Europolis Invest acquires second Warsaw building

“We are looking forward to starting construction of the Saski Cresent Office Building, the next phase of the Saski Park Office Complex."
By : Anna Staniszewska

    Saski Point: Sold for $36 million.

   Europolis Invest Immobilien Management, an Austrian property fund, received municipal approval last month for its $36 million purchase of the Saski Point office building in Warsaw.

   Industry players have been anticipating the deal since the development went on the market five months ago.

   Tenants in the two-year-old building include SNCF, Estee Lauder, ECS International, Societe Generale, Steward International and AIG/Lincoln Polska, the co-owner and developer of the 8,000 square-meter project.

   “These types of deals don’t happen very often on the Polish market, however, there is great interest from institutional investors in Warsaw,” said Dorota Latkowska, head of the finance and investment department at U.K.-based Knight Frank Nieruchomoœci.

    According to Bernhard Mayer, chief executive officer of Europolis Invest, although the Polish market is not yet mature, the yields are higher than in developed property markets.

   “We chose the building because of its excellent location (ulica Marszałkowska) and high-profile tenants,” Mayer said. He added that the company plans to continue investing in Central Europe, despite the economic slowdown in the region.

   “Europolis might even close the next deal (yet) this year,” he said, without revealing any details.

   Last September, Europolis Invest, a subsidiary of the Austrian Investkredit Group, spent $70 million to acquire the 20,600 square-meter Warsaw Towers on ulica Emilii Plater. Apart from Warsaw, the fund owns City Gate and the Infopark Research Centre in Budapest, as well as the Hadovka Office Park in Prague. “(Saski Park) continues our process of acquiring prime properties in the emerging markets of Central Europe,” Mayer said. As for Warsaw, he said the Polish capital still lags behind other major European cities in terms of available office stock. “There isn’t a massive oversupply,” he said. The quality of buildings and the tenant profile are also questionable, but this is changing, he added.

   Brian Patterson, managing director of AIG Lincoln, called the deal a win-win transaction for both parties, and said that AIG would still manage the building. “We are also looking forward to starting construction of the Saski Cresent Office Building, the next phase of the Saski Park Office Complex,” Patterson added.

   Europolis Invest is planning to open a representative office in Warsaw within the next nine months to oversee management of the buildings it already owns, and to scout new ones. “We want to take care of our business on the site,” Mayer said.

   Retail warehousing in short supply

   Poland is below the European average in terms of rental rates per square meter, according to Healey & Baker’s “European Retail Warehousing” September report. Of the 15 countries included in the report, Poland ranked 12th at E150 per square meter a year, whereas the European average is E175. The highest rents were found in the U.K., where retail warehouse space costs E403 per square meter annually.

   Only retail warehouse parks with a single developer, at least three schemes, parking, and suburban locations, were included in the study.

   In Poland, retail warehousing is still new and the market continues to be dominated by older industrial stock converted for retail purposes. While this is changing, there are still a handful of schemes that meet the criteria of a typical retail park, such as hypermarkets, which are developed at the rate of about 10 per year, according to the report. They must contain at least 600,000 square meters (10 million in the U.K.), most of which trade DIY goods, construction materials, furniture, household appliances and electronics. The biggest chains in Poland include Media Markt, Obi, Praktiker, Castorama and Ikea.

   Healey & Baker estimates that domestic demand for these kinds of projects is still growing. It also expects that lease deals will account for a higher proportion of market activity as the number of built-to-suit projects increases. The prime yield remains at 13%, which is high compared to the European average of 8.2% and the U.K.’s 5.75%. This gap is expected to narrow as interest from institutional investors increases, the report says.

   Announcements

   n Atrium Centrum completed. Another 14,000 square meters of office space and 2,000 square meters of retail space hit the Warsaw market last month, as the Atrium Centrum on Aleja Jana Pawła was officially completed. Rent is set at $29.50 per square meter a month, plus a $5.50 service charge. According to Sweden’s Skanska, the project is 30% leased. Banks, retail outlets and restaurants will be located on the ground level of the seven-story structure. The building is a part of the Skanska Atrium Business Centre complex, which includes the Atrium, Atrium Tower, Atrium Plaza and the Atrium South, currently under construction and will include a five-star Westin hotel, as well as an office and retail building.

   n Rainbows, an outdoor advertising company, leased 370 square meters in the 2,500 square-meter Srebrna 16-office building in Warsaw’s Wola district. U.K.-based Healey & Baker acted on behalf of the developer, Srebrna, in the deal.