Deluge of new office space may prove to be less torrential than thought
Earlier predictions said that at least 300,000 square meters of class A and B office space will be developed in 2000, with some in the property industry suggesting that up to 500,000 square meters is possible.
But Henry Butcher said supply is unlikely to meet these projections. "A substantial number of new buildings would have to start in September to be capable of delivery before the end of 2000,' the agency said. "If few new starts are made then new supply could be as low as 200,000 square meters"
Henry Butcher said that the falling supply is most likely a result of investors' reactions to declinining rents as well as demands by banks for more security through tighter lending conditions.
Other agencies are coming to the same conclusion.
"There are a number of sites with building permits or close to (having) building permits with the potential to be completed next year," said Richard Sexton, head of agency at Knight Frank Nieruchomo¶ci. "But there is no spade in the ground yet."
Sexton said that developers are reluctant to build without having space pre-let, as there is a risk that they will not find tenants.
Projects already under construction and slated for completion in 2000 include Mostostal Export's Focus Filtrowa project, which will offer 33,000 square meters of office space, the Renaissance Tower being developed by Apollo/Rida, which is planned for 18,000 square meters, Mahler's 7,200 square-meter office building under construction at ulica Wspolna and the Kopernik office building, which plans to complete the first phase of a 6,000 square meter project next year.
Global project to resume
Global Hotels, developer of the Holiday Inn hotel chain in Poland, said that it would complete its Wrocław hotel next May.
Development of the hotel, the second Global-backed Holiday Inn in Poland, was suspended earlier this spring because of a conflict between Global and the general contractor for the project, Germany-based AGIB.
Global decided to sack AGIB as contractor, but AGIB in turn said it would claim compensation for expenses.
But the conflict will not halt the development for long, Global vowed.
"We lost three months, that's it,' said Andrew Findeisen, chairman of the supervisory board of Global Hotels, who said that a new general contractor for the project will start construction in September.
It remains to be seen if work will start, though, because the former general contractor said it is not backing down on its claim for compensation. "Now this is a stalemate," said Zbigniew Chrzanowski, head of AGIB in Poland.
Global purchased the land and the project for the development of a 165-room hotel in central Wrocław, on which construction had already started, last November from AGIB. Despite selling the project and land, AGIB stayed on as general contractor for Global with both sides agreeing that the hotel would be completed by December 1999, Chrzanowski said.
Earlier this spring, Global decided to fire AGIB saying that a lack of construction progress made it impossible for the project to be completed on time. "AGIB had a turn-key contract and it failed to fulfill it," Findeisen said.
But AGIB's Chrzanowski said that it would be able to complete the project on time even though there was no sign of the work earlier this spring. He added that AGIB was slow in making headway because Global had asked to make changes to the design, which prevented AGIB from continuing work based on existing construction permits.
Global countered that, as the owner of the project, it has the right to fire the contractor if it is not happy with progress. "We have the ownership title," Findeisen said.
AGIB said it doesn't question Global's right to cancel the deal, but that it is contesting the way in which it was done.
Chrzanowski said Global fired AGIB because it wanted to avoid payment for expenses already incurred by AGIB and it wanted to claim compensation for a delay of the project.
"Global wants to build the hotel for free," Chrzanowski charged. AGIB plans to file a lawsuit demanding compensation for expenses, he added.
Findeisen played down the effect any AGIB actions will have on the project now moving ahead. He said that in coming days Global will sign a contract with a new general contractor. Findeisen would not name the contractor, but said the project will resume in September and will be completed by May 2000.
When completed, the hotel will be the second Holiday Inn for Global, which has the franchise right to operate Holiday Inn hotels in Poland. Global, co-owned by Enterprise Investors and the International Finance Corp. (IFC), plans to invest up to $47 million over 10 years here to develop a chain of 20 Holiday Inn hotels.
Late last year the company opened its first Holiday Inn, a 143-room hotel in Gdańsk. Global had also bought the land and a hotel under construction there from AGIB. Both sides also disagree on the amount Global owes AGIB for the Gdańsk project, Chrzanowski said.
AGIB in turn could be shying away from further investment in Poland, said Chrzanowski. After selling its two projects to Global, it also sold its retail project in Katowice to U.K.-based Chelverton International. Chrzanowski said that there are no new projects in the pipeline for the time being.
But Henry Butcher said supply is unlikely to meet these projections. "A substantial number of new buildings would have to start in September to be capable of delivery before the end of 2000,' the agency said. "If few new starts are made then new supply could be as low as 200,000 square meters"
Henry Butcher said that the falling supply is most likely a result of investors' reactions to declinining rents as well as demands by banks for more security through tighter lending conditions.
Other agencies are coming to the same conclusion.
"There are a number of sites with building permits or close to (having) building permits with the potential to be completed next year," said Richard Sexton, head of agency at Knight Frank Nieruchomo¶ci. "But there is no spade in the ground yet."
Sexton said that developers are reluctant to build without having space pre-let, as there is a risk that they will not find tenants.
Projects already under construction and slated for completion in 2000 include Mostostal Export's Focus Filtrowa project, which will offer 33,000 square meters of office space, the Renaissance Tower being developed by Apollo/Rida, which is planned for 18,000 square meters, Mahler's 7,200 square-meter office building under construction at ulica Wspolna and the Kopernik office building, which plans to complete the first phase of a 6,000 square meter project next year.
Global project to resume
Global Hotels, developer of the Holiday Inn hotel chain in Poland, said that it would complete its Wrocław hotel next May.
Development of the hotel, the second Global-backed Holiday Inn in Poland, was suspended earlier this spring because of a conflict between Global and the general contractor for the project, Germany-based AGIB.
Global decided to sack AGIB as contractor, but AGIB in turn said it would claim compensation for expenses.
But the conflict will not halt the development for long, Global vowed.
"We lost three months, that's it,' said Andrew Findeisen, chairman of the supervisory board of Global Hotels, who said that a new general contractor for the project will start construction in September.
It remains to be seen if work will start, though, because the former general contractor said it is not backing down on its claim for compensation. "Now this is a stalemate," said Zbigniew Chrzanowski, head of AGIB in Poland.
Global purchased the land and the project for the development of a 165-room hotel in central Wrocław, on which construction had already started, last November from AGIB. Despite selling the project and land, AGIB stayed on as general contractor for Global with both sides agreeing that the hotel would be completed by December 1999, Chrzanowski said.
Earlier this spring, Global decided to fire AGIB saying that a lack of construction progress made it impossible for the project to be completed on time. "AGIB had a turn-key contract and it failed to fulfill it," Findeisen said.
But AGIB's Chrzanowski said that it would be able to complete the project on time even though there was no sign of the work earlier this spring. He added that AGIB was slow in making headway because Global had asked to make changes to the design, which prevented AGIB from continuing work based on existing construction permits.
Global countered that, as the owner of the project, it has the right to fire the contractor if it is not happy with progress. "We have the ownership title," Findeisen said.
AGIB said it doesn't question Global's right to cancel the deal, but that it is contesting the way in which it was done.
Chrzanowski said Global fired AGIB because it wanted to avoid payment for expenses already incurred by AGIB and it wanted to claim compensation for a delay of the project.
"Global wants to build the hotel for free," Chrzanowski charged. AGIB plans to file a lawsuit demanding compensation for expenses, he added.
Findeisen played down the effect any AGIB actions will have on the project now moving ahead. He said that in coming days Global will sign a contract with a new general contractor. Findeisen would not name the contractor, but said the project will resume in September and will be completed by May 2000.
When completed, the hotel will be the second Holiday Inn for Global, which has the franchise right to operate Holiday Inn hotels in Poland. Global, co-owned by Enterprise Investors and the International Finance Corp. (IFC), plans to invest up to $47 million over 10 years here to develop a chain of 20 Holiday Inn hotels.
Late last year the company opened its first Holiday Inn, a 143-room hotel in Gdańsk. Global had also bought the land and a hotel under construction there from AGIB. Both sides also disagree on the amount Global owes AGIB for the Gdańsk project, Chrzanowski said.
AGIB in turn could be shying away from further investment in Poland, said Chrzanowski. After selling its two projects to Global, it also sold its retail project in Katowice to U.K.-based Chelverton International. Chrzanowski said that there are no new projects in the pipeline for the time being.
