Old-school with a new twist

The plan might be a beautiful one, but the price of bringing it to life can sometimes be rather high. Rafał Przybył, the regional manager of Vastint Poland responsible for the conversion of Stara Rzeźnia, a former abattoir complex in Poznań, is able to provide quite a long list of the challenges faced by developers when they embark on such a project – including changes to the rules and regulations, as well as the necessity of keeping a flexible approach and adapting to local requirements. He also stresses the lack of strict criteria for the issuing of permits for this type of project. “For historic buildings and areas that are under the protection of the local monuments conservator, there is a lot of discretion, which makes the decision-making complicated,” he admits. Additionally, Magdalena Bartkiewicz-Podoba, the CEO of Liebrecht & Wood Poland, insists that: “These kinds of projects normally require much more funding than those built from scratch.” Her company is currently developing the Drucianka Campus project in Warsaw’s Praga-Północ district.

Old buildings don’t normally get financial institutions into a state of high excitement. “Raising the necessary funds for a conversion project is much harder than with new projects, especially when you take into account the risks related to renovating the existing structures,” admits Rafał Przybył. The director of Liebrecht & Wood. meanwhile makes the point that current technical standards cannot always be applied to historic structures. “Creating places like Centrum Praskie Koneser in Warsaw and Drucianka Campus is a multifaceted task, which is not only about adapting a set of historic buildings that are usually in a terrible state of disrepair to new uses, but also about planning out how they are going to function over a period of many years,” explains Magdalena Bartkiewicz-Podoba.

Klaudia Kubies of A&A Holding, which is developing the Magazyn Bawełny centre in Łódź, also points out that renovation projects that take many years also have to meet the rapidly changing needs of the market while also staying up-to-date with technology and changing social trends and, as a result, they have to be constantly adapted to changing circumstances. “The pandemic and also the subsequent drastic changes in consumer behaviour and office usage has demonstrated that it is highly flexible commercial real estate that is the most in-demand from tenants. This is the only kind of space that can be adapted to the evolving trends and needs of the market,” emphasises Magdalena Bartkiewicz-Podoba.

Why modernise?

So why do developers even take on such challenges? All those that we spoke to agreed that it is mostly about returning high-quality buildings often with attractive locations back to local communities. “Historic buildings have a lot to offer when they are in prestigious locations such as the centre of town,” says Klaudia Kubies of A&A Holding. “Modernisations and conversions also further sustainable development through the re-use of existing resources, which fits in with ESG strategies,” claims Rafał Przybył of Vastint Poland. “Moreover, a modernised building converted to mixed-use that draws on the heritage of the location including its aesthetic and historic qualities helps create and strengthen local communities while also ensuring their wellbeing,” argues Magdalena Bartkiewicz-Podoba.

How do you guarantee the success of a mixed-used conversion by balancing the proportions of office, retail and residential space? Obviously, there are no perfect proportions, but nonetheless there are certain rules. “Across the world, we are moving away from creating single-use quarters in favour of balanced projects that meet the requirements of the 15-minute city,” points out Magdalena Bartkiewicz-Podoba. “Developments that are not only work places but also centres of life are those that tenants prefer and will continue to prefer into the future,” she claims.

Rafał Przybył draws attention to how the residential section is an important as piece of the puzzle. “Interest is growing in living in centrally-located places. That’s the conclusion of a study on the ownership trends for apartments, including their size and other parameters,” he points out. It’s hard to say which part of a mixed-use project is now the most profitable for an investor, because a lot depends on the local market conditions; but in his opinion, despite the radical changes in the investment market, offices are still highly profitable, especially when this space allows for new ways of working. However, Rafał Przybył also admits that “it seems that the residential sector is nonetheless the most attractive in this regard.”

Poznań, Warsaw and Łódź

What’s the biggest news we’ve been recently hearing from the construction sites of renovation projects? As has already been mentioned, Vastint Poland has been developing Stara Rzeźnia in Poznań, and in 2023 appointed Erbud to renovate the first of three historic buildings within the complex. Currently, the project is at the planning stage and the urban plan for the area is shortly to be ratified. “We’ve already started on building the infrastructure with the construction of a large storm drain and we’ve begun the work to secure the old buildings, especially the largest former production hall,” reveals Rafał Przybył. Already, permits have been issued to reconstruct three of the buildings with work to start any time soon. Two further buildings are also to undergo a similar transformation.

In the second half of 2022, preparation work was begun by Liebrecht & Wood on the development of Drucianka Campus in Warsaw’s Praga-Północ district. The complex is to eventually comprise 42,000 sqm of offices and over 7,500 sqm of retail, service and event space. The renovation work was planned by the Juvenes Projekt studio and should take around 2.5 years at a total investment cost of almost EUR 150 mln. “The work done so far includes securing the walls of the main building that are to be conserved, and also the chimney. Also, advanced earthwork has been completed to strengthen the foundations using jet grouting,” explains Magdalena Bartkiewicz-Podoba.

Last October, A&A Holding received the final building permit for Magazyn Bawełny in Łódź, which is a building within the Manufaktura complex. The renovated building that once served as a warehouse for the neighbouring cotton mill is to house 8,500 sqm of offices and 4,000 sqm of retail and services. Construction work is to start this year and currently the general contractor is being selected.