Platforms to success

To begin with, could we look at your private rental sector (PRS) platforms, Resi4Rent and the more recently established LifeSpot. What’s the difference between the two and how have they been performing?

Nebil Șenman, managing partner and co-owner of Griffin Capital Partners: We are pleased to share that both of our platforms have been performing exceptionally well in the market. Resi4Rent, the first of these, is the largest institutional rental operator and PRS developer in Poland in central city and district locations. In 2024, one in four apartments on the PRS market is part of the R4R portfolio. Over the past 5-6 years, we have scaled the platform with our investors to include 4,400 units in operation, 4,500 units under construction while half of them to be completed by the year-end 2024 and app. 1,900 apartments in the advanced permitting stage, set to come online within the next 18-24 months. We maintain consistently high occupancy levels, and our properties, in Poland’s six largest cities, are distinguished by their high-quality construction and architecture.

Maciej Dyjas, managing partner and co- owner of Griffin Capital Partners: After closely monitoring the market, we decided to launch our second PRS platform, LifeSpot, in 2021. This company focuses on developing affordable rental housing in medium and large cities across Poland. LifeSpot currently operates app. 2,000 units in Warsaw, Kraków, Wrocław, the Tricity, Łódź and Katowice, with an additional 2,100 units under construction and a pipeline of over 2,000 units that have building permits or are in the permitting stage, expected to become operational within the next 1-3 years.

What stage are we now at in Poland with the PRS market compared with Western Europe and other parts of the world? How big is it compared to other types of rental and home-owning? Is it still in its infancy – or showing signs of maturity?

MD: Despite the growing number of new projects in Poland, the Polish institutional rental market is still in its early stages compared to more mature markets in Western Europe. Over the past few decades, we have observed a shift in attitudes toward residential renting across the CEE region. The traditional mindset of “my house is my castle” has evolved into “my flat is my castle”, leading to the highest rates of home ownership in CEE countries. In contrast, in most post-communist EU member states, with the exception of Germany, there is a more balanced approach between owning and renting. Meanwhile, the economic, social and geopolitical changes in our region, particularly in large urban areas, are driving a strong need for rental housing. Participants in the PRS market often highlight changing living habits and attitudes toward renting, especially among younger generations, as key drivers of the institutional build-to-rent market’s development. This trend is continuing despite already high housing prices, with growth rates often outpacing salary increases, as seen in cities like Prague and Warsaw. However, as credit becomes more expensive, the concept of ‘housing affordability’ – which varies depending on the context – has gained more attention in expert discussions, making the rental market increasingly attractive.

NS: In addition to Maciej’s observations, solid fundamentals like strong rental demand, consistent rental growth, and high occupancy rates in existing PRS developments are encouraging foreign investors to enter the market. After a dip in the investment volume caused by macroeconomic and geopolitical uncertainties in 2022, investor confidence in the Polish residential sector remained cautious throughout 2023. Over the coming years, we expect that investors will focus more on the potential and the massively under-supplied PRS market, which we see already in the increasing analysis and interest in our numerous discussions with institutional investors from different jurisdictions.

Which cities and locations are showing the greatest demand? And which places are likely to take off in the future?

NS: Poland is currently facing a significant housing shortage, particularly in major metropolitan areas. The structural housing deficit in the six largest Polish cities exceeds 400,000 units (source: PRS & PBSA Market in Poland, JLL, 2024). Naturally, this is where the PRS market is growing the fastest, and we are seeing the greatest interest in our apartments – we are still seeing the highest interest in Warsaw, followed by Kraków, Wrocław and the Tricity area, but also in Łódź, Katowice and Poznań, covering the largest markets, with plans for further expansion.

MD: For both of our platforms, we work with large, experienced developers. For LifeSpot, we have signed a framework agreement with Murapol, which is also a part of our portfolio. Murapol is the only developer with a presence outside the major metropolitan areas, providing valuable experience and local insight. While we have considered expanding beyond the primary markets and explored cities like Szczecin, Radom and Toruń, various factors prevented these projects from moving forward. Nevertheless, we continue to monitor smaller cities, and there is a good chance we will eventually enter these areas.

Who are generally the type of people who choose to live in PRS apartments? How big is this demographic in Poland – and are there now enough people with the income necessary for this market to take off?

MD: Firstly, it’s important to note that the PRS market in Poland still accounts for just over 0.1 pct of the country’s housing stock. The private rental sector continues to dominate the market. When we look at the profile of our tenants, we are primarily talking about the youngest segment of consumers — those who have completed their education and are starting their professional careers. While they may eventually want to own a property, it might be still too early and not yet the right time for them to buy. The vast majority of our clients are under 34 years old, with the smallest group being those over 45 – often parents renting apartments for their student children. We are also open to families with children, who prioritise location and access to necessary infrastructure.

Another segment that is growing in Poland is the purpose-built student accommodation (PBSA) market, which your new StudentSpace platform is addressed to. What’s the potential for this market in terms of supply and demand?

NS: At Griffin, we recognised the potential of the PBSA market as early as 2014. That’s when we opened Poland’s first PBSA building in Poznań under the Student Depot brand, which was our platform at the time. We successfully exited that venture by year-end 2023, having grown the portfolio into a leading market player with nearly 4,200 beds in operation and another 1,000 under construction. However, recognising the immense potential of this sector in Poland, we decided to launch a new platform, StudentSpace, in partnership with Signal Capital and Echo Investment. This decision was driven not only by our expertise, knowledge and the synergies with other companies in our portfolio but also by favourable market conditions and opportunities. Currently, Poland is home to the sixth-largest student population in Europe, with app. 1.2 mln students across 359 universities. Despite the existing assets, including public accommodation, Poland faces a shortage of around 400,000 student beds, which is the sixth largest deficit in Europe (source: PRS & PBSA Market in Poland, JLL, 2024). This unmet demand makes the market highly attractive from an investor’s perspective.

StudentSpace was launched earlier this year. What’s being developed so far and when will the first student dorms open?

MD: We announced the launch of the new platform in March this year, and just a few weeks ago, we unveiled our first two investments. We have already secured two plots in Kraków, where buildings will be constructed to accommodate more than 1,200 students. Building permits have been obtained, and the development process is underway, with their completion expected before the 2025/2026 academic year. However, StudentSpace’s plans go beyond Kraków, with active projects already in progress in Warsaw. One of these will be located in Mokotów district, offering excellent connections to major Warsaw universities.

NS: This provides a solid foundation for achieving our business milestone: building 5,000 beds over the next 3 to 5 years. It’s worth mentioning that our buildings are designed and constructed with meticulous attention to detail, meeting the needs of residents and adhering to environmental standards. Echo Investment, the developer behind these projects, brings exceptional experience and expertise, gained through the development of PRS projects under the Resi4Rent brand and as a service developer for Student Depot in the past. It specialises in creating modern buildings that seamlessly blend into the urban landscape – an approach that also guides us in our StudentSpace projects.

Self-storage is another segment that you’ve recently entered with last year’s acquisition of Stokado. For anyone who is unfamiliar with this segment, could you explain what kind of facilities these are? And what is the potential of this market in Poland?

NS: Self-storage units, simply put, are storage spaces designed to hold various items and goods for a specified period. These facilities are self-service, meaning users have constant, unrestricted access to their storage unit during the rental period. The growing appeal of self-storage is being driven by urbanisation, smaller living spaces, and the shift toward more flexible business operations. It’s not just companies, particularly SMEs, that are turning to this service; a rising number of consumers are opting for it as well. With more people moving, both domestically and internationally, self-storage provides the flexibility to manage their space without having to part with belongings. Additionally, the lack of space in cities and the rising costs of renting or purchasing apartments are pushing residents to store items in self-storage facilities rather than renting larger homes.

MD: The potential for growth in Poland is significant. Currently, Poland has around 4,600 sqm of self-storage per million inhabitants – 17 times less than the UK and 4 to 6 times less than in Germany and Spain (source: European Self Storage Industry Report 2023, CBRE 2023). This demonstrates that Poland is still in the early stages of market development, with demand expected to rise as the awareness of and need for flexible storage solutions grow. This market has already seen steady expansion across Europe, and Poland is poised to follow similar trends, offering significant opportunities to close the gap with more mature Western European markets.

Why did you choose to acquire Stokado? What has it completed since the deal, and what else is in the pipeline?

NS: The self-storage market in Poland is highly fragmented and inconsistent. Some operators manage just a single building, others rely solely on container units, and some operate out of rented properties. Acquiring an established player along with its assets has allowed us to enter the market from a stronger position. Stokado currently operates 27,000 sqm of net leasable area and stores goods for app. 3,000 private and B2B customers across its nationwide network of dedicated self-storage facilities. Since the acquisition, we have focused on expanding our operations.

MD: Just a few months after joining forces, Stokado acquired the Polish operations of warehouse rental company Top-Box, including its operating facility in Warsaw. This acquisition increased Stokado’s portfolio by 4,500 sqm nla, with an additional 5,000 sqm nla in development. Earlier this year, we also started the construction of a new 5,000 sqm nla self-storage facility in Kraków. This will offer 24/7 access and flexible rental options for both individual and business customers. In addition, it will be the first self-storage facility in Poland to achieve a BREEAM certificate of ‘Very Good’, reflecting our commitment to the highest sustainability standards. We plan to complete construction by Q3 2025. Looking ahead, we will continue to scale Stokado’s operations, with a new location to be announced soon. This expansion is part of our broader strategy to capture the growth potential in Poland’s self-storage market and develop 150,000 sqm nla over the next five years.

NS: We are exploring various growth opportunities. Our strategy includes both developing our own self-storage facilities under the Stokado brand and pursuing further acquisitions.

You also have several platforms dedicated to logistics. How have they been performing lately?

MD: The logistics sector in Poland, while experiencing a post-pandemic boom, saw some cooling last year. However, activity is increasing again, particularly with, data from Q2 of this year (source: European Logistics Update H1 2024, Cushman & Wakefield, 2024), showing that demand in Poland achieved the best performance in Europe during that period. In terms of supply, the Polish market is on the verge of surpassing 35 mln sqm of warehouse space. The market is showing signs of stabilisation, and investor activity is beginning to rebound. New projects are being launched but require a meaningful level of pre-let to attract capital.

NS: Our platforms are aligned with this trend. Trademarc recently sold a 40,000 sqm BTS warehouse in Teresin, west of Warsaw. This confirms that if one has a valuable, well-located and environmentally certified asset, there’s room for new transactions and investments. One of the motivations for selling this particular asset was our strategy to dispose of stabilised properties to free up funds for new investments, where we see significant opportunities in the current market conditions. Our second logistics platform in Poland, European Logistics Investment (ELI), is also active. Last year, it expanded its presence in Silesia by acquiring land in Knurów for a BTS industrial project, which is now completed. Additionally, this year, ELI signed a EUR 155 mln loan agreement with a consortium of Pbb and Helaba which underlines the strong metrics of our properties in terms of location, quality and occupancy. The funds will be used to refinance eleven properties in ELI’s logistics portfolio, situated in nine prime locations across Poland.

How confident are you in the continuing strength of Polish warehousing as an investment product?

NS: Despite a complex macroeconomic environment and ongoing market volatility, the Polish logistics and warehousing sector remains one of the more robust markets in Europe. In H1 2024, the sector demonstrated remarkable resilience, with warehouse leasing activity increasing by 21 pct y-o-y, reflecting a strong appetite for high-quality industrial space. This growth was largely driven by the sustained expansion of e-commerce and manufacturing. Moreover, Poland benefits from its strategic location in Europe, acting as a key logistics hub for international trade routes, which further enhances the sector’s appeal to investors. Currently, 2 mln sqm of new warehouse space is under construction (source: Rynek przemysłowo-logistyczny w Polsce Q2 2024, CBRE, 2024). These figures underscore investor confidence in the sector’s stability and long-term growth potential, making warehousing a highly attractive investment product.

You have already launched a project in The Netherlands and I believe you are planning to open an office in Germany. Could you tell us why you are making these moves?

MD: That’s right, for several years now, we’ve been expanding beyond Poland. In 2021, we launched the International Industrial Properties (IIProp) platform, which currently holds assets in Austria, France, Italy and the Netherlands, and we’ve also invested in Germany and Spain. Among our recent achievements, last year we began construction on a new light-industrial project in the highly urbanised municipality of Moissy-Cramayel, south of Paris, which we plan to complete by the end of this year. Additionally, this year, we initiated a new logistics facility in Zwolle in the northern Netherlands, with its completion expected in Q1 2025.

NS: Germany is also particularly attractive to us. We increased our presence in this country by acquiring, together with Wing, a 60 pct stake in Bauwert, a leading German real estate developer focused on Berlin and its outskirts. We plan to further strengthen our presence in this country by opening an office there next year. Germany’s large economy, and diverse real estate markets, and its strategic location at the heart of Europe offer significant growth opportunities. By starting a local presence, we do believe that we can source and develop some attractive investment opportunities not only in real estate but eventually also in the energy and infrastructure environment. As always you have to be local, to build reliable and strong relationships with our strategic investment partners, which have approached us multiple times to broaden our network and approach beyond the CEE region.

Which other markets abroad are you now looking at? And what scale of activity are you planning outside Poland?

NS: For now, we will first focus on Germany. We need to go step by step. We are not expanding just to expand, but it needs obviously to make commercial sense – as with the acquisition of Bauwert. We have a strong angle to Germany as we have done very successful transactions worth billions in the past in our previous assignments as the development and merger of GEHAG with Deutsche Wohnen or the creation of the leading commercial platform German Acorn Real Estate, which was merged with Prime Office into Deutsche Office, and we later sold to Alstria Office REIT-AG, to name a few landmark transactions.

MD: While real estate remains a strong pillar of our business, our interests and activities extend far beyond this sector. We are also significantly involved in private equity, energy and infrastructure sector – an area where Griffin has established a strong presence and achieved notable success. This aligns with our strategic focus on innovation and sustainability. We see significant potential in infrastructure projects, such as those related to sustainable transport, which complement our existing renewable energy initiatives – we are also, among others, working on creating a new venture in this area.

The dynamic duo

Maciej Dyjas and Nebil Șenman are the managing partners and co-owners of Griffin Capital Partners. Maciej’s career began in consulting companies affiliated with Hewlett Packard in Germany and US. He then became a co-investor and partner, and later managing partner and CEO of Eastbridge Group, which by the time he departed in 2014, held assets of over USD 3 bln. He is a Polish-German national. Before joining Griffin in 2014, Nebil held senior roles at Oaktree’s private equity and real estate funds, where he originated and oversaw investments and operations worth several billion euros in Europe focusing on Germany and Poland. Prior to Oaktree, he spent eight years at Ernst & Young Real Estate, holding various managerial positions in real estate and corporate finance advisory services.