: home office proved successful only as a temporary solution, but you can’t do business in the long term without meeting people – clients and colleagues. Chemistry doesn’t work through a computer screen, especially in the case of such companies as ours where daily contact with people is a key feature of our business. We have resumed normal activity and are busy utilising this time to run projects in order to meet our targets by the end of this year.

PK: We’ve been very successful in other areas as well – our retail tenant representation team introduced Primark to Poland, leasing sizeable stores in Galeria Młociny and Posnania. Our investment team is currently working on a large hotel deal. Last year, our valuation team valued several billion euros of property. And the research and advisory team is actively supporting market players with their know-how and strategic approach to real estate.

What are your feelings about the final quarter of this year and 2021?

PK: Definitely positive. We have lived through many crises and we will live through this one too. The world will get back to normal. We’re looking forward to 2021, which will – in my opinion – see a powerful burst of built-up energy from those who have taken a wait-and-see approach. They won’t hold back any more. History has seen many upheavals, conflicts and some very challenging times, but stability gradually returned. Further growth is inevitable.

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