It’s become pretty commonplace to say that Warsaw’s office market is in trouble, that the pipeline is just too big and that the country’s economic boom was all just an offshoot of a binge of EU-funded road-building. The truth will turn out to be far more subtle and complex.
As we’ve been told ad naseum, Poland is long in smart, ambitious young people with highly marketable skills in finance, technology and languages, it’s also just plain big. European-big. And this is part of the reason the Warsaw Stock Exchange has quietly become one of the more attractive markets in Europe. Immofinanz didn’t just double-list there for marketing purposes, after all. It wants Polish pension fund money.
Anyway, the next time someone tells you Warsaw’s office market is past its peak, send them to links like this article.
Record stock sales and a growing economy are helping Poland solidify its position as central Europe’s busiest financial center, even as euro-area neighbors struggle to shake the sovereign-debt crisis. UniCredit SpA (UCG), JPMorgan Chase & Co. (JPM) and Societe Generale SA (GLE) are establishing investment-banking hubs in Warsaw, where equity sales of 15 billion zloty ($4.6 billion) this year exceed the $490 million in the rest of central Europe.
Get it? If that doesn’t make the doomsayers think twice, give them the link to this article: SocGen’s Russian Unit Said to Cut Hundreds of Jobs in Moscow.
It’s tough to think of many more important transactions that could take place in Central Europe than one involving the Warsaw Financial Center. And that’s exactly what was announced today, with co-owners CA Immo and Pramerica Real Estate Investors agreeing provisionally to selling the asset to Allianz and Curzon Capital Partners III, a fund managed by Tristan Capital. JLL and Colliers advised the vendors on the deal, who acquired the building originally in 2005. The two held 50% shares each in the 50,000 sqm asset, but in the new arrangement, Allianz will hold 87.5%. The sale price was announced to have been €210m.
“Our investment strategy calls for 7-10 % of the overall portfolio to be sold every year in order to take maximum advantage of positive market phases and generate profits,” says Bruno Ettenauer, Chief Executive Officer of CA Immo. “Capital released in this way is earmarked for debt reduction and the realisation of current development projects. We are looking forward to the successful sale of the Warsaw Financial Center, which has now been agreed. This transaction will have a significantly positive impact on the annual result for 2012.”
Not bad news at all for Warsaw. Confirming an ongoing trend in which the Polish capital is becoming the financial center of CEE, UniCredit has just announced it will be making the city its regional hub. Office developers will be rubbing their hands in anticipation at the news, because the company will be hiring lots of people to make this happen. Fox has the full story:
Unicredit CAIB Poland will handle all central European business with the exception of Turkey and Russia, Jacek Radziwilski said, adding that the Warsaw office will address more local client needs. The Unicredit subsidiary includes a brokerage, corporate finance arm and capital markets unit.
“The situation on global capital markets means many people are moving,” Radziwilski said, when asked whether it would be hard to convince potential employees to move to Warsaw. “Lots of people in the City [of London] are looking for work right now.”
In what can only be called an epic fail, the city of Warsaw has fired the architect of the city’s new museum of modern art. Swiss Christian Kerez won the competition way back in 2007, but somehow the project got bogged down in regulations and even plumbing permits.
Kerez blamed the delays on city officials who he said obstructed his work or made impossible demands. He also said it was city authorities’ responsibility to get permission for plumbing, electricity and other installations.
We don’t claim to have the inside scoop (yet) on how this all came about, but it seems a pretty lame way to get fired from a job in one of Europe’s most ambitious, dynamically developing cities. If we remember correctly, the whole sorry affair was a series of contractual spats where Kerez was unhappy with his fee, and to be fair, the city wanted changes made to the original design. Still, it looks like it probably was time for Warsaw to move on. The word you always read by critics of Kerez’s design was the word “supermarket”…as in, they thought it looked like one. Whether fair or now, the city will be holding a new tender, for a new architect and a new design.
In other words, back to the drawing board.
HB Reavis continues to make inroads into Poland. The latest scalp was for the Slovak-based developer is a win in a pair of land tenders for over 17,000 sqm of land in central Warsaw. Polcom Investments, part of the HB Reavis Group will take over the land plus buildings on Chmielna Street. The total transaction value was PLN 171m. Cushman & Wakefield organized the tender for the vendor.
When Kulczyk Investments tried to get its plans for Chmielna Tower through the urban planning process back in 2007, it got rejected by the Civil Aviation Office (CAO) which objected to its planned height of over 280 meters (antenna included).
In fact, Gazeta Wyborcza
reports that in view of its proximity to Warsaw’s airport, the agency set the maximum height at that location at 130 meters. But the developer refused to compromise on its original plan, and the approach now appears to be paying off, after a recent u-turn by the CAO. Chmielna Tower has been given clearance to take off, meaning that construction could begin within two years. The company is currently carrying out the project on its own, but it’s expected that Chmielna Tower, which would be Warsaw’s tallest building, will be placed in a joint venture between Kulczyk Investments and US giant Silverstein, to be called Kulczyk Silverstein Properties.
Kulczyk Silverstein Properties (KSP) has purchased the Stratos Office Center in central Warsaw from Pramerica Real Estate Investors. KSP plans further acquisitions in Poland and other countries of CEE region.
Stratos Office Center is a 10,600 sqm Class A office building developed in 2000 by the Austrian developer Karimpol.
Pramerica acquired the property in 2006. The building is fully let to tenants including BRE Leasing, the Belgium Embassy as well as international law firms Beiten Burkhardt and Bird & Bird.
The transaction was financed by Landesbank Berlin AG and Berlin Hyp and was brokered by Colliers International. Hogan Lovells acted for KSP while Salans acted for the vendor. One unconfirmed market source not involved in the deal put the yield at around 6.6%.
Posted in investment, office, Warsaw
Tagged Berlin Hyp, Colliers, Hogan Lovells, Karimpol, Kulczyk Silverstein, Landesbank Berlin, Pramerica, Salans, Stratos