Real estate Lokale Immobilia
13:57 8 May 2022
Post by: WBJ


Newly promoted as Head of Poland for Savills IM, Piotr Trzciński shares his insights on real estate, logistics and ESG during these shocking times. INTERVIEW BY MORTEN LINDHOLM


WBJ: How does the current situation with the war in Ukraine and the high level of uncertainty influence your business?

Piotr Trzciński: Our approach was always a risk-off approach, so there is no need for a pivot in the strategy we have historically had. Probably we will become a little more selective in terms of location, quality and ESG enhancement/profile in the asset we are buying. Our biggest concern at this moment is inflation. However, it is still too early to say whether the situation will be a permanent factor to influence lease costs for tenants. On top of this there is an increased currency risk due to high volatility as we speak. But we still believe that a fundamentally well-located defensive asset still remains that way. Let’s not forget that by definition an investment in real estate assets is a long-term investment. The war [in Ukraine] is a huge shock but we have been through shocks before and the real estate market as a whole survived and certain sectors have emerged as clear winners.

So what asset classes are you investing in now?

We have established two main pillars of our activity. Logistics is clearly one of them, and I can see us moving into sub-sectors of the logistics market, like the last mile or cold storage, rather than the more generic asset we have been buying for the last five years in Europe and Poland. We also did a number of BTS schemes, that fits the defensive approach that I have mentioned earlier. The second strategy is related to the living sector — student housing + residential for rent. In this sector we would usually invest in standing assets but some of our equity can consider forward commitments in certain core markets like Spain. But we are investing in setting up internal know-how dedicated teams – pan Europe – that specialize in such investments. Being focused on the strategy of two sectors does not exclude making tactical acquisitions in other sectors. We would very much like to see opportunities in convenience retail that we believe have emerged as a winner out of the pandemic. It has been relatively less volatile than other sectors. My personal favorite is also discount stores given high inflation in the midterm and given people will be warier about their expenses and will be price sensitive. That sort of real estate will have an appeal.

On offices, we will definitely look at the core prime office. We have not done much in that segment in the last two years but I do see the potential on the back of the supply gap occurring in the next 2-3 years in Poland, especially Warsaw.

Also in the long term, I am positive about offices. I believe the offices will remain a social hub for employees to exchange information, onboarding and create a corporate culture. We are already seeing the trend of going multi-functional about the space, where people can meet where they like and sit down in surroundings they prefer, this is what tenants want and I am very far from saying that the traditional office model is dead. We will need offices.

There has been a boom in logistics, especially in Poland, in the last couple of years. Are there still more opportunities in this sector?

Last-mile delivery, we define it as an important unit within the supply chain that serves as the last step before the goods reach end-users. We think it has a bright future, based on the trend of how we spend our free time, how we shop and what we expect in terms of delivery. When we look at Amazon’s constant needs and growth, Allegro expanding its network of last-mile units in Poland, you have other retailers following the same pattern. This is for us a fundamental trend, the low e-commerce penetration in Poland. This will be one of the key growth drivers for the sector. More importantly, the land value under that sort of asset is substantial. It is challenging to get land to build closer to cities and it is going to cost more because often the land needs repurposing or there are existing structures that need adaptation (demolishing, replacing and infrastructural changes).

Is this a trend for all of Poland or just Warsaw?

I think this is the trend wherever the urban population is large enough, I think we will get into a situation where even populations of smaller cities will expect the same standard delivery as larger urban areas.

How does ESG influence your business and situation?

It has been a prevailing theme for us and not only in Poland. We knew that SFDR (Sustainable Finance Disclosure Regulation) requires the financial industry to disclose risks related to ESG. To mitigate risks we had to introduce many changes to our investment process and asset management. That becomes even more important now with the growing commodity prices on existing assets. Regarding asset management, ESG is a prime topic for us. Helping tenants, aiding tenants to reduce their occupation costs and improving the ESG profile on assets we manage.

In terms of ESG considerations in our investment process, we have prioritized this in the effort to understand the embodied carbon footprint of an asset we would acquire, ESG features and potential.

I think we are going to see a divergence between ESG-labeled and non-ESG-labeled assets, the latter being probably older buildings with significant capital expenditure required to add ESG features. They are going to suffer in terms of liquidity. Especially in logistics, I would agree with the observation that we might see assets being labeled like white-good labels in terms of energy efficiency usage from A+++ to D.

Investors will price in the ESG risk. The UK and France are ahead in the curve. Poland is still not there. This will be triggered by tenant demands. Tenants want to meet their net-zero target by a specific date, meaning they will have to occupy assets that will help them meet these targets.

If we see a push from all sides — investors, tenants as the actual users and lenders who support us with greener financing at competitive pricing — it will be a win-win for all, better for investors and better-quality assets for lenders. So, we need the push from all sides. Maybe developers are not there yet. It is a learning curve for all of us. It takes time to respond to new regulations and trends. We are in the adjustment phase but in the right direction.

Last six months seem to have speeded up the process?

Yes, there were regulations, and yes, there is no choice anymore. But it is good. Because if you let investors and market participants choose themselves, some wouldn’t opt for what we need. Now we are all in the same boat — a change for the better.


AuM has grown from c. €230m in 2017 to over €1.7bn in logistics, office and retail sectors as of  December 31, 2021

Piotr Trzciński has  17 years of experience in key real estate sectors gained in international private equity and real estate companies such as Blackrock (MGPA) and CA Immo. Over his career Piotr has completed over €600m in real estate transactions and has had asset management responsibilities for €2.6bn AuM across the risk spectrum from core to value-added

savills im
piotr trzciński

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