Bydgoszcz yet to join the premier league
Bydgoszcz may be one of the country's largest cities with 386,000 inhabitants, but it's a minor league player as urban centers go. While most big cities in Poland tend to double as regional capitals, Bydgoszcz in the north has the misfortune of being squeezed between three giants: Gdansk, Warsaw and Poznan. It also has to compete with its rival, Torun, which is only 40 kilometers away, for domination of the Kujawsko-pomorskie province.
Although Bydgoszcz is twice the size of Torun, it lacks the tourist attractions and university that make Torun a more vibrant and younger community. "Torun is more dynamic. Although it's smaller, it's developing faster," said Urszula Kuzman, who runs the property agency Invest House in Bydgoszcz.
The rivalry dates back to before World War I, when both cities were part of Germany. Torun's citizens were primarily German and Bydgoszcz's primarily Polish, though the latter did have a large German minority that comprised about 15% of its population even after independence.
This constant jockeying for position between Bydgoszcz and Torun almost led both cities to lose their status as provincial capitals. In 1998, the Polish government redrafted the country's fragmented administration system of 49 provinces under which Bydgoszcz and Torun were capitals of two different provinces and created 16 larger provinces. Both fought for regional capital status, and during the ensuing struggle the government almost placed both cities within the Pomorskie province, whose capital is Gdansk. Meanwhile, the Kujawsko-pomorskie province was on the verge of not being established.
Realizing that they would both lose out, the authorities in Bydgoszcz and Torun got together and decided to share the role of regional capital. Consequently, Bydgoszcz is now the administrative center of the Kujawsko-pomorskie province, while Torun has the regional Parliament.
Bydgoszcz's economy has traditionally been based on transport and heavy industry; the city is on the Brda river and east of the Wisla. But during the past decade, as Poland switched to a market economy, local industry has consistently failed to keep up. Foreign investors have bought some state-owned companies, but not all of them, and there's been little investment in local greenfield projects. The result has been a steady decline in the local economy.
"There aren't many big companies in Bydgoszcz," Kuzman said. "You can feel the economic stagnation here."
A major foreign investor in Bydgoszcz is Lucent Technologies, which employs 1,320 workers and was the region's biggest revenue earner last year with zl. 1 billion ($220 million), according to Bydgoszcz city hall statistics.
Other foreign investors that have bought into existing state-owned companies include Unilever, which acquired a detergent manufacturer, and Austrian beer maker BBAG, which took over a local brewery with a 2.1% share in national beer production, according to city hall.
Local companies that dominate Bydgoszcz include Organika Zachem, a chemical firm employing 2,196 workers with zl. 538 million ($120 million) in revenue last year. Other local behemoths are Elektrim Kable, a cable manufacturer, which employs 649 workers and earned zl. 145 million ($32 million) in revenue in 1999, and local confectioner Jutrzenka, which employs 1,136 workers and had zl. 136 million ($30 million) in revenue last year, according to city hall figures.
Some flagship Bydgoszcz companies are struggling, though. Romet, formerly Poland's national bicycle producer, has gone bankrupt, said Malgorzata Suska, director of city hall's promotion department.
The Kujawsko-pomorskie province has many mid-sized industrial towns such as Wloclawek, Grudziadz and Inowroclaw. Major foreign investment in those towns has focused on formerly state-owned companies. French cement maker Lafarge invested $46 million in the Kujawy cement plant near Inowroclaw, Netherlands-based Framondi invested $175 million to acquire a paper mill in Swiecie and Italy's Montedison took over a food vegetable oil producer in Inowroclaw.
Industrial/warehousing market
A large supply of former industrial properties has put the lid on any new investment in light industrial and warehousing space in Bydgoszcz, Suska said.
She said a rare example of interest in warehousing was shown by a German frozen food distributor, which short-listed Bydgoszcz for its Polish location a couple of years ago. The firm apparently went elsewhere, as it made no contact with city authorities beyond initial research inquiries, Suska said.
Another near miss came with regard to Bydgoszcz's potential as a logistical hub. Historically part of an inland waterway linking Poland's major rivers, the Wisla and Odra, Bydgoszcz was dealt a blow in the mid-1990s when the government announced that the planned north-south motorway would go through rival Torun, Kuzman said.
Office market
A developed infrastructure has put many investors off building offices in Bydgoszcz. "There is plenty of vacant office and retail space," Kuzman said. According to local industry sources, occupiers tend to construct their own buildings, with most projects carried out by banks such as Bank Handlowy, Kredyt Bank and Pekao bank. In addition, Bank Rozwoju Eksportu recently redeveloped a granary on the Brda river in central Bydgoszcz as office space. New office projects in the offing are also by owner/occupiers, such as the local branch of Telewizja Polska (TVP), which plans to build an office for its own use.
There are also no commercial developers in the city, as tenants can find cheaper space in older buildings in central Bydgoszcz, where rents can be as low as $3.5-$4 per square meter, Kuzman said.
Retail market
With almost 400,000 people, it's no surprise that Bydgoszcz is an attractive location for retailers, and most development focuses on retail projects. "There is a wave of new retail investment in Bydgoszcz," Suska said.
So far only France's Casino has developed a shopping center, anchored by the hypermarket chain Geant, while do-it-yourself retailer OBI and another German-owned firm, Makro Cash & Carry, operate stand-alone outlets.
But that's about to change, with 13 retail projects in the pipeline for a total of 180,000 square meters of space.
Swedish furniture retailer Ikea plans to build a store between the Fordon district near the Wisla river and the city center, Suska said. Hypermarkets planned for next year are the U.K.'s Tesco, the Portugese-owned Jumbo and the French Auchan. Also in the offing is do-it-yourself retailer Castorama, Suska said.
However, some of these projects could still be held back. According to Thomas Schoutens, development director of Belgian-owned CFE Polska, the Auchan hypermarket is on hold because construction has been blocked for political reasons. CFE Polska was hired by Auchan to build the project.
Once completed, this new wave of retail space could lead to oversupply and the lowering of retail rents in the city, Kuzman said. City hall figures put retail space in nearly 5,500 stores in older buildings at more than 300,000 square meters.
Kuzman said there are many vacancies in Casino's shopping center and downtown along major high streets such as Gdanska, Dworcowa and Dluga, where typical rents are about $18-$20 per square meter, she said.
As well as retail stores, developers plan to build entertainment projects in Bydgoszcz, Suska said. Multikino plans to set up a multiplex cinema at ulica Focha in the city center. The theater is to open next year and will be the first multiplex in Bydgoszcz, she said.
Local company Energoexport also plans to develop a water park in the city, Suska added.
Residential market
The pace of residential development in Bydgoszcz is in line with most Polish cities of the same size. Last year, there were 1,295 apartments built, or about 33 per 10,000 inhabitants. This pace of building places Bydgoszcz on par with Rzeszow but behind Torun, which had nearly 70 apartments built per 10,000 residents.
The prices of residential properties built by companies such as local developer Budlex or the Pomorska Housing Cooperative (PSM) are about zl. 2,250-zl. 2,400 per square meter, Kuzman said. These prices are similar to those in Lodz, but lower than Warsaw's. Residential prices in Bydgoszcz are stagnant and expected to go down, Kuzman said.
"A few years ago people invested more (in property)," she said.
