Phase one of historical building renovation in Szczecin completed
U.S.-owned Sczecinskie Towarzystwo Renowacyjne (STR) last month completed the first phase of a zl. 30 million ($7 million) historical renovation project in the center of Szczecin, the developer said.
STR, owned by American Retail Systems, a restaurant company, completed the renovation of four late-19th century and early-20th century multifamily buildings totaling 9,000 square meters in the northwestern port city, said Stuart Gross, STR's president.
"It's revitalizing the center of the city," he said.
STR's investment is part of Szczecin's master plan to relocate residents and renovate more than 40 historical buildings in the Plac Zgody downtown area.
STR started the renovation in 1998, when it created a joint venture with the city to carry out the project. However, in late 1998 the joint venture fell through, STR bought out the city's stake in five of the buildings and withdrew its commitment to renovate the others, Gross said.
Since then, STR has completed the redevelopment of four of those five buildings including a 220-meter sidewalk. The fifth building will be renovated later on, Gross said. As a part of the project, the developer constructed 107 temporary apartments outside the city center for residents of the renovated buildings, he said.
The four renovated buildings include 9,000 square meters of mixed-use space. Typically the buildings have a basement and ground floor for retail and entertainment facilities, two middle floors for offices and two top floors for residences.
More than half of the buildings are already leased. Office tenants include insurance companies Generali, Amplico-Life and Alcatel, a telecom company. The asking rent for the remaining office space is DM 20 per square meter a month. Despite the relatively low rents, the developer said renting office space in Szczecin is not easy. "We're not struggling, but we are working hard," Gross said. "Szczecin is not very positive."
More popular are the DM 60 asking rents for retail space, mostly thanks to the buildings' excellent location in the very heart of Szczecin, he said. "It's the best location in Szczecin, it's ground zero." Retail tenants include a shoe store, dress store, optical outlet, restaurant and an 850 square-meter discotheque, Gross said.
Residences on the top two floors of the project, which average about 50 square meters each, are being rented for zl. 1,300 a month, Gross said.
The developer, which financed 50% of the project from its own capital and the other half through local banks, only intends to lease space in the buildings because it's planning to sell them in their entirety to an institutional investor in the future, Gross said.
STR said it would like to continue renovating buildings in Szczecin if it is able to buy more of them on a similar basis. The planned second phase is expected to include bowling facilities and a multiplex cinema as well as an arts center to be located in the fifth building owned by STR, he said.
STR is currently negotiating with the city to acquire three more buildings, Gross said. He would not, however, give any timetable or details of the project.
Warsaw boom revives nat'l residential market
The number of apartments completed in the first half of the year reached 34,138 units, 7% more than in the same period last year, according to figures released last month by the Central Statistical Office (GUS).
The growth reversed the downward trend in 1999 when the residential market shrank compared to the previous year.
The national growth in residences completed this year has been fueled by very strong growth in the Mazowieckie voivodship (where Warsaw is located), which outpaces other provinces' growth, according to GUS.
"There are new investors in the Warsaw market," said Artur Pietraszewski, head of new apartment sales at Warsaw-based real estate agency Unikat. "The market is strong."
The number of apartments completed in Mazowieckie rose by 50.4% in the first quarter (first-half figures were not available) of 2000, as compared to the same period last year, according to GUS. The national growth rate in the first quarter was only 15%.
The Mazowieckie voivodship in the first quarter of 2000 accounted for 30% of the total number of apartments completed in that time frame. Dolnoslaskie, where Wroclaw is located, was the second-biggest voivodship in terms of apartments completed in the first quarter of 2000, but accounted for only 7% of the national market, GUS said.
The boom in residential development especially in the Warsaw area is fueled by the fact that many investors started developing residential projects, Pietraszewski said. Many investors decided to speed up the start of development last year to try to benefit from government tax incentives for residential construction, he said. Until last year, it was thought that incentives were expected to be lifted starting in 2000. Parliament, however, unexpectedly failed to agree on a new tax law and decided not to lift the incentives, which are in place at least until the end of this year.
But residential market growth is mostly driven by the high demand for small, cheap apartments, sources said. In Warsaw the biggest demand is for small two-bedroom apartments priced below $1,000 per square meter, Pietraszewski said.
Developers willing to build inexpensive apartments tend to concentrate on larger projects, which in the Warsaw area average at least 300 dwellings. Such buildings also help to boost completion figures in the capital, he said.
Property experts hesitate to say, however, whether this year's growth in new residential development is sustainable. "It's hard to predict the future," Pietraszewski said.
He said that demand for new residences is price sensitive and could easily be hampered by unfavorable tax changes. In spring, the government hinted that it might introduce value-added taxes for construction materials and residential sales, which would raise the final cost for an apartment from 7% to 22%, enough to adversely affect sales, Pietraszewski said.
