The cityscape gardeners

Nathan North, ‘Eurobuild CEE’: Vastint has been active in Poland since the early days of the real estate market here. Could you give us some sense of how you have grown your operations since then?

Roger Andersson, the managing director of Vastint Poland: The company has been present in Poland since 1992, so we will be celebrating our 30th birthday here next year. Our first project was Swede Center on Al. Jerozolimskie in Warsaw, which as well as offices had the second McDonald’s and the second Ikea store in the country. This was a complex project in itself, because it was built on a concrete slab above the city’s main railway line. Back in the 90s we started with around seven people in our office; now we have 60 and an annual revenue of EUR 114 mln. At present we now have 235,000 sqm of existing properties (not including sold properties) in our portfolio and almost 600,000 sqm of leasable and saleable space in the pipeline. Three projects are under construction with a combined area of 60,000 sqm: the B10office-hotel complex in Wrocław and the second phase of Waterfront in Gdynia, both started this year, as well as the K2 office building, also in Gdynia, which is close to completion and should be ready at the beginning of 2022. As an international organisation we are still growing geographically and now have divisions in seven countries – including in Latvia, Lithuania and Romania in our region. Vastint Group has just opened a branch in France, where we are also planning to be for the long term. Maybe later we will do the same in Italy or Spain, where we already own properties – hotel buildings – but we don’t have local operations in these countries yet.

What distinguishes Vastint from other developers?

We put our own money into developed projects and manage the design work ourselves. And the projects are very carefully designed with the end-user in mind, as we hold onto most of them in our property portfolio for our own management. Having our own in-house property and technical management teams is also unusual for developers, since most outsource such activities. We want to be as close to our tenants as possible and to deal with them when it comes to the service costs, refurbishments and so on. We can use our experience from these contacts when planning future developments, both here and cross-border, to avoid repeating the same mistakes – and it’s more difficult than it sounds to accomplish this. This approach is reflected in our Business Garden developments, which as well as in Warsaw, Wrocław and Poznań have also been built in Riga, Vilnius and Bucharest. Although the business parks in the various cities don’t look the same, they are all built according to the same concept – with lots of green areas and amenities and through the employment of proven solutions. We want the client to see what we do and trust us to do it, yet we are not afraid to think innovatively and to break the mould. We’ve been in Poland for many years and intend to stay for many more. So it’s important for us to be respected and reliable.

You said that Vastint is a long-term developer and manages its portfolio. However, you have sold some projects.

Yes, we have sold a number of projects in the last two years. For instance, we decided to leave Szczecin and sold the Brama Portowa office complex there. The buildings comprising the first phases of the Business Gardens in Poznań and Wrocław have also been sold. These recent transactions are not in conflict with the Vastint’s long-term strategy. Although we have sold nine buildings, most of these complexes still remain in our portfolio. But there came a moment when we recognised that it was an opportune time to sell to capitalise on favourable market conditions – and this proves that our developments are good investments.

And how has your strategy changed over the many years you have been active in Poland? Are you not shifting from office to residential development?

It’s true that ten years ago we were exclusively an office developer, but even back then we were already thinking about diversifying our business activities by entering different segments of the real estate market. As a result, in addition to commercial buildings, we are now developing hotels, residential projects and mixed-use developments in Poland’s largest cities. Our first purely residential project, Riverview in Gdańsk, was completed two years ago, after eight years of preparation. The estate was very well received, and thus we have proven that we can think long term and successfully develop our business. In the near future we will introduce to the market other residential projects in Gdańsk and Poznań. We plan to deliver nearly 6,000 flats over the next five years.

And you’re also planning a further stage of your Riverview residential project on the Gdańsk river embankment?

One of the planned projects will be a continuation of the existing Riverview estate, although this phase is to be three times bigger. We bought the land 8–9 years ago, when this was a very old and very scary place to walk through. The design process was a huge challenge due to the tricky demands in the masterplan. But our plan there was to transform the plot into an interesting place to live – and now it might even be the best residential area in Poland. There are old historic buildings on the site with interesting, industrial architecture, which are now being converted into two-storey apartments, almost like townhouses. And it’s not very common to transform old buildings into residential space. Even the architects I spoke to said: “Roger, this just isn’t possible” – but we nonetheless succeeded. We are selling the apartments with a simple approach – what you see is what you get. All the flats on offer are fully finished and equipped with virtually everything you need, i.e., household appliances in the kitchen units, built-in wardrobes, and even washing machines. You can move in the very next day after the purchase – you just have to bring your furniture. You also don’t have to live on a building site for years while your neighbours are doing their fitting out. We are probably the only developer in the country offering this kind of approach on such a scale. It may not be a product for everyone, but the residents of the existing part of the Riverview estate have been satisfied with the quality of the finished flats they’ve moved into. A similar strategy will be applied for all our planned housing projects.

What approach are you taking to your large-scale multifunctional projects?

Our basic aim is to create multifunctional neighbourhoods for many people to live, work and to spend time in, urban quarters that are friendly in scale and form and yet helping Polish cities to become more attractive and sustainable. Such developments are very challenging as they are long-term and complex – but on the other hand, this also makes them super interesting. As there is no simple ‘one size fits all’ solution, we have a huge responsibility for getting each of them right. In our opinion, it’s always important to enter into a dialogue with the local authorities to address the city’s broader needs and ensure that social priorities are not marginalised. We have become experts in this field and quite famous for such projects – and people now know that we keep our promises and won’t build something that they don’t like. We are working on a truly remarkable project on a 5.5 ha site in the centre of Poznań – Stara Rzeźnia, which will offer 80,000 sqm. The area has been neglected for many years and the former slaughterhouse complex, built in 1900, was being used for flea markets and cultural events. However, it is quite a well-known district of the city and the local community has high expectations for it. Stara Rzeźnia will be significantly reshaped by 2025. The restored historic post-industrial buildings in the two main central squares will be surrounded by new residential and office buildings. There will also be a theatre and a market hall, craft workshops, gastronomy and services. The mixed-use project will ensure a high quality of life for its residents and visitors and is designed preserve the identity of the place. Another major pipeline project is Airport Village in Warsaw, to be built on a 14 ha greenfield site across the road from Chopin Airport. The city didn’t know what to do with this site and we came up with the solution: 180,000 sqm of residential and office space, catering, small-scale services, education and medical services with extensive greenery, sports fields and two large lakes. This approach offers the chance to create an attractive local centre for residents and people from outside the development area. In Gdynia we are continuing our Waterfront development, the first stage of which was completed in 2015 and included 10,000 sqm of office space and a Courtyard by Marriott hotel. The project involves extending the town up to the coast with around 80,000 sqm of residential and office space, retail and service premises, a Moxy hotel and a long-term occupancy hotel, a market square (something Gdynia hasn’t had previously) and cultural amenities, including an eight-screen cinema. The entire project will be well-integrated into the city’s fabric and has great potential to become an important part of its public space.

Has Covid led to any major changes to the planning and design of your projects?

Markets change and unexpected events occur, so of course we sometimes modify our strategy accordingly. Yet the pandemic has had a slight impact on, let’s say, the way we market our products, but not on our long-term thinking. Our office buildings coped with the pandemic situation without any problems. The high technical standard of the facilities meant that only minor adjustments were needed to bring them into line with the sanitary regime required during the during successive waves of coronavirus. Nor did any of our planned designs need to be altered. The properties have plenty of green space and are generally not high-rise buildings, with openable windows, and they are equipped with many technical systems for ensuring clean air in the work rooms. In addition, our leasing offer is very flexible. You can rent from us offices of 200 sqm or even up to 20,000 sqm, and in short, medium or long-term agreements. We also offer ready-made, fully finished space that you can move into straight away, which can be very convenient in times of uncertainty. In our residential properties, it has also been possible to offer space for home offices due to their flexible layouts.

Covid must have had an impact on your office leasing levels. You’re not worried that home/hybrid work is here to stay?

During the last 18 months or so, we did see the demand for office space fall by 50 pct. But today the demand is back to almost pre-pandemic levels, which is definitely a good sign. Office tenants, however, are still in waiting mode, putting off decisions about moving; but in the first half of this year we signed leases for 8,000 sqm of offices, which is quite a big figure for us. Several leases have also been renegotiated because, as our experience shows, office tenants rarely move out and usually stay for a very long time in our complexes. But at present about 30 pct of our tenants are still in home/hybrid mode and waiting to return to their offices. Some people think that the hybrid mode is here to stay. I actually think that it will only do so for a while, but not in the long run. People want to have social contact and interaction with each other. In Vastint’s company offices, for instance, everyone was back by June. It’s not easy to work from home – there are too many distractions. And it’s not healthy either, when the line between work and your home life becomes so blurred. People want to have social contact and interaction with each other. I’m quite a determined person in my business life, but even I struggled to work from home. My remedy for this was to engage in lots of online meetings. However, many homes in Poland don’t have good wi-fi and an office environment provides all the necessary amenities – fast connections, IT support and access to the company server. Compared to public and other kinds of space, the office environment can be made to be very safe – and it will be the buildings that cope better with the pandemic that will come out as the winners in this situation. Therefore, the question is actually not whether things will get back to normal, but how long it will take. We believe there is still an office market.