WBJ: Ghelamco and Madison International Realty earlier this year sold the Warsaw Spire office tower located in the Rondo Daszyńskiego area in the Polish capital’s Wola district for €386 million. What does the huge deal say about the location’s potential?

Jeroen van der Toolen: The transaction proves the fact that the city center of Warsaw has been redefined and now also includes the Rondo Daszyńskiego area. In recent years, we have seen the new office projects in this area attract tenants which previously occupied space in the most prestigious office buildings located in what was historically regarded as the Central Business District of the Polish capital. Now, the biggest investment funds – which tend to be more conservative and cautious than tenants – have also recognized this area’s potential.

Crucially, unlike many other parts of downtown Warsaw, this neighborhood has every chance of becoming a very well-planned area with a proper mix of urban functions. When the ongoing schemes are completed, you will have office, retail, hotel and residential space here. Already the area boasts one of the most popular cultural facilities in the city, the Warsaw Rising Museum. The increasing attractiveness of this part of Wola is well reflected by the growing demand for new apartments, whose prices have gone up significantly of late.

So, you’re saying that investors’ perception of the area has changed…

Definitely. There is no difference in yields between the Rondo Daszyńskiego area and, let’s say, the Plac Piłsudskiego or Plac Trzech Krzyży areas in the very center. I would even say that this area, which is already well known to investors, will in the future have the best yields.

Does the sale change anything for you as one of the tenants of the Warsaw Spire tower?

No, we are not planning to move out, at least for now. Our lease agreement expires in approximately three years and we will stay here during this time. We love the building; its development is one of the most important milestones in our history. Besides, sitting here we have a nice view of the sites that we are developing now, as well as those which we will start developing here soon. We could move to one of our new schemes, but they are attracting a lot of tenant interest anyway so there is no commercial need for this.

Several very large lease deals have been signed in the Rondo Daszyńskiego area in recent months, with two of the biggest agreements having been secured by Ghelamco. Can we expect to see more major transactions in the area later this year?

Yes, we will see more large lease transactions here, even of a scale comparable to the mBank deal. The reasons for this include the continued growth of companies already present in Poland and, in some cases, their consolidation of office space. What is equally important is the entries of new companies to the country – in The Warsaw HUB, for example, almost 50% of the office space will be occupied by foreign companies which are not yet present in the Polish market or those moving new divisions here.

Also, we can expect big lease deals signed by companies that currently occupy large areas in C-class buildings. Some of these companies will move into new office projects in the near future and their current offices will be demolished to make room for new investments. Developers today are very lucky – when we and our major competitors announced all the new office skyscraper projects here a few years ago, some people were skeptical and doubted that the boom would continue for long. But, in fact, the office market in Warsaw is still very hot.

How is the commercialization of The Warsaw HUB and The Warsaw Unit going?

In a few weeks, the leasing level at The Warsaw HUB will reach approximately 80%, which is a satisfactory level considering the fact that the entire development is scheduled to be completed in mid-2020. At The Warsaw Unit, we have leased almost 20,000 sqm to date.

What are your further development plans in this part of Warsaw?

In the Rondo Daszyńskiego area, we have sites for four more office towers. We cannot reveal the details of those projects yet – our policy is to announce schemes once we have secured building permits. We expect to be able to announce the first of those investments next year.

How long can the development boom here last in terms of the availability of sites?

Indeed, most of the best sites have already been developed or secured by developers for future projects. There remain quite a few plots of land in the Rondo Daszyńskiego area which could house new office schemes, but many of them are not in private hands – they are owned by the state, by such entities as Polish State Railways. Additionally, some of the sites that are available for purchase are in the hands of owners with very high price expectations. But we are constantly looking for land acquisition opportunities here.

Ghelamco used to be very active in the Służewiec area in Warsaw’s Mokotów district, which is one of the biggest office hubs in Poland but has been criticized for its office monoculture for a long time now. Are you planning anything new there?

We continue to believe in Służewiec – although there are still major transport problems there which the municipal authorities are yet to solve through investment in several crucial road infrastructure projects, the situation has actually improved a lot of late. The area has attracted many residential developers, so its nature is changing and it already has a very different mix of functions than in the past. Office schemes in Służewiec have always leased well and the area has actually lost relatively few tenants in recent years. We have one office site with a building permit there on which a project with 32,000 sqm of space can be built. Admittedly, we will probably wait a bit for the market there to pick up before we launch it. In the past, we tried to buy more land in Służewiec, but we did not succeed as we were not able to compete with residential developers. They can afford to pay a higher price for land than office developers because the construction of a residential project is cheaper than the construction of an office scheme.

What about regional cities?

Warsaw remains the most important market for us, but we will continue to be active in some of the biggest regional markets as well. Next year, we want to start building new office projects in Łódź, Kraków and Katowice.