Von der Heyden acquires downtown residential renovation project at last
German developer Sven von der Heyden last month acquired a 3,000-square-meter building in downtown Warsaw for renovation. Von der Heyden plans to renovate the 100-year-old building on ulica Wilcza near the junction with ulica Krucza and redesign it into a high-end residential project.
Von der Heyden has already developed two new office buildings in Warsaw and about a year ago acquired land for a residential development in Miedzylesie, a suburb in eastern Warsaw. Betting on the appeal of nostalgia and traditional elegance in the city that amazing as it seems now was widely known before World War II as the "Paris of the East," von der Heyden said there would be ample demand for high-end residential units in old buildings in central Warsaw. "People love to come back to their roots," he said. "It's nice to live in a beautiful old building."
Whereas demand for high-end, downtown apartments is strong, supply of such units is exceptionally low for a European city of Warsaw's size and history. In fact, the city center's residential landscape is dominated disproportionately by large, multi-family communist blocks. Almost all residential property in the city center is owned by Gmina Centrum or cooperatives, and older buildings are generally in poor condition. "There is very little supply," von der Heyden said.
Developers face difficult roadblocks to acquiring interesting old buildings, which tend to be fully inhabited by long-term occupants. Many opt, therefore, to build new projects, but these lack the charm of Warsaw's pre-war architectural heritage, von der Heyden said. He had been looking unsuccessfully for the last four years for an older building to buy and renovate and his attempt last year to buy a building near the National Philharmonic Hall on ulica Sienkiewicza failed.
Von der Heyden wouldn't reveal the price he paid for the four-story building on ulica Wilcza built in the 1890s, but he did say that it wasn't a bargain. "I didn't get a great deal," he said. "I had to pay the market price, but it still makes sense."
He wouldn't reveal how much it will cost to renovate the building, "which is in very bad shape," he said. The developer also plans to add a fifth floor to the building.
Von der Heyden had estimated last April that it could cost $2,000-$2,200 per square meter to buy an old building and renovate it (see Lokale Immobilia April 19-May 2, 1999). However, Von der Heyden expects to sell apartments in this building for $2,150 per square meter.
The schedule for development of the Wilcza building will depend on when von der Heyden manages to relocate tenants, who still occupy some apartments in the building, he said.
Europlex, Jerozolimskie Business Park change agents
Developers of two office buildings in Warsaw Europlex and Jerozolimskie Business Park phase D have switched to new real estate agencies just a few weeks ahead their respective completions.
Liebrecht and Wood, the Belgian developer of Jerozolimskie Business Park, ended its cooperation with Henry Butcher, formerly the sole agency for the building, and hired Healey & Baker late last year. Henry Butcher Country Manager Brian Burgess said his agency was unsuccessful in attracting tenants to the building well ahead of its completion.
"We didn't achieve anything," he said. "The landlord was impatient." But, ironically, Burgess said that even after Henry Butcher had been dismissed, it introduced two tenants, French cement firm Lafarge and local agro firm Rolimpex. Healey & Baker admitted that those leases were signed prior to their involvement with the project in western Warsaw.
Burgess added that if Henry Butcher were given the chance to be the agent when the 7,000-square-meter office building is completed, it would easily lease the space. "That's the market (currently). You have to wait until completion," he said.
Also, DTZ announced that developer Kinomax has retained the property agency to replace competitor Jones Lang LaSalle in marketing the 22,500-square-meter Europlex building on ulica Pulawska.
Jones Lang LaSalle was dismissed even though during the agency's marketing efforts, Kinomax, a Polish-Austrian firm, was able to lease 9,000 square meters to German insurance giant Allianz in Warsaw's largest office lease deal in 1999. DTZ, housed next door to Europlex in the Pulawska Financial Center, will also do facility management at Europlex. The agency said Europlex's retail space, including an eight-screen multiplex cinema operated by Silver Screen, should open in February. Europlex still has about 4,000 square meters of available office space at around $29 per square meter.
Israeli institutional investor buys office building in Mokotow
The Israeli-based firm Adgar last month acquired a 13,500-square-meter office building on ul. Postepu 15 in the Warsaw district of Mokotow for an undisclosed amount, said DTZ, which advised the buyer in the transaction.
DTZ refused to identify the seller, a "local developer," or reveal any details of the agreement. The transaction is Adgar's first real estate investment in Poland. The buyer is the property investment unit of an Israeli insurance firm, said Alan Colquhoun, managing director of DTZ Poland.
The agency was also hired by the new owner to market the property and manage the facility, completed last month, according to Colquhoun. Postepu 15 already has three tenants: French tire company Michelin, Italian insurance firm Generali and Pierwszy Polsko-Amerykanski Bank (PPA Bank). Some 4,000 square meters of office space are still available, DTZ said.
In brief: DTZ announced it had formalized business relationship with two southeast Asian companies, CY Leung & Co. and Edmund Tie & Co., to create a new entity called DTZ Staubach Tie Leung. The companies will use a common logo and jointly provide cross-border services. Colquhoun said DTZ in Poland would now have more access to Asian clients in Poland including, for example, a Singapore investor, which will come to Poland in February in search of investment opportunities.
