City in Focus: Szczecin
By : Greg Goodale
Szczecin, built at the mouth of the Odra River on the edge of Lake Dabie, ranks among Poland's largest cities.
Capital of Western Pomerania, Szczecin was part of Prussia until 1945, and now lies just 12 kilometers from the German border.
With nearby Swinoujscie, it forms one of the largest port complexes on the Baltic Sea and is the historic crossroads connecting Western Europe with the Baltic states, Scandinavia and the Balkans. As a result, the city has been a center for shipping and shipbuilding and a magnet for European entrepreneurs during the past few centuries.
This historic link with marine-based industries continues in Szczecin today. The Port of Szczecin is home to two large shipping companies: the Polish Steamship Company (PZM), and Euroafrica Linie Zeglugowe. The city's principal companies are shipyards, led by Szczecin Shipyard, which topped Western Pomerania's "Top 100 Companies" list last year with net profits of more than zl. 19 million ($4.75 million).
The list, which ranks companies according to sales, placed PZM second in 1999 with sales of zl. 982,938 and Szczecin-based insurance company Korporacja Ubezpieczeniowa Filar third with sales of zl. 722,284.
Some 55,359 companies were registered in the city in 1999; 54,303 of these being private enterprises. The service industry is the largest sector, making up 32.8% of the local economy, with corporate and real estate services second (19.6%) and construction third (12.4%). According to December 1999 figures, Szczecin had the sixth largest number of firms and the sixth highest number of new-company registrations in the country.
Ryszard Tosiek, director of privatization at Szczecin City Hall (http://www.szczecin.pl), said the city favors a long-term cautious reliance on marine industries. "If these industries go into recession this will have a significant effect on the city's economy, lowering its prosperity and increasing unemployment," Tosiek said. "This makes it necessary to increase the diversity of our economy by encouraging the development of other industries."
Standard&Poor (http://www.standardpoor.com)'s, an international rating agency, said in its March and April reports that Szczecin's reliance on marine industries has fallen in recent years, but the sector continues to employ 12% of the working population. For the agency, which awarded the city a BBB credit rating, Szczecin's potential lies in its location, infrastructure and continuing low unemployment.
For Tosiek, there is not enough business interest in Szczecin, and it is the city's job to change this. "Foremost in our minds is the idea of a bank that would be based in the city, and our strategy assumes further attempts to make this happen," he said. "We are trying to create a climate that would encourage more companies to set up here. Commerce and services are prospering and this is especially evident in the case of large hypermarket chains, and hotels, but there is a shortage of large investment in industry."
Progressive strategy has meant that Szczecin's marketing efforts were rated in the 2001 Gdansk Institute for Market Economy Research city ranking list as the third best in Poland, while the city is rated as the fifth most attractive investment location in the country.
Brendan Considine, corporate affairs director for English developer Chelverton International (http://www.chelverton.pl), has first-hand experience with the city's business climate. "Szczecin seems an ideal city for a number of reasons," Considine said. "It has a reasonably sized population and a reasonably strong economy by Polish standards. There is a core, successful industry in shipbuilding and shipping rather than just services. It is a very good location in terms of European Union (EU) entry, given its historic role as the port city for Berlin."
Chelverton's project, which involves the development of a 172-acre site part of which Chelverton will receive in return for the creation of a local airport evolved from a lengthy series of negotiations with city hall.
"To be fair to the authorities, this was a very complex agreement tied in with the nature of the land sale and the airport construction," Considine said. "Even by U.K. standards, this is an enormous scheme. It would have been difficult for anyone to move quickly on this."
Chelverton's development is also close to Lake Dabie, which is linked by canals to Berlin. Many at city hall said the development of a marina on the lake could attract German boating enthusiasts who would use Szczecin as their home port. "The development of Dabie Airport and its surrounding areas and the creation of a marina is a good opportunity," Tosiek said. "The airport would mean that boats do not have to be brought from Berlin. They could be moored here and their owners could fly in."
Leszek Koperkiewicz of local realty agency Extra Invest said there is potential for capitalizing on Berlin's sailing enthusiasts. "At the Berlin marina, boats have to be stacked vertically," he said. "I think the connection to Berlin will definitely be significant. It's the largest body of water in the region and it offers really great sailing."
Office
Class-A office rents in Szczecin range from $12.50-$15 per square meter while Class-B rents range from $4-$12.50 per square meter. According to Koperkiewicz, office supply in the city will only prove sufficient if current levels of demand are maintained. "Taking into account projects currently under development, I think there is a sufficient supply of office space," Koperkiewicz said. "Nevertheless, this may not be enough if inward investment starts to drive office demand."
The market is responding to demand for lower-priced modern offices. Szczecin developer Przedsiebiorstwo Produkcyjno-Uslugowe Bioox plans to complete a seven-story office building on ulica Chmielewska by June 2003. The cost of the 4,000 square-meter project is estimated at zl. 10 million ($2.5 million). Set for completion at the end of this summer is the Pentagon office building, which is being developed by Szczecin's P&J on plac Sprzymierzonych and is slated to cost zl. 35 million ($8.75 million).
"Demand in Szczecin is limited," Koperkiewicz said. "It would be difficult to say there was an investment boom. Szczecin has never been seen as a place with a great demand for offices. Companies have mainly tended to go for class-B buildings."
Business parks, which offer lower rents, better parking and easier access than highly visible locations, are also becoming popular. "The business park on Mieszko I street was fully rented at DM14 per square meter and offered plenty of parking, good public transport and was on an exit road from Szczecin," Koperkiewicz said.
Retail and Leisure
With retail units in the main shopping district costing between $35 per square meter monthly and average rents at around $20, retail developers have set about satisfying the city's retail needs.
Chelverton's Szczecin-Dabie development is in the planning stages. According to Brendan Considine, the project will tie Chelverton to Szczecin for many years to come. "We're hoping to complete a building permit around Christmas and New Year," Considine said. "We want to start construction in March 2002, and the scheme's opening will be in November 2003."
The four phases of the project will create a shopping and leisure center, a technology park and a logistics center, with a further leisure component in the planning stages. "At the same time we will be rebuilding an existing grass airstrip run by a local sports aviation club (into) a fully-fledged airport with a terminal and control tower," Considine said. "We will get part of the land for building the airport."
A proposal has been submitted to the Szczecin Pogon football club to develop land around the club's stadium, including a supermarket-anchored shopping center, leisure center, conference center, hotel and multiplex cinema and extensive redevelopment of the stadium. Mat-Trade, representing Turkish investor Sabri Bekdas, responsible for Reform Plaza and the Reform Center in Warsaw, is involved in the contractual stage of the project.
German developer ECE Projektmanagement (http://www.ece-gruppe.de) is to start construction of a mixed-use project on plac Zolnierza Polskiego in the second quarter of 2002. Generally referred to as Centrum Kaskada, the project will occupy 20,000 square meters, half of which is city property. The value of the project has been estimated at DM200 million, with a puppet theater and a helicopter pad for the children's hospital on ulica Wojciecha being part of the deal.
Industrial
According to Malgorzata Baumgart of Extra Invest, rents for new industrial space of about 1,000 square meters start at $5 per square meter, while properties of a lower standard are available for less than $5. Koperkiewicz said there is a shortage of high-quality industrial space, but the majority of current stock is new or recently refurbished. "The port and docks are selling off unused space, so there are a lot of small, cheap properties," Koperkiewicz said. "Highly efficient logistical facilities are nonexistent in Szczecin. Ulica Gdanska is the best location for these facilities as it combines access to exit roads to the port and the city center."
Residential
Szczecin has seen the number of new homes rise from 1,175 in 1996 to 1,514 in 1999 and 1,700 in 2000. New residential developments offer homes for between $575 and $750 per square meter. Apartments in tower blocks cost about $500 per square meter while prewar housing offers the lowest prices at between $275 and $325 per square meter. The largest residential projects include those by Germany's Europrojekt, which is building a development on ulica Kolumba, numbering some 200 homes costing zl. 2,600 per square meter, and Konstal's residential project on ulica Topolowa with more than 100 homes priced at zl. 1,950 per square meter.
