Developers waited for takers in 1995

In Warsaw last year, the voice seemed to be telling developers: "When they come, you can build it."
One of the most distinguishing characteristics of the office market in 1995, some analysts say, was the role large end users played in getting projects off the ground through commitments to take space in buildings that existed only in the mind of the developer.
"There were five major pre-lets prior to even starting construction - it's very unusual on an international basis," said Michael Hodges, partner at Jones Lang Wootton (JLW). "It's a very good indicator of the strength - or weakness - of the market, depending on which side of the fence you're on."
Regardless of the point of view, those deals were substantial.
In April, ING announced its plans to take almost 8,000 square meters in a project developed by MBO (ING's property arm) and Holding Wars (Warsaw's development company). The project will house ING Bank, Bank Slaski (25.9% owned by ING) and Nationale-Nederlanden Insurance, also a member of the ING Group. Rents were set at $35 per square meter.
At Plac Teatralny, a unique project currently in the pipeline, first Citibank Polska and then Bank Rozwoju Eksportu SA signed on to buy 100% of the project's 32,000 gross square meters. The project is developed by French contractor Bouygues.
In October, after two years of negotiations, IBM signed a lease for 2,800 square meters in the Wisniowy Business Park, developed by UK-based Chelverton Properties.
Then in November, in what is probably the largest pre-lease in recent memory, Price Waterhouse signed a 10-year lease for more than 4,000 square meters in a project on ul. Nowogrodzka developed by Polish Wadeco and German von der Heyden & Partners. The lease contract is worth an estimated $18 million.
Last year was also a big year for schemes outside the city center, including office parks and distribution facilities. Menard Doswell & Co completed the first building at the Warsaw Industrial Center, as did the Kontrabecki Group at their distribution center. French logistics company Faure & Machet also completed the first phase of their logistics facility in Msz-czonow.
On the office side, construction is winding down on the first of three buildings in the Ochota Office Park, and is nearing completion at Jerozolimskie Business Park. With IBM signed on, work is now beginning at the site of the Wisniowy Business Park.
Richard Petersen, partner at Healey & Baker, said that 1995 brought a deepening of the market, not only because of the amount of space and number of tenants, but also because of the type of development taking place. "Before there was just Ilbau, but now there are some other serious developers who are coming in with banks and not just trying to make something out of nothing," Petersen said. "There's much more solid work in the pipeline."
As for 1996, the only new city-center space to come on the market before the fourth quarter will be the FIM Tower, already delayed several times. But work has begun or is expected to begin on several projects, meaning 1997 should be a busy year for the market.
Market watchers, however, say the place to start looking for activity is in retail space. With wages rising in real terms, Poles have more money for consumption, but a very fragmented retail infrastructure. Skanska is expected to move ahead with phase III of its Business Center Wola project which will be comprised mostly of retail.
"For the next five years it's going to be retail," JLW's Hodges said. "If you can find a building on Nowy Swiat, buy it. It can only get better."

Construction: 1995/1996 Projects

Completed 1995
Project Area Timing
Aktyn Business Centre 10,675 sqm IQ 1995
Atrium Business Center 9,300 sqm IIQ 1995
ETC 4,000 sqm IIIQ 1995
Ochota Office Park 12,000 sqm IVQ 1995

To be completed, 1996
Project Area Timing
FIM Tower 15,000 sqm IIQ 1996
Atrium Business Centre, phase II 17,500 sqm IVQ 1996
Ilmet Complex 26,000 sqm IVQ1996
Ochota phase II 12,000 sqm IVQ 1996

In the pipeline
Project Area
Atrium phase III 15,000 sqm
Europlex 24,000 sqm
Holland Park 8,000 sqm
Norway House 5,300 sqm
Nowogrodzka 4,000 sqm
Plac Teatralny 32,000 sqm
Sienna 7,500 sqm
Warsaw Financial Center 75,000 sqm
Wisniowy Business Park 5,000 sqm