Brown is the new green

According to Statistics Poland as cited by Newmark Polska, on 62 ha of construction sites in 2021 land reclamation was being carried out. Bringing such sites back into use seems to follow the principles of green construction, whereas raising a new building from scratch on undeveloped land uses up existing resources. However, the development time is often considerably longer, and, in comparison to a greenfield project, the project is far more complicated and the costs are higher.

Historical knowledge

Michał Samborski, the head of development at Panattoni, claims that the trend for developers to turn to brownfield sites has been evident for many years, but lately it has been picking up extra pace. Maciej Wójcikiewicz, the director of the valuation department at CBRE, makes the point that the original usage of the land and its current status are crucial: “There are no universal features. When it comes to real estate that is not under conservation protection, there’s usually a financial advantage to be gained from demolishing any existing buildings, since doing so only adds a little to the costs in relation to the entire investment and the time it takes is relatively short. However, when it comes to historic buildings, the costs are much higher and the time it takes is much longer. And if hazardous materials were used in their construction, such as asbestos, the removal costs can even be sky high,” he admits.

Luckily, not every brownfield site is a death trap filled with dangerous substances and huge hidden costs; but all of them require specialist know-how and experience. “Knowledge of the laws governing land reclamation and environmental conservation is also essential,” insists Maciej Krzyżak, the development director at 7R.

For the Earth and Earth-dwellers

Brownfield sites are excellent for achieving social responsibility goals, since everyone can benefit from this type of investment – including developers, workers and the local community. “Warehouses built on reclaimed land gain additional points during their environmental certification for the fact that this land has been brought back into use,” points out Jakub Kurek, the industrial land and warehouse director of Newmark Polska. Maciej Wójcikiewicz of CBRE also highlights another advantage of former industrial sites: “Renovating buildings when compared to their demolition reduces carbon dioxide emissions. Besides, transforming existing real estate into warehousing, service and recreation facilities or hotels also generates new jobs,” he argues. “Breathing new life into degraded land is beneficial for the environment and meets ESG strategy goals. It also regenerates the local economy and increases tax revenues,” adds Maciej Krzyżak of 7R.

Painting the town brown

A large majority of warehouse developers in Poland have completed brownfield projects, but Panattoni has completed the most. Out of 317 projects completed in the last three years by the company, 77 were on former industrial sites. The developer’s land reclamation process involves removing pollution, soil stabilisation and the introduction of new plant species. The land on which City Logistics Katowice has been built is one example of this process. The ground was polluted with heavy metals due to its use for mining and foundry operations in the past, and so around 2,000 cubic metres of soil had to be cleaned, at the not insignificant cost of EUR 330,000. The first Panattoni project to be awarded a BREEAM rating of ‘Excellent’ was Panattoni Park Sosnowiec – the brownfield site of a former glassworks. According to Panattoni, brownfield projects make up at least 45 pct of its European portfolio and in Poland accounted for 33 pct of all its projects in 2022.

7R also redevelops former industrial sites. “We’ve developed or are currently developing such projects in Katowice, Bytom and Zabrze. In Katowice, we have completed 7R City Park Katowice I, right next to a junction of the S86. The complex was built on the site of a former foundry,” reveals Maciej Krzyżak of 7R. The development did not take place without a few surprises, but fortunately they were good ones. “During the work, we came across a lump of dross [a clump of metal impurities formed during casting], which was buried in the grounds in May 1984 to mark the 150th anniversary of the foundation of the first foundry in the area. The piece is now on exhibit in the Walcownia Museum of Zinc Foundries,” says Maciej Krzyżak. Hillwood has also undertaken brownfield projects, in such locations as Gliwice and Mysłowice. At the moment it is building a 130,000 sqm logistics centre on the site of a meat packing factory that closed down many years ago in Rawa Mazowiecka.

Not just for e-commerce

Former industrial sites are often to be found on the outskirts of cities or just outside them, and for this reason they represent attractive propositions for many industries. “The best locations are coveted by residential, office and retail developers, as well as the developers of large mixed-use projects. In the warehouse sector, many are looking to open large centres close to their customers. E-commerce companies are the natural candidates for such centres along with those specialising in last-mile logistics. Reclaimed industrial land, however, attracts all industries that require warehousing and distribution near the centre of a city. These could be catering firms that supply local offices or car part suppliers for city garages. Many companies also use such space for their showrooms and head offices, especially when the site has historical and cultural significance,” explains Michał Samborski of Panattoni.

Profitable plots

Nevertheless, many industrial buildings cannot be repurposed as warehousing or production facilities. This doesn’t mean that they cannot be reused for anything. The ace up their sleeve is their access to infrastructure, such as utilities and roads, which have to be built up from scratch with greenfield projects. “For brownfield logistics, we generally have to knock down the old structures. The older buildings are often too low-rise and are not very functional, so it’s difficult to adapt them to the legal and technical requirements of the industry. Office and retail developers have more opportunities to repurpose such buildings. You always have to resolve problematic issues, such as the layouts of load-bearing walls, the height and size of the rooms, and the lighting. However, if the buildings are in a good location and they also have historical significance, tenants tend to like them, making the development profitable,” argues Maciej Wójcikiewicz of CBRE.