City in Focus - Poznan
By : Anna Staniszewska
View to a killing: As a center for investment, Poznan makes good business sense to many foreign and local companies.
Poznan (http://www.poznan.pl) is the capital of the Wielkopolskie voivodship, Poland's second largest province covering some 30,000 square kilometers. The city borders the Poznanskie and Gnieznienskie lake districts and is a major tourist destination as well as a center for foreign investment in light and heavy industry.
One consequence of this high level of business is an unemployment rate of just 2.6% out of 600,000 people in Poznan and 3.5 million across the province, far below the national average jobless figure of 15%.
Poznan's prime location on the transit route between Moscow, Berlin and Paris and its highly qualified labor force have lured a large number of investors to the area. According to the Polish Agency for Foreign Investment (PAIZ), from 1991 to 1999 the Wielkopolskie voivodship attracted 231 foreign investors, which ranks the region third after the Mazowieckie and Slaskie provinces.
What does it all mean? Street sculputre may be the rage, but it still baffles the older generation.
PAIZ and the Institute for Market Economy Research have regularly ranked Poznan and the Wielkopolskie voivodship the second or the third region in terms of foreign investment in local industry. It's estimated the province attracted around $1.8 billion of inward investment in the 1990s. "Investors choose Poznan because of its good technical, communication and banking infrastructure," said Katarzyna Sobocinska, assistant to the director of the Department for Economic Promotion at Poznan City Hall.
The People's showroom: Volkswagen is one of Germany's largest investors in the Wielkopolskie voivodship.
Germany is one of the main foreign investor in the Poznan region. The largest is car producer Volkswagen (http://www.volkswagen-poznan.pl), which will invest DM313 million to modernize its plant and build a painting facility by 2002. The plant manufactures the VW Transporter T4, Skoda Felicia and Skoda Fabia. Bolechow near Poznan is home to the Neoplan bus plant.
In addition, German tobacco company Reemtsma has invested zl. 1.3 billion ($307 million) in the Wytwornia Wyrobow Tytoniowych (WWT) cigarette factory in Poznan. Another German firm, Beiersdorf, invested zl. 352.6 million ($86 million) in local cosmetics producer Lechia to build a 7,000 square-meter manufacturing plant in the city and to modernize existing facilities.
U.K.-based Glaxo Wellcome (http://www.glaxowellcome.pl), which recently merged with Smith Kline Beecham, invested zl. 1.8 billion ($430 million) in local pharmaceutical producer Polfa Poznan to build the Glaxo Wellcome Poznan production plant in 1999.
Almost 50% of Poland's candy comes from the Wielkopolskie voivodship. The region has also been a big pull for foreign chocolate producers. Germany's Stollwerk, the producer of Alpen Gold brands, built a factory in Jankowice near Poznan for DM70 million. Switzerland's Nestle has invested zl. 246 million ($60 million) in Goplana since 1994 and in February 2001 Nestle Polska formally merged with Goplana and Winiary, based in Kalisz. U.S. chewing gum producer Wrigley built a 9,500 square-meter manufacturing plant in Poznan, investing zl. 451 million ($110 million) in 1997.
U.S.-based processed-food manufacturer Bestfoods (http://www.bestfoods.com.pl) took over local instant soup and pudding concern Amino in 1992.
The alcoholic beverages industry is also active in the region. South African Breweries, lured by Lech Browary Wielkopolski, later merged with Tyskie Browary Ksiazece to form Kompania Piwowarska in 1999.
The second largest distillery in Poland, Polmos Poznan (http://www.polmos.poznan.pl), is undergoing privatization and is to choose a strategic investor in the first quarter of 2001, most probably France's Pernod Ricard. It is estimated that the price will be around zl. 400 million ($97.6 million).
The electronics industry is represented by Dutch-Japanese Philips Matsushita Battery, with a production plant in Gniezno and France's Alcatel Teletra in Poznan, taken over by U.S.-based Kimball Electronic last year.
Poznan is also known for its well-developed banking and finance services. "It's the second city after Warsaw in terms of banks and financial institutions," Sobocinska said. We have 43 banks here." It's the headquarters of Wielkopolski Bank Kredytowy (WBK) (http://www.wbk.pl), 60.14% of which is controlled by Allied Irish Bank, as well as Invest Bank. The city has attracted many international consultancy firms such as KPMG, Arthur Andersen, Deloitte & Touche, PricewaterhouseCoopers and Ernst & Young. All major Polish and foreign insurers are also present.
Over the years, Poznan has gained worldwide recognition through the Poznan International Fair (http://www.mtp.com.pl), an annual event since 1921. During its 80-year history, the fair has expanded to cover 450,000 square meters of indoor and outdoor exhibition space that includes conference rooms and a press center, hosting 15,000 exhibitors annually. The Poznan International Fair company manages about 40 specialized international fairs a year, including the Budma construction fair and the Poznan Motor Show, which represents 50% of the Polish fair market. "Thanks to the Poznan fairs, the city gets business contacts and keeps up with new developments in all sectors," Sobocinska said. She added that there are about 1.5 million visitors to Poznan annually.
Office
Despite its status as a regional capital and the large number of banks, insurance companies and businesses it houses, Poznan has little in the way of modern office space. The Poznan Financial Centre (http://www.pfc.pl) on plac Andersa is the first new building completed this year, yielding 18,000 square meters on 14 stories. About 14,500 square meters are office space with the remaining 3,500 square meters devoted to retail. Last year, the largest office deal on the market was inked when WBK leased 11,000 square meters in the building. The financial center's asking rent runs to $28 per square meter.
The zl. 180.4 million ($44 million) Poznan Financial Centre was developed by Germany's Von der Heyden Group and is adjacent to another project by the same developer called Andersia Property, to be started in September 2001 and finished in late 2004. The future mixed-use facility will comprise 9,500 square meters of class-A office space, 13,400 square meters of retail and eight stories of four-star hotel accommodation. Costs are estimated at zl. 287 million ($70 million). Both projects are 85% owned by the developer with the city controlling the remaining 15%.
Kupiec Poznanski is the second development, and is expected to bring 17,500 square meters of mixed-use space to the market. A consortium of Poznan merchants are developing a six-story building near plac Wiosny Ludow to host retail outlets on the first three floors with offices filling 8,000 square meters. It is scheduled to be completed by the end of this year.
In areas outside the center, several projects are under construction or being planned. The Winogrady Business Center on ulica Serbska, a 12,000 square-meter project, is expected to yield 5,100 square meters of office space and 6,900 square meters of retail space developed by Belgium's Keystone. The investment is estimated at zl. 55 million ($13.4 million). Rents are planned to be e22 per square meter.
Local residential developer Ataner (http://www.ataner-poznan.com.pl) plans to construct a class-B office building on ulica Towarowa, generating another 11,000 square meters of mixed-use space. Work on a zl. 45 million ($11 million) project is expected start this August and finish in the first quarter of 2003.
According to U.K.-based Knight Frank's November 2000 annual property report, Poznan will soak up to 76,000 square meters of modern office space in two to three years. According to the agency's Dorota Gilewicz, Poznan will see a surge in demand for modern office space because more companies are coming onto the market. "It's not like Warsaw, where there are many office buildings on offer," she said. "But in Poznan there are many developments, so when leasing contracts in old buildings expire, domestic as well as foreign companies may want to move and expand." She added that the greatest demand for space is from IT firms, German businesses, and insurance companies.
Retail
The eyes have it: As more money floods into Poznan, fashionable retailers are quick to follow.
With a per-capita income of more than zl. 2,000, the city is flourishing with new retail outlets while others are being built. "Right now, Poznan is not saturated with retail space," said Alan Colquhoun, managing director of DTZ Zadelhof Tie Leung, an Anglo-Dutch real estate consultancy and the agent for Kupiec Poznanski.
As with most large cities in Poland, there is no place for spacious hypermarkets in the city center. The downtown shopping quarter, occupied mainly by small traders, is bordered by ulica sw. Marcin, ulica 27 Grudnia, ulica Gwarna and plac Wolnosci as well as areas around the Old Town and ulica Glogowska. The major retail project Kupiec Poznanski, financed by local merchants and situated within the city center, is expected to deliver 9,000 square meters of modern retail space by the end of 2001. Recently the Netherlands-based C&A clothing chain store took 1,200 square meters in Kupiec.
As for shopping centers and retail chain projects, there are about 210,000-220,000 square meters available in and around Poznan, according to the Knight Frank report.
German retail operator Metro invested DM100 million in its M1 shopping center on ulica Szwajcarska, covering 55,000 square meters, which includes Real, Media Markt and Praktiker stores. Swedish furnishing supplier IKEA has two outlets in Poznan. DIY centers Castorama and TTW Dom i Ogrod as well as food chain operators Selgros and Makro Cash & Carry are also present. France-based Auchan and the U.K.'s Tesco opened outlets last year.
Within the next two years a further 24,000 square meters of retail space will be delivered to the Poznan market in mixed-use projects. Another nine developments are in the planning stages, including Poznan Plaza with Israel's Plaza Centers Europe, which deveoped the Sadyba Best Mall in Warsaw. France's Carrefour plans to set up in Poznan, as does the Casino retail chain, which has purchased land on ulica Bukowska and ulica Zgorzelecka to develop a retail, hotel and office space project.
For the moment, Poznan is oversupplied with hypermarkets. "We have been flooded with supermarkets and hypermarkets," said Grzegorz Olczak of Ataner. But there are still shortfalls in certain retail sectors; clothing shops, for instance. "There are hardly any chain stores in Poznan; there is no real shopping mall," Dorota Gilewicz said.
According to Knight Frank, monthly rents for retail space in large shopping centers range from DM18 to DM37 per square meter. On major shopping streets monthly rents can reach DM80 per square meter.
Entertainment
Poznan's cinemagoers were the first to see movies in a multi-screen cinema in Poland. In 1998 Multikino (http://www.multikino.pl), a joint venture between the U.S.' multiplex operator UCI and Polish media group ITI, opened its eight-screen complex on ulica Krolowej Jadwigi. "Looking at the attendance in Multikino, Poznan needs more entertainment facilities," said Gilewicz of Knight Frank.
A remedy for the lack of leisure facilities could be a multi-use complex, which is under construction in the Franowo district of Poznan. Kinepolis, a Belgian cinema operator is developing a zl. 82 million ($20 million), 20-screen movie theater for 7,874 viewers. The project will include a U.S.' Atomic Entertainment bowling center with 28 alleys. This would break the stranglehold of the Niku Centrum Rekreacji (Recreational Center) (http://www.niku.com.pl), which was the first to open in Poznan in 1998 and has 18 bowling alleys and a 3,600 square-meter fitness club.
Residential
Something old, something new: Modern residential developers have only recently turned their attention to Poznan.
Poznan has seen an increase in residential development in recent years. In 1999, 2,183 apartments were completed, 229 more than in the previous year. This has been accompanied by a market-share increase of private developers, which are responsible for 45% of residential projects.
Cooperatives are still active but the trend is moving toward private investors who can offer completed units. "People don't want to buy (apartments) from a drawing board," said Grzegorz Olczak, investment director of Ataner, a local developer.
The leaders on the market include Danter, Ataner, Agencja Inwestycyjna and Spoldzielnia Mieszkaniowa Wielkopolanka. Developers outside the region are also trying to enter the sector. Kielce-based Echo Investment and Howell, with headquarters based in Wroclaw, have projects in Poznan.
Despite growth in the number of apartments completed, demand is still modest. "People don't have the money to buy their own four walls," Olczak said. Loans are too expensive." The average price per square meter is zl. 3,000-zl. 3,100, but it can go up to zl. 5,200. Winogrady, Rataje, Jezyce and Grunwald are among the city's most popular residential areas.
With the emergence of out-of-town supermarkets, more Poznan inhabitants are moving to the outskirts and to neighboring towns. "Apartments are cheaper, not to mention that the air is cleaner," Olczak said. Swarzedz, Lubon and Czerwonak are the most popular new destinations for home buyers.
Warehouse
With the A-2 highway under construction, Poznan and its surroundings are set to become a major center of warehousing and distribution. Apart from light industry, key investors along the A-2 include Alcatel, Bestfoods, Kronotec, Neoplan and Reemtsma. Bertelsmann, Kuhne und Nagel, Raben, Scansped and Spedpol are also active in the Poznan region. As stated in the Knight Frank report, 45,000 square meters of warehouse space were available in 1999. The space increased to 64,000 square meters in 2000.
