Von der Heyden to build Warsaw office facility to house PAP
The Von der Heyden Group struck a deal with the Polish Press Agency (PAP) to construct a new office building in downtown Warsaw, the developer and the agency announced last week.
The German property development company will demolish a PAP-owned building on the corner of ulica Mysia and ulica Bracka in central Warsaw and build a new $24 million, six or seven-floor structure by the end of 2002. The building will have gross space of 15,000 square meters, one third of which PAP will buy for its headquarters. The Von der Heyden Group will own and lease out the remaining 10,000 square meters, said majority owner Sven von der Heyden.
"It will have a classical facade that integrates old Warsaw," said von der Heyden, who recognizes the colossal loss to the city when most of its famous pre-war architecture was destroyed in World War II. His other investments, in Warsaw and abroad, have included renovation of interesting older buildings. Von der Heyden speaks of appreciation for the intangible benefits older buildings contribute to a city, of duty to the local community and hints of a bit of architectural nostalgia.
PAP selected the Von der Heyden Group from a list of other developers bidding to build the project including Golub Epstein and Tishman Speyer, von der Heyden said. Under the agreement, PAP will contribute the land a 1,469-square-meter site on ul. Mysia 5. The building on that site now, perhaps ironically, contained the headquarters of Poland's censorship office in communist years. Built in 1949 and acquired by PAP in 1991, the structure will be demolished.
Von der Heyden will arrange $24 million in financing for the project. For its part, PAP's contribution of land will not be enough. The agency will also pay an undisclosed amount to own part of the new office building when construction is completed, said Robert Bogdanski, PAP's president. He said the agency would borrow money to finance the acquisition.
However, PAP said its interest payments would undercut the cost of renting its 2,900-square-meter offices from Bank Gospodarstwa Krajowego (BGK) at the corner of Aleje Jerozolimskie and ulica Nowy Swiat. Bogdanski said the space is inefficient. "We were prepared to make our cash flow worse, but in fact it will become better," Bogdanski said. He wouldn't reveal the cost of renting from BGK, but Adam Murza-Murzicz, who advised PAP in the deal with von der Heyden, set that at $20-$25 per square meter monthly.
In its new headquarters PAP, which employs 360 people, will have 2,500 square meters, 400 less than now, but gain efficiency, Bogdanski said. He said PAP wanted a modern building because it needs high-tech facilities. "We think the internet is our future," he said.
For his part, von der Heyden will have a lucrative office facility in downtown Warsaw. "It's a fantastic location," said von der Heyden. "It's totally in the city center, but not loud." But he said the land with PAP is not a big bargain compared to normal land acquisition in central Warsaw and called the project "very demanding." Construction will run from January 2001 and July 2002, von der Heyden said. He has hired U.K.-based PRC Architects to design the project.
