WBJ: Good to see you again Paweł & Rajmund. Let me kick off our talks by asking how you are doing and how has business been the past year?

What a year it has been. A transformative year. Initially focused on regaining momentum, we diligently reached out to our market contacts, updating them on the new circumstances. As spring turned into summer in 2023, we began to observe a notable change in momentum and purpose, sensing a positive evolution in our business endeavors.

A key for success was cultivating a familial atmosphere within our tight-knit team. Plus, Rajmund and the business development team deserve immense recognition for their contributions, diligently securing projects and expanding our network. 

Of course, we didn't expect any handouts. It's been hard work, but work we take pride in. We never turn down an opportunity to submit an offer for a client. Over the past year, we've likely sent out 2-3 offers a day. We do this with a clear purpose, believing that our efforts have ramifications for both the recipient and, ultimately, bring benefits and respect to us.

Recognizing the growth from 35-40 employees a year ago to 100 is a significant achievement. It's based on business growth, connected with relations both with clients but also internally. With our values, we've been able to attract the best fitters in the market, including those who have returned to work for us due to the family culture. Our team comprises architects, project managers, cost control personnel, business development managers, and the individuals responsible for the actual fit-outs who are 100 strong, on top of the previously mentioned number.

We now have 8 project teams operating across Poland, with teams in Tri-city, Wroclaw, Krakow, and of course Warsaw. This expansion signifies our increased scale, providing us with more stability and flexibility to approach each project optimally for our partners on a local level.

What would you highlight as key lessons learned during the past year?

The significance of relationships, both internal and external, cannot be overstated when facing the challenges of company growth. I want to emphasize the recruitment of talented individuals in a competitive market, which has been facilitated by maintaining a personal connection and open dialogue with team members. Our success stems from a people-centric approaches.

We came from corporate structures, which has equipped us with valuable skills. That experience provided us with improved tools for processes such as contract pricing, procurement, project management, and goal-setting. We've been able to leverage this experience in our new operations, making it easier for partners to understand our objectives.

I would like to express our heartfelt gratitude to our open-minded customers for the opportunities and trust they have bestowed upon us. Through ongoing conversations with our partners, we aim to provide assistance and offer solutions, enabling them to plan ahead effectively. Our accomplishment of completing over 60,000 square meters of fit-outs in 2023 is significant, and it underscores the importance of strong relationships in our endeavors.

How have you navigated the difficult real estate market?

Obviously the office market bottomed out. All the data corroborates this, showing low investment levels and a lack of new projects.

I think we should acknowledge that things will never return to how they were. Our society has been altered, first by COVID and now by the devastating war east of the border. These events have changed behaviors and habits, affecting various patterns in the urban landscape, such as where and how people live, commute to the office, and seek entertainment and services in office districts. Additionally, generational differences play a role, with younger individuals adopting a more balanced approach to work and life. All of these factors deeply influence the future of real estate.

For us, it signifies that we've expanded our services beyond the office market. Our expertise now spans multiple sectors: residential properties continue to thrive in Poland, Private Rental Sector (PRS) has seen recent success, logistics remains strong, and there's a significant demand in the high-end residential segment where virtually anything we build is sold. Let's not overlook hospitality either. This year, we're concluding several massive hotel projects, delivering hundreds of rooms.

We've expanded our offerings to include what we term 'Design & Build', where we not only provide excellent design but also ensure proper functionality and efficient execution, all within the specified time and budget. This may also involve fulfilling individual orders for furniture or decorating the designated space. When executed correctly, this approach is the most effective way for investors to save both time and money. It eliminates the friction between partners during various stages of the project.

Which sectors will be most important for you in the coming year?

As previously discussed, we observe macro trends impacting the real estate market, including a potential shift from home ownership to renting in Poland. The PRS market is nascent in Poland but holds significant potential, with projections of up to a million units for such projects. These ventures are particularly compelling for us as fit-out specialists because the standardized nature of these projects allows for efficient and streamlined processes, making it convenient to work on multiple apartments within the same scheme.

The same goes for the hospitality sector, it presents significant opportunities. As mentioned, we are currently involved in several major projects, with more details to be shared upon completion. The market potential in the region is substantial, prompting us to consider business expansion in the Central and Eastern European (CEE) region. Many hotel owners and operators operate across borders, presenting opportunities for us to extend our services. For instance, hotel markets in Budapest, Prague, and Vienna boast around 40,000 rooms per city, significantly larger than Poland's. Additionally, listening to our clients reveals their primary concern: a shortage of skilled contractors in the fitting area. Coupled with the increasing interest in travel, this sector remains a focal point for us, and we maintain close relationships to stay informed.

ESG is a new market. What are your observations about ESG and its impact?

There is no doubt that ESG will influence the real estate market. While our company may be relatively small in scale, we gauge our ESG success by our ability to assist clients in reducing carbon footprints and conserving energy.

We already have projects underway in Wroclaw where we are revitalizing buildings, altering their functions. While we don't alter the building's structure extensively, through redesigning and incorporating technology, we inadvertently promote ESG principles. By introducing technological advancements to the building, we inherently contribute to creating an outcome that better serves the environment and the society overall.

Other areas ripe for both business development and ESG impact are within the industrial sector. Many old factories, warehouses, and production facilities were built at a time when technology, social impact, and workplace conditions were different concerns, and energy efficiency wasn't a priority. However, times are changing, and there is significant potential for development in these areas. A fit-out company can play a crucial role in optimizing costs and effects for these locations and companies, considering the evolving landscape of technology and environmental responsibility.

So we now possess the expertise , and have employees that can support the clients in making the appropriate decisions, in terms of implementing ESG.

How are you preparing to meet the anticipated rise in market demand and competition as conditions improve?

We are in a good spot. However, there are indeed challenges facing the construction and real estate development sectors in Poland. Despite the current slowdown, issues such as the scarcity of skilled labor, aging demographics, and the imperative for innovation are already apparent.

This is a significant discussion, and let's approach it systematically. Remember when Poland joined the EU, and over two million Poles migrated to the UK and Germany for employment? Now, Poland finds itself in a similar predicament, needing more labor. This presents a challenge for the government and requires legislative attention. I believe we require around half a million workers in Poland, and it's crucial to address this before it's too late and demand exceeds supply. Otherwise, we risk construction costs escalating significantly.

We still have skilled labor, and they can continue to educate the younger generations. However, my concern lies in the fact that these youngsters may not necessarily come from Poland, as their focus seems to be on higher education and technology.

Essentially, at the end of the day, we're moving towards processes like standardization, prefabrication, pre-manufacturing, and robotics—anything that reduces the reliance on human labor in the construction process.

It's crucial for us to voice our concerns and acknowledge our responsibility to the market. We want to emphasize that in the construction industry, skilled workers are essential; financial plans alone won't suffice. The time to act and implement proactive measures to tackle challenges and capitalize on opportunities is now.   

Key Takeaways

1. Our business underwent a revolutionary shift with the power of relationships. Leaving a corporate giant and venturing on our own was daunting, but the market's response exceeded our expectations, thanks to the support from contacts and friends spanning over two decades.

2. The transformation in 2023 was achieved by assembling a stellar team of professionals committed to delivering high-quality work. Rooted in fundamental values of care, trust, and purposeful action, it's not rocket science but a recipe for success.

3. With 23 years in the business, transitioning from entrepreneurs to a corporate setting and back, our goal extends beyond acquiring more jobs. We aim to elevate standards, utilize our experience to support employee development, offer clients faster and cost-effective solutions, and share market insights for sustainable development.

4. Fitting over 2 million sqm of real estate space taught us valuable lessons. A one-size-fits-all approach doesn't work; acting local and respecting individual differences is crucial.

5. While the market might not fully grasp it now, in five years, the cost of finishing offices, apartments, or hotels could surpass Western Europe due to high demand and a shortage of skilled resources.

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