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Prestigious, historic and downtown



Interview with KSP's Management Board by Poland Today

Adam Zdrodowski: You have recently announced your plans to redevelop the former Holland Park office building in downtown Warsaw. What is the reason for redeveloping this relatively new project now?

Edgar Rosenmayr (ER): Well, the project is not that new, it is already 15 years old. But, the opportunity to redevelop the former Holland Park office building, which we have renamed Ethos, has emerged now that the main tenant of the scheme, the ING group, has moved to another location. We want to take advantage of the situation – the redevelopment would not be possible if the tenant continued to occupy space at the building.

Piotr Krawczyński (PK): Also, we have obtained a planning decision which allows us to extend the building so we want to take advantage of this and develop new space on the site. The proportion of office and retail space will change – there will be new office space but also a whole new floor will be devoted to high-street retail. To date, the building has just had one retail floor and once redeveloped it will feature two.

When is construction on the Ethos development scheduled to launch and finish?

ER: Construction is scheduled to launch in March or April, depending on the process of obtaining the building permit, and to finish in the last quarter of next year. However, this will also depend on the process of commercialization. We are now in talks with a number of potential tenants interested in leasing space in Ethos. The building will no longer be occupied by one large tenant but will rather be a multi-tenant facility.

Will Kulczyk Silverstein Properties be looking at other opportunities to build an office tower in Warsaw? Are you now looking for land for such a project in the Polish capital?

ER: This is possible, especially since Silverstein Properties has extensive experience in the development of office skyscrapers in the United States. We could certainly apply this experience in Warsaw. However, whether we will do this and when will ultimately depend on the market situation – the big disadvantage of skyscrapers is that they cannot be phased and thus they are very risky investments.

We are talking to land owners and looking at sites in Warsaw which could potentially house high-rise projects. There are many good locations in the downtown of the city. However, many of the available sites are too small and very often they are also overpriced. We are now seriously looking at one particular opportunity to buy land for an office tower in Warsaw and doing due diligence on the site in question.

Apart from the potential skyscraper, which kind of office projects will you be focusing on in Poland in the upcoming years?

PK: Our strategy does not envision the development of office buildings in large numbers. We are not going to be present in locations such as the Mokotów district, but rather focus on prime locations in downtown Warsaw. We are interested in the acquisition of existing buildings in prestigious historic locations in the city which can be redeveloped and transformed into modern office buildings.

In general, what is the market sentiment in Warsaw now and how do you view the prospects for the office market in the city in the next few years?

ER: The investment sentiment is certainly very positive, which is evidenced by the high investor activity and the sale of a number of large office buildings in Warsaw last year. There is good product in Warsaw and, significantly, some buildings are even sold before their completion, with the recent sale by Skanska Property Poland of their Atrium 1 project being a good example.

We are a bit worried about the amount of the new supply of office space which is scheduled to be delivered in Warsaw within the next two years. It is pretty huge and even with the Polish economy growing it is not certain that the market will be able to absorb it. For developers it obviously means that there is more competition and that the leasing process is more difficult. The pipeline for the years 2016-2017 seems to be much more reasonable.

Are you planning any purely retail projects in Poland?

ER: We are not excluding the possibility of developing purely retail projects in Poland. We are actually considering the development of a shopping centre in the greater Warsaw area where, we believe, the market is not saturated yet. Additionally, we would be interested in the development of other retail formats, including department stores, in the downtown of the capital.

Statistics show that there is still less quality retail product in Warsaw than in most of the other capital cities in Europe. There is potential for the development of proper high-street retail in Warsaw – in fact, we see our Ethos project as a valuable addition to the high-street retail map of the city. However, for now the existing facilities remain quite dispersed and the high streets in Warsaw suffer from problems including the lack of parking spaces.

How much are you planning to invest in Poland this year and will the investments only be in Warsaw?

ER: This is all about opportunities. We have not decided to invest a particular amount of money, this will ultimately depend on the decisions of our shareholders as new opportunities emerge. We are looking at the major regional cities in Poland, they are attractive for developers and investors but so far the best business opportunities which we identified have all been in Warsaw.


Source: Poland Today, March/April 2014, MIPIM issue

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