Poznań PGK development attracts first tenant

Germany-based AKB Marketing Services signed a lease agreement in late March for 650 square meters in Poznań's PGK Centrum II, becoming the first tenant in the 10,000 square-meter project. "It might not be the most spectacular transaction but for the Poznań market it's very significant because the deal was signed in the early stage of development, which wouldn't have been possible a year ago," said Michał Melaniuk, marketing and leasing director at GE Capital Golub Polska. "It's a sign that Poznań's market is maturing." GE Capital Golub Polska is representing the building's investor, Poznań-based Poznańska Grupa Kapitałowa (PGK), in property management and leasing. Melaniuk said that negotiations with other companies are under way. Asking rent at PGK II is $17-$20 per square meter, plus a $5 per square meter service charge. Construction of the zł. 40 million ($9.8 million) building was started last fall and should be completed in March 2003. "Local markets are different from Warsaw, and transactions that exceed 1,000 square meters don't happen very often, so 650 square meters is pretty much," said Jerzy Wysocki, head of the office department at U.K.-based property consultancy Knight Frank Nieruchomości (KFN). Because tenants have so many buildings from which to choose in Poznań, AKB's selection is a feather in PGK's cap, he said.

Poznań: Tale of the tape The spate of new projects under construction or completed threaten to saturate Poznań's property market in the near future, insiders said. In addition to the zł. 25 million ($6.1 million) PGK Centrum I, completed in 1999, there is also the $46 million Poznań Financial Center, finished last year. The latter, developed by the Netherlands-based Von der Heyden Group, added 11,200 square meters of modern office space downtown. "It's a Mercedes on Poznań's market," Melaniuk said. The asking rent is about $25 per square meter, comparable to Warsaw prices. In the project's second stage, the investor will spend $70 million to erect a 60,300-square-meter mixed-use project, combining office, hotel and retail facilities. Other developments include Kupiec Poznański, Winogrady Business Center and Globis. According to a KFN report, investments planned for 2002-2003 will dump 52,000 square meters onto the market. "This market is getting tougher," Wysocki added.

Beyond the looming supply of fresh office space, Poznań developments face other obstacles. "Most of the companies are local and are used to renting cheap space in mansions or older office buildings," Wysocki said. "It takes time to persuade them that a slightly more expensive modern office building is more efficient - providing open space, raised floors and air conditioning." Melaniuk agreed. "We need to educate them that the real costs per employee are lower than in an old mansion," he said. Poznań's vacancy rate is about 10-15%, according to KFN. Still, Melaniuk said Poznań's real estate market is the "most interesting" after Warsaw. "The Poznań market is still very absorptive," he said. "Most of the demand comes from the local firms connected with foreign capital as well as from branches of international companies, expanding to secondary cities," he said. Melaniuk noted that proximity to the German border and Poland's desire to join the European Union also play an important role for the regional property market.

In brief: - Robert Bosh, a German producer of electronic goods signed a five-year lease deal last month to occupy 1,086 square meters in Warsaw Distribution Center (WDC) warehouse project. WDC, developed by U.S.-based TKG International has a total of 30,000 square meters of office and warehouse space. - Mostostal Export, a Warsaw-based general contractor, set up a joint venture with Ramet Europe of Israel. The company, to be called Bukowińska Development, will build a 10-story residential building on ulica Bukowińska in the Mokotów district. The complex will have 122 apartments ranging in size from 38 square meters to 130 square meters and three levels of underground parking. Construction is expected to start in the second quarter of this year. - Sweden's Skanska announced that it would break ground on Oś Saska, a new housing project in the Wola district, in October. Skanska plans to build 120 apartments ranging in size from 61 square meters to 198 square meters within 15 months.