Echo Investment nabs pricey retail site in the heart of Szczecin
Echo plans to develop a 50,000 square meter, retail and entertainment project that carries a construction cost of a minimum zl. 200 million ($52 million), said Michal Kubicki, Echo Investment's development director.
Interest among bidders, which led to the high final price tag of more than $1,200 per square meter for the plot located next to the Radisson Hotel, surprised both Echo and its rivals.
"We expected this to cost about zl. 70 million ($18 million)," said Jacek Wesolowski, general director of Polinvest, a Gdynia-based developer that wanted to buy the site in the northwestern city, but dropped out of the final round of bidding because of the high price tag. The winning bid was one of the highest so far in the country, Wesolowski said.
But both Echo and competitors said that the site was the best that one could imagine in downtown Szczecin. "This was the only location in downtown Szczecin for development of this kind," said Kubicki.
The project will be Echo Investment's biggest project to date, the developer said. It's also the developer's third project in central Szczecin. Echo soon hopes to start two other developments that would include a multiplex theater and two hotels, carrying the Ibis and Novotel brand, both operated by France-based Accor. Echo has a cooperation agreement with Accor.
Echo has Szczecin high on its development plans because it said the city is the most under-invested urban center among large cities with more than 400,000 inhabitants. Additionally Echo sees Szczecin developing fast because the city serves as a command headquarters for Danish, German and Polish NATO forces. Echo's Kubicki said that this means that thousands of cash-rich customers have been coming to town, who will spur a retail boom in the near future. "These are not only soldiers, but also their families," he said.
Warsaw still risky
Warsaw is considered to be one the riskiest but also most rewarding markets in Europe for institutional real estate investors, according to a report last month from U.K.-based real estate agency Knight Frank.
Property investment yields in Warsaw are at 11-12%, slightly above the level of other cities in the region including Prague and Budapest, where yields are 10-11%. Warsaw yields also far outpace Western European cities where yields range from 5% in Munich or Zurich to 9.5% in Lisbon, Knight Frank's report said.
High yield basically means that property prices are low because of the risk involved. "There are many reasons why yields are high but risk is certainly the main one," said Brian Burgess, country manager in Poland with Henry Butcher real estate agency. "(Warsaw) is considered to be a risky place," he said.
The list of cities that have yields equal to or higher than Warsaw include Moscow (15%-18%), Mexico City (13%-16%), Istanbul (12%) as well as some cities in Asia and Africa, according to Knight Frank.
But high yields also mean that the period of return for investors could be quicker than in safer markets with lower risk. "It's a risky but rewarding market," said Burgess.
Although Warsaw may reward investors, it's expensive for tenants, Knight Frank said. Despite falling rents here, the total cost of office occupancy per square meter here is $46 a month, according to the report. The only European cities where costs are higher are in London, Paris and Moscow, the report said.
The risks for Warsaw were the continued belief that Poland is still linked economically to Russia and that with rents so high there is a danger that they will fall, Burgess said.
On the move
• Sean Briggs, head of the retail department at Healey & Baker, the U.K.-based real estate agency, is leaving the company to start working for an unnamed developer, said a property watcher in Warsaw, who asked not to be named.
Briggs, contacted last week, would neither confirm nor deny the report. "I can't comment now," Briggs said.
Briggs, who has been working in Healey & Baker's Warsaw office for more than four years, established the retail department in the Warsaw agency three and a half years ago. Presently, Healey & Baker's retail department, considered by competitors as one of the strongest in Warsaw, employs 10 agents.
If Briggs does leave his will be the second departure of a top manager from Healey & Baker's retail department this year. Mike de Mug, senior agent at Healey & Baker, left the company to work for developer Tishman Speyers.
• Michalina Wiczkowska, who headed finance and administration at developer Chelverton International, took a new post on Aug. 1 as vice-director for real estate management at insurer Commercial Union, Wiczkowska said in a statement. Chelverton International is developer of the Wisniowy Business Park, and Wiczkowska, as head of finance at Chelverton, participated in the sale of Wisniowy building A to Commercial Union.
• Jones Lang LaSalle has recently hired three property negotiators, or agents, for its retail department. New hires are Agnieszka Burzynska, Jan Ziolkowski and Barbara Fryzel. Jones Lang LaSalle said it needs to boost its retail department because it has been involved in marketing efforts for the massive Tishman Speyers' retail project in Krakow as well as other retail projects outside Warsaw.
• Henry Butcher last week moved its offices from a building on Barbary street to the Atrium Plaza building at Jana Pawla. Henry Butcher, which is also the agency representing the developer of the Atrium Plaza, took a 200 square meter space in the building. The space could prove only temporary though, said Brian Burgess, country manager at Henry Butcher. That's because the space Henry Butcher took is reserved for an unnamed tenant of Atrium Plaza that has first call if it needs more space in the building, he added.
Interest among bidders, which led to the high final price tag of more than $1,200 per square meter for the plot located next to the Radisson Hotel, surprised both Echo and its rivals.
"We expected this to cost about zl. 70 million ($18 million)," said Jacek Wesolowski, general director of Polinvest, a Gdynia-based developer that wanted to buy the site in the northwestern city, but dropped out of the final round of bidding because of the high price tag. The winning bid was one of the highest so far in the country, Wesolowski said.
But both Echo and competitors said that the site was the best that one could imagine in downtown Szczecin. "This was the only location in downtown Szczecin for development of this kind," said Kubicki.
The project will be Echo Investment's biggest project to date, the developer said. It's also the developer's third project in central Szczecin. Echo soon hopes to start two other developments that would include a multiplex theater and two hotels, carrying the Ibis and Novotel brand, both operated by France-based Accor. Echo has a cooperation agreement with Accor.
Echo has Szczecin high on its development plans because it said the city is the most under-invested urban center among large cities with more than 400,000 inhabitants. Additionally Echo sees Szczecin developing fast because the city serves as a command headquarters for Danish, German and Polish NATO forces. Echo's Kubicki said that this means that thousands of cash-rich customers have been coming to town, who will spur a retail boom in the near future. "These are not only soldiers, but also their families," he said.
Warsaw still risky
Warsaw is considered to be one the riskiest but also most rewarding markets in Europe for institutional real estate investors, according to a report last month from U.K.-based real estate agency Knight Frank.
Property investment yields in Warsaw are at 11-12%, slightly above the level of other cities in the region including Prague and Budapest, where yields are 10-11%. Warsaw yields also far outpace Western European cities where yields range from 5% in Munich or Zurich to 9.5% in Lisbon, Knight Frank's report said.
High yield basically means that property prices are low because of the risk involved. "There are many reasons why yields are high but risk is certainly the main one," said Brian Burgess, country manager in Poland with Henry Butcher real estate agency. "(Warsaw) is considered to be a risky place," he said.
The list of cities that have yields equal to or higher than Warsaw include Moscow (15%-18%), Mexico City (13%-16%), Istanbul (12%) as well as some cities in Asia and Africa, according to Knight Frank.
But high yields also mean that the period of return for investors could be quicker than in safer markets with lower risk. "It's a risky but rewarding market," said Burgess.
Although Warsaw may reward investors, it's expensive for tenants, Knight Frank said. Despite falling rents here, the total cost of office occupancy per square meter here is $46 a month, according to the report. The only European cities where costs are higher are in London, Paris and Moscow, the report said.
The risks for Warsaw were the continued belief that Poland is still linked economically to Russia and that with rents so high there is a danger that they will fall, Burgess said.
On the move
• Sean Briggs, head of the retail department at Healey & Baker, the U.K.-based real estate agency, is leaving the company to start working for an unnamed developer, said a property watcher in Warsaw, who asked not to be named.
Briggs, contacted last week, would neither confirm nor deny the report. "I can't comment now," Briggs said.
Briggs, who has been working in Healey & Baker's Warsaw office for more than four years, established the retail department in the Warsaw agency three and a half years ago. Presently, Healey & Baker's retail department, considered by competitors as one of the strongest in Warsaw, employs 10 agents.
If Briggs does leave his will be the second departure of a top manager from Healey & Baker's retail department this year. Mike de Mug, senior agent at Healey & Baker, left the company to work for developer Tishman Speyers.
• Michalina Wiczkowska, who headed finance and administration at developer Chelverton International, took a new post on Aug. 1 as vice-director for real estate management at insurer Commercial Union, Wiczkowska said in a statement. Chelverton International is developer of the Wisniowy Business Park, and Wiczkowska, as head of finance at Chelverton, participated in the sale of Wisniowy building A to Commercial Union.
• Jones Lang LaSalle has recently hired three property negotiators, or agents, for its retail department. New hires are Agnieszka Burzynska, Jan Ziolkowski and Barbara Fryzel. Jones Lang LaSalle said it needs to boost its retail department because it has been involved in marketing efforts for the massive Tishman Speyers' retail project in Krakow as well as other retail projects outside Warsaw.
• Henry Butcher last week moved its offices from a building on Barbary street to the Atrium Plaza building at Jana Pawla. Henry Butcher, which is also the agency representing the developer of the Atrium Plaza, took a 200 square meter space in the building. The space could prove only temporary though, said Brian Burgess, country manager at Henry Butcher. That's because the space Henry Butcher took is reserved for an unnamed tenant of Atrium Plaza that has first call if it needs more space in the building, he added.
