On the eve of the revolution

What does the new strategic consultancy and ESG department that you run actually do?

Katarzyna Lipka, director of strategic consultancy and ESG, Cushman & Wakefield: The department itself is indeed new, but most of the services we offered before. I’m talking about strategic consultancy and support for sustainable development and construction. Our research is not only about optimising the management of real estate and its repositioning, but it also covers certification, energy efficiency and purchasing electricity. Currently, we have to deal with a few mega-trends that are drastically changing all aspects of business, while the upcoming regulatory challenges are a huge challenge for all companies – including developers, property owners and corporations.

Which regulations do you mean?

New regulations such as the ‘Fit for 55’ package to achieve EU climate goals, including the reduction of greenhouse gasses by at least 55 pct by 2030. Part of this package is an amendment to the EPBD directive, which should come into effect within a few months. Among other things, this sets out a definition for a zero-emission building as well as changes to the energy characteristics certification and also the requirements for calculating a building’s contribution to global warming throughout its entire life cycle. New requirements are also emerging in the new year for reporting sustainable development in accordance with the CSRD directive.

Are Polish firms ready for this?

Most companies that already report under the NFRD directive are in a relatively good position. This is obviously slightly different to the rules that will come into force in 2024, but large corporations already have particular structures and infrastructure that allow them to make further changes – teams of experts and advisors as well as set procedures. However, the important thing is that we are not talking about an ESG strategy, but a business strategy that includes ESG principles, since these two factors cannot be separated.

What about small and medium-sized firms in this situation?

Large companies that have until now been reporting under the NFRD will still have to meet the reporting requirements but under the CSRD from 2025; and they are going to be joined by small and medium-sized firms listed on the stock exchange a year later. However, smaller companies may lack appropriately qualified specialists. Importantly, there will be ways of gathering, updating and processing data, so you most certainly need to think about new information systems.

What’s going to happen to the office market in Warsaw, which has almost collapsed, over the coming year?

That’s true. Over 2023, a total of 60,000 sqm of new space came onto the market in Warsaw, which is far below the average of 250,000 sqm for the last dozen or so years. This supply gap could last even up until 2026. Tenant decisions are going to be determined by the lower volume of space, with many of the new projects being concentrated in city centres. It also should be pointed out that the rising number of renegotiations shows that the trend for companies to regularly change their offices has been diminishing. This has a lot to do with the maturity of the market in Warsaw as well as the rising costs and the more limited availability of office space.

Which sectors are going to perform well in the future?

Retail has been doing a lot better. We can see rising consumer confidence resulting in greater consumer spending over the coming months and with this expected improvement in the economic situation we can have a greater expectation that the retail sector will grow more rapidly. At the same time, we are seeing certain changes in consumer behaviour. The demand for premium products and wellness services has been growing, while consumers are becoming more aware of and willing to buy recycled clothing that’s made from good materials. They are also paying more attention to human rights during their manufacture. Since 2020, a large part of this new supply has been provided by retail park development, which customers are favouring due to their convenient locations and the ease with which they can do some quick shopping. The shopping centre segment, however, has reached its saturation point – and we are even seeing some such centres being closed down.

Does this mean that the warehouse market is set to lose its crown to retail as the fastest-growing sector?

When it comes to the supply side, this sector has indeed been slowing down a little, which will probably be reflected in a reduction of the growth in stock over 2024. Because of the still-uncertain macroeconomic and geopolitical situation, we are also seeing a slowdown in demand as well as a change in its structure. E-commerce is still growing but no longer as quickly as during the pandemic. However, the nearshoring of manufacturing and the shortening of supply chains will be the main source of growth for the market. In all sectors, we are seeing a slowdown in investment activity due to the pandemic, the war in Ukraine, soaring inflation and interest rate hikes. Nonetheless, the market fundamentals in Poland remain strong and it is only a question of time until the market regains its balance.

And when it comes to the very near future, what are your plans for the winter break?

I’m taking my son to a family skiing camp in January. He’s going to continue learning how to ski, which he started last year. But I also need a bit of practice.

Interview: Julia Cudowska