City to sell prime parcel downtown
City officials envision construction of a new retail and entertainment complex on the site bordering the square, now home to the 7-year-old, 24-floor office tower and Radisson Hotel complex. This complex is up for a "lease-back" sale by state-owned steamship company Polska Zegluga Morska (PZM). (See photo, page S5.)
"This city is awakening and this could be the site that creates the necessary synergies," said Jacek Wesolowski, managing director of Polinvest, a Gdynia-based developer that intends to bid on the vacant lot.
But not everyone is sanguine about the development. The decision to sell city land on Plac Rodla risks "flooding the market with excess capacity," said Stuart Gross, president of local developer Szczecinskie Towarzystwo Renowacyjne (STR). "The only question is whose blood will be running in the street."
Gross is doing what he can to stem potential losses. As a result of the Plac Rodla sale, STR is cutting back its initial project by more than 85% to build a similar commercial center a few blocks west on Boguslawa street. STR, a joint venture with the city and majority owned by American Retail Systems (ARS), initially planned to build a 60,000 square meter, $100 million, mall-like atrium complex to cover a city block, Gross said.
The plan now calls for construction of just 8,300 square meters of office and retail space for an estimated zl. 30 million, Gross said. Also, after a board meeting with city council representatives in mid-April, the STR joint venture looked ready to dissolve with ARS likely to buy out the city's share in the venture.
"The city found it easier to part ways than to continue working in the current partnership," said Andrzej luszczewski, a member of STR's supervisory board representing ARS. "It is much more feasible that ARS would buy out the city's shares," luszczewski said, estimating that the buyout price would be 49% of the company's net book value, which he estimated at zl. 17 million ($4.35 million).
Regardless of changes at STR, Gross said the city's parcel on Plac Rodla was "without a doubt the most attractive land in Szczecin."
Polinvest, which is backed by Norwegian capital, said it would bid for the city's property and build a Klif supermarket, hotel and office space there if its offer wins, said Wesolowski of Polinvest, which has built Klif shopping malls in Gdynia and Warsaw.
The city plans to sell the site through a 99-year lease agreement, said Zdzislaw Kula, head of the city's investor services and economic promotion department. Unofficial estimates place a value of zl. 50 million ($12.82 million), or zl. 5,000 a square meter, for the plot, which Kula called "just rumors."
Official announcement of the offer was due to come in late April, Kula said. The tender date was not set as of press time, but it could come in June or July. "It's the very center of the city," he said.
The city is looking to develop retail space as well as pubs and restaurants on the site, Kula said. "This is one element of our strategy of 'downtownization,' " he said. "Szczecin needs a center to draw people to, and in terms of quality and location, this site is the best."
The sale on Plac Rodla marks a possible turnaround for Szczecin, said Krzysztof Jacunski, director of new business development for Chelverton Properties. Chelverton signed a letter of intent with Szczecin authorities last year to develop a 300-hectare site with retail, distribution, office and light industrial projects in conjunction with converting an existing sport airport into a small commuter airport, Jacunski said. That project represents $100 million "just waiting for the green light from city hall" to begin negotiations, Jacunski said. However, in mid-April those plans were put on hold by city officials.
"Szczecin has a lot of potential, but so far it has not developed as it should have," Jacunski said.
State-owned steamship company PZM, is also putting its 72,000 square meter complex on the block. The complex sits on 1.2 hectares adjacent to the city's vacant lot. PZM built the complex for about $150 million in 1992. At that time, PZM "was very rich," said company spokesman Krzysztof Gogol. "It was before the transformation, and we were being paid in dollars. The management made some projections that were very optimistic."
Construction was financed through an 8.5-year loan from Austrian bank Girocentrale (now Erste Bank), Gogol said. Initially, the project was a joint venture between PZM and Austrian construction conglomerate Ilbau. But in 1995 PZM bought out Ilbau. After disappointing revenue from shipping last year, PZM now faces $42 million to clear the loan and is looking for a buyer, Gogol said.
PZM wants to sell the complex and buy it back in 12-15 years through a lease arrangement, said Andrzej Szalek, PZM's proxy general director.
PZM is in talks with a Polish bank to buy the complex, said Szalek, who would not specify which one. Pekao and BIG Bank Gdanski are tenants in the building.
"This city is awakening and this could be the site that creates the necessary synergies," said Jacek Wesolowski, managing director of Polinvest, a Gdynia-based developer that intends to bid on the vacant lot.
But not everyone is sanguine about the development. The decision to sell city land on Plac Rodla risks "flooding the market with excess capacity," said Stuart Gross, president of local developer Szczecinskie Towarzystwo Renowacyjne (STR). "The only question is whose blood will be running in the street."
Gross is doing what he can to stem potential losses. As a result of the Plac Rodla sale, STR is cutting back its initial project by more than 85% to build a similar commercial center a few blocks west on Boguslawa street. STR, a joint venture with the city and majority owned by American Retail Systems (ARS), initially planned to build a 60,000 square meter, $100 million, mall-like atrium complex to cover a city block, Gross said.
The plan now calls for construction of just 8,300 square meters of office and retail space for an estimated zl. 30 million, Gross said. Also, after a board meeting with city council representatives in mid-April, the STR joint venture looked ready to dissolve with ARS likely to buy out the city's share in the venture.
"The city found it easier to part ways than to continue working in the current partnership," said Andrzej luszczewski, a member of STR's supervisory board representing ARS. "It is much more feasible that ARS would buy out the city's shares," luszczewski said, estimating that the buyout price would be 49% of the company's net book value, which he estimated at zl. 17 million ($4.35 million).
Regardless of changes at STR, Gross said the city's parcel on Plac Rodla was "without a doubt the most attractive land in Szczecin."
Polinvest, which is backed by Norwegian capital, said it would bid for the city's property and build a Klif supermarket, hotel and office space there if its offer wins, said Wesolowski of Polinvest, which has built Klif shopping malls in Gdynia and Warsaw.
The city plans to sell the site through a 99-year lease agreement, said Zdzislaw Kula, head of the city's investor services and economic promotion department. Unofficial estimates place a value of zl. 50 million ($12.82 million), or zl. 5,000 a square meter, for the plot, which Kula called "just rumors."
Official announcement of the offer was due to come in late April, Kula said. The tender date was not set as of press time, but it could come in June or July. "It's the very center of the city," he said.
The city is looking to develop retail space as well as pubs and restaurants on the site, Kula said. "This is one element of our strategy of 'downtownization,' " he said. "Szczecin needs a center to draw people to, and in terms of quality and location, this site is the best."
The sale on Plac Rodla marks a possible turnaround for Szczecin, said Krzysztof Jacunski, director of new business development for Chelverton Properties. Chelverton signed a letter of intent with Szczecin authorities last year to develop a 300-hectare site with retail, distribution, office and light industrial projects in conjunction with converting an existing sport airport into a small commuter airport, Jacunski said. That project represents $100 million "just waiting for the green light from city hall" to begin negotiations, Jacunski said. However, in mid-April those plans were put on hold by city officials.
"Szczecin has a lot of potential, but so far it has not developed as it should have," Jacunski said.
State-owned steamship company PZM, is also putting its 72,000 square meter complex on the block. The complex sits on 1.2 hectares adjacent to the city's vacant lot. PZM built the complex for about $150 million in 1992. At that time, PZM "was very rich," said company spokesman Krzysztof Gogol. "It was before the transformation, and we were being paid in dollars. The management made some projections that were very optimistic."
Construction was financed through an 8.5-year loan from Austrian bank Girocentrale (now Erste Bank), Gogol said. Initially, the project was a joint venture between PZM and Austrian construction conglomerate Ilbau. But in 1995 PZM bought out Ilbau. After disappointing revenue from shipping last year, PZM now faces $42 million to clear the loan and is looking for a buyer, Gogol said.
PZM wants to sell the complex and buy it back in 12-15 years through a lease arrangement, said Andrzej Szalek, PZM's proxy general director.
PZM is in talks with a Polish bank to buy the complex, said Szalek, who would not specify which one. Pekao and BIG Bank Gdanski are tenants in the building.
