Where are Poland’s Alpine skiers?
Harald Jeschek of Karimpol has been investing in Warsaw’s office sector for more than two decades, and despite the current challenges posed by the economic effects of COVID, his faith in Poland’s future remains stronger than ever. Yet one question still puzzles him, and it’s nothing to do with business.
Austria and Poland are two very different countries, but they both share a passion for winter sports – particularly of the ski-jumping and cross-country variety. The question on the mind of Jeschek, Managing Partner of office development company Karimpol, is this: “I keep seeing the success of the Polish ski jumping team, but when will we see the Alpine skiers?”
While he may not be able to influence the fortunes of the Polish downhill skiing team (which currently sits outside the top 26 nation ranking, while the country’s ski-jumping team lies in a formidable 2nd place), Jeschek has been a long-term stakeholder in Poland’s economic success through the investments of Karimpol, a private family-owned developer originally from Vienna which has built offices in Warsaw since 1997. At present, the group operates in five countries in the region: Poland, Czechia, Austria, Slovakia, and Hungary. The latest manifestation of this faith in the country’s business and economic future comes in the very tall form of Skyliner, its new 195m flagship office building located at Rondo Daszynskiego in the city’s Wola district – the company’s 9th office scheme in the capital. The building received its building permit at the beginning of the year, and has recently signed two significant lease deals. X-Trade Brokers (XTB) will occupy nearly 4400 sqm of office space over three floors, and MicroStrategy is taking 3000 sqm of Skyliner’s 45,000 sqm leasable office space. “The last few years have been a time of exceptionally dynamic development for XTB, which translated into an employment increase in virtually every team responsible for key business areas in the company,” said Paweł Szejko, financial director and board member at the company, which was the first leveraged foreign exchange brokerage house on the Polish market when it was founded in Warsaw in 2002 and has now grown to be one of the largest stock-exchange listed FX companies in the world with offices in 13 countries. MicroStrategy, the largest publicly traded Business Intelligence company in the world, has tacitly vouched for the office tower’s hi-tech credentials by choosing to locate the second largest of its 28 global offices in the building. Skyliner, says MicroStrategy’s Michał Miziak, “is perfectly located and perfectly connected,” adding that its design has a “timeless character.”
An increasingly diverse field of tenants
XTB and MicroStrategy are perfect representations of the new type of tenant looking to expand in Poland’s business landscape, and Jeschek has seen a huge change in occupier profile during his career. “Tenant size has increased at least threefold, but the more substantial change is the move from the basic pillars of the service sector – banking, insurance, construction – to a much more diversified field of businesses linked to the IT sector, business service providers etc. At the same time tenant expectations regarding their working environments have increased significantly. Even before COVID tenants liked to make their workplaces resemble the home environment. This trend could now accelerate with offices competing even more with home working.”
Home vs office: today’s perennial debate
The ‘home office vs office workplace’ debate is one that was present before COVID-19, but has naturally intensified since early 2020. A recent report by international real estate services company CBRE spells out some of the main fault lines of the debate, which can be summarized as ‘the comfort of home’ vs ‘interaction with colleagues’. While the hybrid office solution – with employees partly working from home and partly from the office – will now almost certainly gain ground, leading to potentially less demand for office space, there is also the growing counteractive tendency for ‘de-densifying’ the office space. “These two opposite tendencies may result in only a minor decrease in the amount of office space,” says CBRE. In an in-depth article in The New Yorker magazine entitled “Has the pandemic transformed the office forever?” journalist John Seabrook relayed the findings of a series of surveys conducted during the pandemic on the 1600 employees of a global marketing and advertising firm, which included the following: “The surveys turned up a number of “pain points,” including a lack of spontaneous interactions with colleagues, difficulty integrating new hires into company culture remotely, Zoom fatigue, and ergonomically incorrect seating. But the sorest was felt by staff who had young children. For a stressed-out parent, W.F.H. (working from home) can quickly turn into W.T.F.!”
Warsaw sitting strong
Leaving this debate to the side, Jeschek believes that Poland’s capital is well-placed to emerge strongly from the COVID crisis: “Unlike other economic downturns, the COVID crisis wasn’t triggered by an economic event, only aggravated already-existing economic shortcomings,” he states. “Now that the vaccine and other measures are in place, those countries which had a strong position before COVID will emerge more quickly, and this is definitely the case for Poland. In my opinion, Poland has all the requirements it needs for a quick rebound. It has always been one of our main investment destinations and my primary dedication since I co-founded Karimpol´s Polish operation. The big achievement of Poland was creating stable and predictable investment conditions. As a result, the country continues to experience record investment from abroad leading to the rapid growth we saw for many years. On the real estate side, some improvement could be made in the permit process and in the length of time it takes to achieve permits, but in general I see a very positive outlook for Poland as a whole.” In terms of the office sector in Warsaw, CBRE’s report seems to back up Jeschek’s confidence: “In 2021 we expect a gradual reversal of the decision-withdrawing trend. With the clock ticking, the ‘wait and see’ approach has to be turned into action, therefore we see some processes becoming unblocked, followed by a number of international newcomers considering Poland as their location of choice as a result of incorporating near-shoring into their strategies.”
The flowering of a district
Karimpol was one of the earliest investors to see the potential in Warsaw’s post-industrial district of Wola, which lies just west of the city centre. “Our commitment to Wola started with the acquisition of the Skyliner plot back in 2012. We have since seen an even higher degree of modern city development than we originally envisaged. It is an exceptional example of city redevelopment – one long-hidden behind the rapid development of the core of the CBD,” he says. “As soon as the infrastructure improved, the conditions were right for private investors to develop a whole new mixed purpose district which now forms a new part of the city centre. What distinguishes Wola from some other city redevelopments across Europe is the successful integration of commercial, residential, retail and community functions to create a balanced model of city life. It is exactly this balance which the design of Skyliner makes reference to by integrating various functions into one building.”
A new way of doing business
Jeschek believes that we are still in the first phase of adjusting to a new way of doing business. “COVID has changed the way we look at things and the ways in which we achieve our targets. Many businesses have had to get used to running their operations remotely in a home office environment. When the situation normalizes they will have to compare the pre-COVID productivity with the current situation. It seems obvious to me that a 70% home office situation can only maintain basic functioning for a limited period of time and can never be the basis for an expanding business and thriving economy. But at the same time, I don’t doubt that some work models which have already become more flexible will remain that way, such as keeping a fixed proportion of home office work in some areas.” Karimpol sees it as their task to assist tenants in their back-to-office strategies and offer more flexibility in the work environment. “We are looking at new space arrangements which better accommodate the larger fluctuations of workspace and also allow tenants flexibility in their growth strategies,” says Jeschek.
A building stands for decades
Developing one of the tallest, most-modern buildings in the de facto capital city of the CEE region is a far cry from Karimpol’s humble origins as a “relatively small operation of residential and commercial real estate in the Vienna region,” but the opening of their first office in Prague facilitated growth into the CEE countries, which was then followed by Warsaw and Bratislava. “We have continuously expanded our activities from office into logistics and retail. Our aim has always been to create institutional-grade property products suitable for acquisition by real estate funds and other institutional investors, and this strategy has never changed.”
To illustrate how he sees his work in real estate, which he says he “certainly enjoys”, Jeschek returns to the skiing metaphor. “A downhill ski racer shows his or her success in under two minutes. We have to wait five to ten years until our success is visible. On the other hand, a building remains for decades, even centuries, and stands as a sign of the change which you were able to make. This is very rewarding.”
Karimpol is a Partner of Poland Today Connect, Poland Today’s network of companies, cities and regions that together promote Poland to the international business community. More information coming soon.
Karimpol’s office projects in Warsaw to date:
Stratos: 10,000 sqm office, 500 sqm retail
Taifun: 7.200 sqm
Mistral: 12,000 sqm
Passat: 10,700 sqm
Equator I: 18,500 sqm
Equator II: 20,600 sqm office, 2000 sqm
Equator III: development project of 18,000 sqm office – at the permit stage
Equator IV: 20,800 sqm
Skyliner: 46,850 sqm office, 2,150 sqm retail & gastronomy