Local heroes

Alex Hayes, Eurobuild CEE: How has Axi Immo evolved since it was founded and how has the market changed during that time?

Renata Osiecka, the managing partner of Axi Immo: Looking back at the growth of Axi Immo over the last 15 years, starting the firm in 2009 was one of the best decisions of my career. The commercial real estate market, similar to many other sectors, was going through a transformation following the financial crisis triggered by the collapse of Lehman Brothers. Despite the numerous challenges I identified, there was a unique opportunity at that point to build something new and durable. I believed that the Polish market would come back to life and companies would start to search for opportunities to adjust to the new situation in the market. It was a time when investors were focusing primarily on large shopping centres and offices. Warehouses accounted for a small proportion of transaction volumes. In time, they were to gain the reputation of one of the most attractive segments of the market. Our growth has gone hand in hand with the growth of the market. The Polish warehouse real estate market was very local to begin with but over time, it has become an integral part of international supply chains. The first boom was triggered by the entry of e-commerce giants such as Zalando and Amazon who opened international distribution centres in Poland, thus strengthening the country’s status as a transit country and a European logistics hub. At the same time we as a firm have gained a reputation as a leader for industrial real estate advisory. We have witnessed how the sector has grown in maturity and how it has become more diverse over time. SBU projects first came to complement existing big box facilities. After this, urban logistics saw a rapid increase in demand as a result of the growth in e-commerce. The Covid-19 pandemic strengthened the sector further as it led to a shift in consumer demand from services to goods, and accelerated the growth of online retail. Global supply chain disruptions meanwhile encouraged manufacturers to move production closer to European consumers – a trend dubbed as nearshoring. In the last few years, development activity has become a key indicator for the industrial real estate market. Over the last decade, total industrial stock in Poland has tripled, increasing by over 25 mln sqm – from 8.2 mln to 33.5 mln sqm. We have evolved from a small, peripheral European market to one of the largest on the continent. Despite the economic slowdown in 2023-24, Poland is still a leader in economic growth in Europe. In Q2 2024, take-up in the Polish industrial sector was the highest in all of Europe.

Axi Immo is known for industrial real estate advisory but these are not the only services you offer. Are you planning to expand into new sectors?

Axi Immo has indeed built a reputation as an industrial real estate expert, especially with regard to warehouse space. However, we are also steadily growing our portfolio of services in other areas of the market. In the very first year of the firm’s operations, we introduced office tenant representation services in response to the needs of our clients who were often looking for space that combined warehousing and offices. Together with the evolution of the market, we have widened the range of services on offer, in reaction to changing market conditions and client needs. Today, Axi Immo is a firm of around 80 professionals active in different segments of the market. We offer a wide array of services within the industrial and office sectors. We are the only Polish advisory firm within industry forums such as PIRF and PORF. With the comprehensive range of services we offer, we are able to lead clients through the entire investment process, from complex market studies, transactional advisory and land purchases to BTS/BTO project management, valuation and property management. Our strategy is to provide comprehensive service, which provides us with a competitive advantage over other players in the market. I have always invested in people and their skills. I have also invested in maintaining a local presence through opening offices in regional cities. Nevertheless, we remain open to further growth and expansion into new areas of business. One fast-growing sector we are planning to invest in is data centres, which are benefitting from the rise of artificial intelligence and cloud computing. We also want to expand what we offer within the private rental sector. It is a very young segment of the market but it is growing rapidly and is attracting growing interest from investors. As part of our long-term strategy, we are continuously expanding our range of specialist services for our clients. As a firm, we are adding competencies in the area of property management, ESG certification and energy optimisation, in response to increasing market requirements and the need for sustainable development. Our most recent line of business, which opened in 2022, is the valuation and advisory department. We decided to add it in response to the needs of our clients and rapidly changing market conditions. In a short space of time, the team has gained the trust of many renowned banks and international clients, winning contracts to value their assets. The team is led by Grzegorz Chmielak, who is well-known in the market and who also heads our investment department.

How will Axi Immo develop over the coming years?

We are planning to focus closely on our key strengths and offer more specialised services in response to changing market conditions. We are carefully monitoring developments in the sectors where our clients are active to provide them with comprehensive, tailored solutions. The key element of our strategy is to further expand our services, especially in areas with the most growth potential. We expect the Polish commercial real estate market will follow a growth path similar to that seen in Western Europe, including a repositioning of existing developments and the introduction of new formats, some of which are already attracting interest from developers and investors. We don’t just want to react to changes in the market. We also strive to shape it, by building long-term relationships with our clients. In an era of globalisation, our clients’ problems become our partners’ problems and so we continue to seek out new skills and diversification opportunities. At the same time, we are investing in our existing talent and we want to attract new specialists to the firm in order to ensure the highest level of service and to support Axi Immo’s sustained growth. We see enormous potential in the warehouse market in Poland, driven by e-commerce and changes in global supply chains. We expect demand to continue to grow for industrial space, which will give us an opportunity to further strengthen our position in the market. ESG requirements are key to this transformation as certification has become a market standard for banks and investors. In response to this, we are investing heavily at Axi Immo in improving our skills in this area, which will allow us to offer comprehensive support to our clients as they strive to meet these standards. In addition, we are planning to increase the use of artificial intelligence in our business. We would like to start using AI in market analysis and use it to automate operations. We want to use the tools of the future in order to better understand the needs of our clients and to make better predictions about the market.

Have you ever considered entering foreign markets?

From the start, we have concentrated on growing our services locally and on developing a thorough understanding of local market players. Today, as well as our Warsaw headquarters, we also have offices in five regional cities. We are growing in a harmonious way in Poland’s largest markets because we want to be close to our clients. We are not spreading ourselves thin as our key goal is to achieve real gains for our clients. Katowice – one of the most important industrial hubs in the country - is our oldest regional office. However, as the largest Polish advisory firm in the commercial real estate market, we are mindful of making sure we are recognized by international clients. I firmly believe that acting alone even the best person in the field will lose out to the many benefits of working together. This is why we have joined several international alliances, such as IRELS and SIOR. Recently, we also became partners with Carter Jonas. As an organisation, we benefitted from being nominated as SIOR European Chapter President. It was a huge international success, allowing us to promote the Axi Immo brand.

How has ESG changed the business?

ESG has become an integral part of the functioning of every firm in the real estate industry, affecting their day-to-day operations. Clients increasingly expect that their projects comply with sustainable development norms, which entail reducing their carbon footprints, improving the energy efficiency of their buildings, and corporate social responsibility. In order to stay ahead of our clients’ needs, our property management business which has for years been led by Janusz Gutowski continues to expand its ESG competencies. Clients can count on our support when it comes to preparing for audits for building certification in line with ESG requirements; we can also provide comprehensive advisory on building energy optimisation. We help our clients deliver projects that don’t just meet requirements – they also bring tangible benefits in the form of lower operational costs. Reducing utility costs and minimising environmental impact have become key arguments supporting decisions to develop new schemes in compliance with BREEAM or LEED certificates. Introducing ESG standards brings long-term benefits too. Landlords and tenants, especially those with an international profile, increasingly have a preference for buildings that meet ESG requirements. ESG significantly increases their attractiveness and their market value.

Can ESG requirements be considered mandatory now?

Although they are not yet formally mandatory for all our clients and business partners, their role in the commercial real estate market is growing in importance year by year. A growing number of developers and occupiers expect the properties they invest in or lease to meet environmental and social standards. In some European countries, especially Scandinavia and Germany, ESG standards are a must when investment decisions are made but this trend is growing in Poland too. From our perspective, ESG is becoming a key element in almost every transaction. Investors who do not take it into account may have difficulties raising capital also when it comes to leasing or selling the assets in the future. Projects compliant with ESG are more resilient to market changes and have more potential to grow in value.

Which trends are likely to shape the market in the coming year?

ESG will remain a key trend. The increasing importance of sustainable development impacts all real estate sectors, with investors, banks and occupiers looking for properties that are certified and energy efficient. Such buildings will grow in market value, which makes ESG the key factor shaping the market. In the office sector, we are seeing high demand for properties in central business districts (CBD), especially in Warsaw. Regional markets are negatively affected by the growing popularity of hybrid work, with lower demand for large BPO and SSC hubs. Investors prefer core locations in CBDs as they often have stable financials. The repositioning of existing office buildings is on the rise, especially in areas that used to be large business districts but lost their appeal to office occupiers. Mokotów-Służewiec in Warsaw is a good example – the office blocks are being demolished there or remodelled to convert them into hotels, conventional apartment blocks or PRS buildings. Adjusting offices to the requirements of the new hybrid work model will also be of key importance to the market. The emphasis on flexibility, as well as the introduction of coworking spaces and serviced offices is a response to the changing needs of employers and employees. During the recent Expo Real fair many experts predicted a revival on the investment market. After the pandemic, investors are again starting to consider acquiring office and warehouse projects. Higher activity in the second quarter of 2024 as well as several large portfolio and single asset transactions that are in progress and should conclude in due course, signal that a return to more normal transactional activity is likely next year. The pricing of assets and interest rates remain important factors. Nearshoring will also remain an important trend. Because of its strategic location.

Is nearshoring still gaining momentum? When are we going to see its effects?

Nearshoring is still on the rise and its effects are becoming more visible. Because of its central location, a well-developed logistics infrastructure and low operational costs, Poland has become a key location for firms that are considering moving their production closer to European consumer markets. Many international firms are taking the decision to locate to Poland in order to mitigate potential disruptions to their global supply chains. One example could be the new production plants from the automotive sector, especially the lithium-ion battery factories in Upper and Lower Silesia. This trend will become visible over the coming years, especially in Poland’s main logistics hubs. International companies are increasingly selecting Poland for its access to skilled labour, flexible labour market and pro-business approach. We expect further growth, especially for the e-mobility sector which seems to be the future for the transportation industry.

Is the war in Ukraine still having an impact on industrial real estate?

The war across our eastern border still affects the commercial real estate sector but many market players have managed to accept the risks that it brings. After more than two years, the conflict has been priced into asset valuations. The war started at a difficult moment, when interest rates were already beginning to rise. This temporarily caused chaos and resulted in investors adopting a ‘wait and see’ strategy. The end of the conflict could open up new opportunities, especially in regard to rebuilding Ukraine. Poland would benefit from this process too. We are already seeing an increase in investments as a result of Nato operations and rising activity of firms from the East, especially the Baltic states and Ukraine, many of which moved their operations to safer locations, such as Poland.

What are currently the biggest threats facing the market?

Poland is closely economically linked to Germany, which means that the recession to the west is affecting our industrial and logistics market. Germany is the main recipient of Polish exports and the slowdown of the German economy weakens the demand for goods produced in Poland. Despite this, we remain an attractive market for investors due to the strength of our domestic consumer market and a favourable location in the Three Seas Region (Baltic, Adriatic and Black Sea). Other challenges include interest rates remaining high, which leads to increased development costs and high yields on existing assets. High interest rates limit access to capital, which results in more caution on the part of investors when it comes to their acquisition decisions. However, cuts and then the expectation of further loosening should positively impact the market in the coming quarters. Rising ESG requirements are also a challenge for the market. Although standards related to sustainable development will bring long-term benefits, they are testing for some firms and investors who have to incur additional costs in order to modernise their buildings and apply for certificates. Introducing new regulations and rising client requirements in this area may affect the development of some projects, especially those that do not meet the most recent standards. We also shouldn’t forget about geopolitical risks as they affect market stability. The war in Ukraine, tensions between the US and China and other conflicts globally could impact the availability of raw materials, the stability of supply chains and the overall international economic situation, which in turn would have repercussions for the commercial real estate market. Business likes stability and predictability, which in the current world is not easy to find.

Are you seeing new opportunities arise?

We are hopeful that new opportunities will arise, especially in the context of political changes in Poland and a possible introduction of REITs. The REIT law would not only help attract additional capital but, more importantly, would strengthen the position of Polish investors, creating opportunities for various new segments of the market to develop. REITs would improve access to real estate investment, enabling smaller investors to gain a stake in the market, which would provide a significant impulse to growth. Moreover, the data centre sector has enormous potential, especially given the rising demand for cloud services and artificial intelligence. Increasing activity in this area opens up new avenues of investment for developers and investors. It’s also worth pointing out that the structure of the market is changing. The reduced foreign capital activity is creating a gap that could be filled by Polish investors who have in recent times become more confident about expanding their presence in the market. The redevelopment of existing properties and plots is becoming more popular as a way to increase activity in the market and new formats are becoming more and more suited to the current requirements. Indeed, I believe that political changes combined with the increasing importance of local investors are likely to start a new chapter in the history of the market and trigger a revival in activity.

What are your biggest hopes and concerns?

Our main hope is that the recovery in investment activity will gather pace. We expect the market to return to robust growth on the back of expected interest rate cuts and macroeconomic stabilisation, with the number of large deals likely to increase. As for my main worries, I would point to heightened geopolitical tensions, which continue to have repercussions for the entire real estate sector.

The founding figure

Renata Osiecka is the founder and managing partner of Axi Immo Group, an advisory agency specialising in commercial real estate – in the warehouse, land, office and investment segments. Renata has over 25 years of experience in real estate management, with expertise in logistics and industrial sectors, as well as advised i nvestors on real estate acquisition and disposal projects. Renata has managed a department responsible for development projects in the CEE region and the real estate portfolio of one of the largest global warehouse developers. She is active on the international market, cooperating with European and global real estate organisations. She is a past president of the European Chapter in SIOR and is also an MRICS member.