Current trends in the Polish commercial real estate market

22 Jun, 2010, Warsaw

Large investors are returning to Poland, open space layout is becoming increasingly popular and modern property management is gaining importance, according to experts from Cushman & Wakefield.

Analysts of Cushman & Wakefield, a global commercial real estate advisory firm, indicate five trends that will shape the Polish market.

Investors return to the market

In the first five months of 2010 investment transaction volume in the Polish commercial real estate market totalled nearly EUR 900 million, exceeding 2009 levels by almost 30%. It does indicate that large investors are back into the market, which bodes well for the future of the Polish investment market.

“Total value of commercial property offered for sale is estimated at over EUR 2 billion. The most active potential buyers on our market are investment funds from Germany, UK, USA, France and Australia. Demand from potential investors has clearly picked up and so has the risk-aversion. Investors therefore are predominantly focusing on prime properties, which in effect pushes up their prices” – said Aleksander Loster, senior surveyor of Capital Markets Group of Cushman & Wakefield.

Modern property management as a turn-key management of income-producing property

Property management is one of the most dynamically developing services sector in the Polish commercial real estate market. Nowadays this is much akin to the role of management in any business, aimed at boosting profitability of an enterprise. The success of investments depends largely on the skillfulness and ingenuity of the property manager supported by specialist software. With constantly changing real estate market and growing expectations of owners and investors, property managers come under competitive pressure to perform well to meet the new requirements.

“With newly developed sports facilities, in particular stadia and infrastructure needed to host the 2012 UEFA European Football Championship, property managers are faced with new challenges” – said Michał Skaliński, head of Asset Management department of Cushman & Wakefield. – „The success of a particular enterprise and the level of income will depend not only on the professionalism of management services provided for a completed facility but most of all on the professionalism of consultancy services provided already at the planning stage of the investment.”

Rising significance of tender conditions in the development of high streets

How do high street locations go from thriving to dying? What, except the price, can be a determinant within the tender process for high streets? How to develop a successful brand-mix strategy?

“Brand-mix strategy can be developed in many ways. It aims to achieve certain critical mass of retail, services and catering, i.e. a sufficient number of stores, service points, cafés and restaurants to allow for comparative and impulse buying, i.e. the offer that would be interesting and varied enough to attract consumers. Another approach is to plan diversified tenant-mix from all sectors. It is also possible to create prestigious retail micro-location based on price offer, certain “luxury oasis”. Once brand-mix is defined rental rates can be determined. They will be the basis in the negotiation with tenants, with their level reflecting the potential of the location for generating returns” – said Katarzyna Michnikowska, senior analyst from Advisory Department of Cushman & Wakefield.

Open-plan office layout remains popular

Open plan design is considered a simple way to reduce office lease costs and as such it is anticipated to become increasingly popular. The benefits of such space arrangement are improved productivity (managers’ better control over assigned tasks) and better communication between employees. However working in open plan work environment may have negative impact on the work comfort and well-being of employees. As a result, savings from reduced lease costs may be significantly lower than the costs of productivity decline, caused by inadequate arrangement.

“Assigning workstations to employees often happens by sheer accident, while the optimal solution would be to conduct a functional analysis adjusting the workplaces to meet the individual needs, preferences and obligations of particular employees. Available architectural solutions do help strike a balance between the costs of space utilisation and the quality and comfort of work” – said Jakub Marszałek, senior analyst from Office Department of Cushman & Wakefield.

Categorised hotels in the Polish seaside enjoy more popularity

The number of tourists, including foreign tourists, visiting Polish seaside is constantly growing. More and more people also choose hotels for their stay. “Polish seaside is still considered the most popular holiday destination among country tourists. In 2009 it accounted for 42% of all holiday trips. To draw the maximum benefit from their region's tourism potential, a substantial increase in hotel accommodation combined with the improvement of the existing hotel stock, especially on the central coast, is required. It must be emphasised however that the crucial issue is the development of transport infrastructure, which would significantly shorten and improve the journey to holiday destination” – said Dorota Malinowska, hospitality consultant of Cushman & Wakefield.

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