Reaching for the skies - again

The Warsaw skyline is set to change once more. But how many of the planned skyscrapers will be realised this time around?

Developers simply won't let go. The vision of Warsaw as some kind of a CEE Manhattan doppelgänger keeps coming back. In the pre-crisis boom years investors were obsessed with skyscrapers. Tall buildings were to become part of the skylines of cities which have never had any other significantly tall buildings before, Ljubljana is one such example. This lust for high-rise buildings has an explanation. No, it is not simply a one-season sensation. Skyscrapers do look good, but why does it have to be so that plans for several projects are announced at the same time?
I am glad you asked. This is certainly a sign, but it is not necessarily a good one, actually. The connection between the ambition to build skyscrapers and an approaching crisis is hardly a novelty. The link has been explained by the so-called 'skyscraper index'. Andrew Lawrence, head of research at Dresdner Kleinwort Wasserstein, noticed something - construction plans for the highest buildings in the world are usually drawn up just before an economic crisis and are at the same time an omen of the impending crash. The Empire State Building in New York was completed at the beginning of the Great Depression in 1930; the World Trade Center and the Willis Tower in Chicago were opened in 1973, just before the stock market crash of 1974/1975 and already in the middle of the oil crisis. And last, and maybe not least, is the Burj Khalifa in Dubai, the tallest building in the world, which has also become the greatest monument to the insane, credit- fuelled growth of the emirate.
These observations helped Lawrence formulate his well-known theory. Here is how he sees it: first of all, in a good economic climate cheap credit fuels growth in the prices of construction plots. Further on, companies start to come up with bolder development visions, connected with the greater need for office space. When land is expensive and there is a high demand for offices, skyscrapers seem to represent the best solution. Yes, they are incredibly expensive to construct (I am pretty sure the cost of the elevators alone can cover the construction of a small building), but we all remember that getting your hands on capital was hardly an issue during the boom years. Capital is available, making it possible for developers to employ the state-of-the-art technologies needed for this type of project. All these factors tend to coalesce and culminate as growth periods come to an end.
Out of all the bold pre-crisis visions for central Warsaw, only one residential project is coming into being. Work is progressing on the Złota 44 residential project designed by Daniel Libeskind. The 54-storey tower should be ready this time next year, but for various reasons is well behind the initial schedule. Nearby, Cosmopolitan Twarda 2/4, another sleek residential tower designed by Helmut Jahn, is also rising. But recently plans for more projects have been both dusted off or introduced for the first time by companies such as Grupa PHN, Ghelamco, Echo Investment, Włodarzewska Development, UBS, BBI Develo-pment, Skanska, Mennica Polska... and believe me the list is not yet complete.
The timing is very interesting. While Poland wasn't exactly devastated by the crisis, it would be a huge overstatement to say that it has been enjoying a growth period. For what it is worth, this period hasn't even really got going yet. Developers are just getting ready for the future, which they believe will be bright. The latest data for the Warsaw office market reveals that the total office stock in the city now stands at over 3.5 mln sqm, with a vacancy rate of 6.7 pct. Around 555,000 sqm of space is currently under construction. Over the first nine months of the year take-up reached 440,000 sqm, indicating that the record-breaking take-up figure from 2010 (549,000 sqm) may be overtaken. It looks promising. Add to this the fact that Warsaw is still the preferred destination for international companies looking to set up a CEE headquarters and the picture gets brighter. But will this remain only a picture? Financing institutions have learnt their lessons this time around and will hardly give money to anything but the best project on the market.
This can only give us hope that whichever projects make it to the market, at least we won't be ashamed of them.

Mladen Petrov