Silesia shapes up
Close to nine million people live within a 100-km radius of Katowice, furnishing the area with an enviable labor force and consumer base. While the region has long been associated with the coal and steel industries, a promotional campaign established a few years ago by regional authorities is working to promote Silesia as a center of innovation and technology.
"Katowice provides an ideal geographic location as well as resources for qualified personnel to support expansion in the CEE region," says Sławomir Szpak, director for Rockwell Automation in Poland. Milwaukee-based Rockwell, a leader in information-systems technology for automated machinery, is planning to build a production and R&D center in Katowice's Special Economic Zone (KSEZ).
Captains of industry
The automotive industry accounts for 69 percent of all industrial activity in Silesia. Recent reports that Fiat will ramp up production of its new Fiat 500 and Ka models through its partnership with Ford project a regional output of 500,000 vehicles next year - an annual increase of 200,000 units - with the bulk of production intended for export.
"Expanded production from automotive firms translates to greater opportunities for auto parts and technology producers in the area who, in turn, can expect significant supply contracts," explains Agnieszka Piszczek, an investment specialist at Katowice-based Metropolis Commercial Real Estate.
Already, some 80 firms have offices located within the KSEZ and this figure is expected to increase steadily over the next few years as major tax incentives entice global firms. The zone is currently divided into four subzones, covering 1,189 ha overall, and continues to expand.
LG Philips has already initiated its large factory investment in Silesia. The 3M company will open its zł.21-million production facility by the end of the year and Lotos has announced plans for a biofuel plant in Czechowice. "Currently, the area is also seeing the entry of many outsourcing (BPO) firms such as Capgemini, attracted by the region's strong labor force and growth potential," says Piszczek.
Logistical possibilities
Substantive productivity requires a comprehensive logistics network. Silesia's roads are among the strategically best-connected in the country and their consistent improvement bodes well for Silesia's future as a major logistics and transportation hub for all of Europe. Companies like McLane are building logistics centers along major roadways. There are two pan-European tranportation routes running east-west and north-south, connecting France with Ukraine and Athens with Finland, respectively, in addition to national route 86 which runs to the Czech border. The intersection of the A1 and A4 highways, planned in 2010, will further facilitate road transport to the south.
The boom in the industrial and logistics sectors has also spurred the development of industrial parks within the economic zone. Euro-Centrum is currently undergoing expansion to provide around 6,000 sqm more space and may expand further to offer a total of 15,000 sqm by next year. The Upper Silesian Industrial Park, and Diamond Business Park Gliwice will both deliver custom office, manufacturing and storage space this year.
The presence of large global firms has encouraged small and medium-sized firms to open offices in Silesia. However, the office market is experiencing a shortage, with vacancy rates of class-A space at 2.5 percent and class-B and B+ at 16 percent. According to Metropolis' Piszczek, the current supply of 150,000 sqm of class-A and B office space will be expanded significantly in order to meet demand.
Currently, Opal Property Developments is converting the former Beldon factory, located close to the Silesia City Center - the region's largest business, shopping and recreation center - into an office complex, expected for delivery in mid-2008. The company is exploring other opportunities in Silesia, which will provide the opportunity to develop thousands of sqm of office space over the next five years.
Improving fortunes
As the economy improves, unemployment falls and wages increase, the residential and retail sectors have also seen a rise in demand, evidenced by the 20-percent increase in housing prices last year and the number of large-scale retail projects from Borgestad/Quinlan Private Golub, Parkridge, Plaza, Mayland and LDSA/Redis. Increasing numbers of people are also shopping around for homes, many of them looking at the luxury sector as it becomes more accessible to the growing upper-middle class.
To meet this demand, developments like Trigranit Development's Dębowe Tarasy, located near its Silesia City Center complex, are cropping up. Developer Eurocape PIA - a joint venture between Irish firm Howard Eurocape and Polish Investments and Acquisition - has purchased a 9,500-sqm site in downtown Katowice, on which it plans to build a 16,700-sqm building designated for commercial use and a 26-storey residential tower with over 400 upscale apartments and 3,000 sqm of retail services on the ground floor. The company also sees potential for a hotel on the property.
"The Katowice agglomeration is set to be the ninth-biggest metropolis in Europe and has the largest accessible budget in Poland [with regards to public-private partnerships (PPPs)]. Katowice, as the biggest city in this initiative, offers us huge opportunities in the Polish market," says Frank Gormley, chairman of Howard Eurocape.
