Capital Park moves mountains for a revitalising deal
Tackling a large mixed-use restoration project is no easy feat, but Polish developer Capital Park plans to transform a former factory into a buzzing commercial and community space.
There’s a popular video online which shows – speeded up – a building being moved about 15 metres to the side. The 900-ton structure is the westernmost relic of the former factory house of Edward Luckfield, a manufacturer from Berlin, dating back to the 1850s – part of the 2-hectare revitalisation project of the former Norblin, Bracia Buch and T. Werner factory on Żelazna street in the very heart of Warsaw’s Wola district. Its movement from its original position and then back again (in order to dig the underground car park) epitomises both the immense challenges of the scheme and the total dedication of its developer. The former Norblin factory scheme is the latest, and by far the most challenging, project by Polish developer Capital Park. With 16 years of experience in the Polish real estate market and a portfolio of properties worth 2.5bn zł covering 304,000 sqm in cities across Poland, that’s saying something.
The aim of the project is to convert the industrial interiors of the former silver-plated metals factory into a vibrant mixed-use scheme featuring 40,000 sqm of office space, internal shopping streets with over 70 stores, a bio-food bazaar with almost 100 units, a 2000-sqm food hall (part-inspired by the Time Out market in Lisbon, except here the focus will be on chefs rather than restaurant brands), a boutique cinema, modern entertainment concepts and a health and beauty zone – for both men and women. Capping it all will be a large open-air restaurant on the roof. All around the complex will be an open-air museum displaying original factory machinery and artefacts, many donated by owners from around the world. “Everywhere you walk you will feel the history of the place,” says Marcin Juszczyk, Board Member of Capital Park. “There will be no wall around the scheme – it will be open to visitors 24 hours a day, seven days a week.”
Marcin Juszczyk is a Board Member of Capital Park.
‘For a good deal, we will move mountains’
Capital Park bought the plot of land back in 2008 when market conditions were very different from what they are now. For starters, Wola – despite being so close to the city centre – was a neglected district. Only the Hilton Warsaw Hotel and the Warsaw Trade Tower had ventured there, two lonely outposts in a semi-deserted post-industrial urban landscape. The global economy had tanked and there was no clear indication yet that Poland would become the famous ‘green island’ of Europe, the only EU country not to go into recession. The national confidence-boost of EURO 2012 was still four years away. But the company fell in love with the site and its possibilities. “We were so keen to do it,” says Juszczyk. “We contacted our shareholders and I will never forget the reply we received: ‘For a good deal, we will move mountains,’ it said. It took two weeks from getting that email to receiving the money for it in the account.”
Now Wola is transforming in front of the city’s eyes, and the office market in Warsaw is booming. Despite frequent predictions of office oversupply over the last few years, demand has kept up with supply, especially for new projects, leading to record take-up rates. “2018 was a record year in all senses,” says Juszczyk. “There were €7.3bn of commercial real estate investment transactions in Poland. Investors are buying office buildings at cap rates of below 5%. It’s similar in prime retail. And what’s good is that it’s no longer just Warsaw – international investors are buying in several cities across the country.” Juszczyk believes the potential in the Wola district is enormous. “When they were developing Warsaw Spire, people said 100,000 sqm in one project was too big. That was proved emphatically wrong. In fact,” he says, “space in Wola continues to be leased. City Centre West is a whole new district – there’s going to be over a million square metres there. There are currently about 30,000 office employees, and in the next five years, there will be about 60,000 more. The good thing about our part of the district is that we really cooperate with our neighbours. When Skanska bought the plot next door from Impexmetal, we met the next day to see what we could do together – we want our projects to fit together.”
The Former Norblin Factory project took a significant step forward in January 2019 when the European Investment Bank (EIB) signed a €60m loan deal to help finance the conversion from brownfield site to a mixed-use scheme, which represented the bank’s first transaction in Poland with a real estate investor under a project financing scheme. The project, said Vice-President Vazil Hudák, responsible for EIB operations in Poland, “is very much in line with the Urban Agenda approved at EU level in May 2016 through the Pact of Amsterdam, a pact which calls on different players to work together to stimulate growth, livability and innovation, and tackle social challenges in Europe’s cities.” It is an example, he continued, “of how a city can develop by revitalising old, underdeveloped spaces without eating into new ones.” Before the EIB’s involvement, the sole lender supporting the project was Polska Kasa Opieki SA, which initially committed close to €160m, but as a result of the EIB loan, the Polish lender has reduced its commitment to €99.3m.
‘We want to offer both city inhabitants and tourists another Warsaw experience’
Capital Park plans to integrate with the city in several different ways. For example, only a limited portion of the 4-level-underground, the 720-space car park will be dedicated to the exclusive use of office tenants. The rest will be open to the public at all hours of the day and night. And, in cooperation with the city authorities and the developers of EC Powiśle and Koneser, two other urban regeneration projects in Warsaw – the first on the west bank of the River Vistula, under development opposite the Copernicus Museum, the latter in the former Vodka distillery in Praga – they plan a ‘red brick road’ (Szlak Czerwonej Cegły) route along the east-west metro line (each project is within a hundred metres or so of a metro station – in Norblin’s case, between two metro stations at Rondo ONZ and Plac Daszyńskiego). “Visitors could start with us and end up at the Vodka Museum,” says Joanna Zielińska, Investor Relations Officer at Capital Park, smiling. “We want to offer both city inhabitants and tourists another Warsaw experience – each project has a lot to offer,” she adds.
Joanna Zielinska is the Investor Relations Officer at Capital Park.
Capital Park has a track record of individuality, and from each project, they gain important experience. One such example is their over-36,000-sqm Royal Wilanów office scheme in the southern-Warsaw residential district of Wilanów, next to Wilanów Palace and about 10 km from the city centre. “When we built the project everyone said it was in the middle of nowhere,” says Juszczyk, “but we believed in the location, and now it is almost 100% leased. What we learned from Royal Wilanów is how to create and manage a public space. It is always thriving, especially in summer, when we have a summer cinema and put on concerts. We even constructed a temporary squash court, snow park and ice skating rink. We learned that it’s vital we are fully involved.” Another example is the conversion of the Hampton by Hilton project in Gdańsk, where they learned about converting a former cinema into a modern hotel.
You might think that taking on the former Norblin factory scheme is enough for the time being, but in fact, there’s another large-scale revitalisation opportunity on the horizon, this time in Silesia, where private investors turned to Capital Park to transform a massive 48-hectare site into an ecological mixed-use district. “The owners fell in love with our vision and we have agreed on terms for cooperation. The idea is to create a carless district combining residential, commercial and leisure elements. We will probably invite other developers to develop the residential part, and we will handle the commercial elements,” says Juszczyk. Transforming brownfield sites into revitalised multi-functional schemes is a growing trend in Poland, he observes, and he is delighted to see it. “It’s great that these opportunities are coming up, and that others are thinking in the same way as us. A great example is Echo Investment’s planned conversion of the Karol Scheibler factory in Łódź. In some regards, they are a competitor, but we wish them all the very best with the project.”
Capital Park’s priority at present, however, remains the conversion of the former Norblin metals factory in Wola.
If you hear a buzzing sound on your approach to Capital Park’s Royal Wilanów or Eurocentrum office projects, that will be the bees on the roof, busy making honey. The company runs two apiaries as part of the ‘Office Plus’ programme, an initiative which – among other things – organises environmentally-positive activities including under the so-called ‘urban farming’ trend. Honey from both sky apiaries is available at the pszczelarium.pl online store and at the Eurocentrum reception.