Warsaw Business Journal October 2019 #54

WARSAW

BUSINESS JOURNAL S i n c e 1 9 9 4 Po l a n d ’ s l e a d i n g

OCTOBER 2019 ~ No. 10 (54)

business magazine in English

For daily news visit us at wbj.pl

HUGE OFFICE LEASE DEALS IN WARSAW

RABEN EXPERTS ON THE FUTURE OF SEA FRIGHT

Ghelamco’s

JEROEN VAN DER TOOLEN on the new office hub in Warsaw’s Wola

NICKLAS LINDBERG Echo Investment’s CEO on the growing popularity of mixed-use projects

PHARMA CRISIS | SMART HOMES | POLISH-SWISS RELATIONS | LOGISTICS | BIM

OCTOBER 6

IN REVIEW

News highlights from the previous month from wbj.pl

OPINION

Artificial intelligence in HR............................15 Small business pitfalls...................................16 Rent roll errors................................................18 M&A market......................................................19 Tax-safe investments......................................21 Interview: Business cycles and trade wars..22 Interview: Polish-Swiss innovation.............24 Interview: Polish-Lithuanian cooperation..26 Interview: Modern sea transport..................28 Interview: Developments in logistics..........30 Interview: Managing a law firm....................32

TECH INSIGHTS

Tech News.........................................................39 Interview: Primeon.........................................41 Interview: Masters & Robots.........................42 Feature: Smart homes...................................44

Feature:

Pharma crisis – drug shortages in Poland 34

LOKALE IMMOBILIA – REAL ESTATE Real estate news.............................................49 Feature: Large lease deals............................62 Interview: Ghelamco.......................................66 Interview: Segro..............................................70 Interview: Geodetic.........................................72 Places + Spaces conference..........................74

EVENTS

Warsaw Business Run....................................78 Azrieli Foundation at Polin Museum............79

LAST WORD

Angry emails....................................................80

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Exclusive interview: Echo Investment 56

premiere offer

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EDITOR'S LETTER

Morten Lindholm Editor-in-Chief/Publisher mlindholm@valkea.com

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

Krzysztof Maciejewski Editor

kmaciejewski@wbj.pl

Kevin Demaria Art Director

kdemaria@valkea.com

it happening, nobody knows really when to expect it, we are all afraid that it will hit us as hard and as unexpectedly as it did about a decade ago… I am talking about the recession. The looming downturn, besides trade wars, has probably been the hottest topic on the business/investment agenda in 2019. However, maybe we are wiser than we were in the middle of the previous decade, maybe this time we have the right instruments in place and national bank leaders actually have a plan? Or maybe the world as we knew it can no longer be predicted based on historical facts. We’re three quarters into the year that many expected to see the end of the longest-running bull market, but somehow expansion seems to continue. It feels that after a period of doom and gloom, winds may be changing. More and more analysts, investors and business leaders are now “cautiously optimistic” about both the short- and the mid-term outlook for business. In Poland at least, optimism is clearly supported by hard data: Moody’s is forecasting GDP growth of 4.4 percent in 2019 and 3.7 percent in 2020, and the drivers are still strong for private consumption as well as EU-funded investment. Neither will stop suddenly, and salaries are increasing and outgrowing the European average, while unemployment is at an all-time low. The real estate sector, always a good indicator of business sentiment, also shows Poland is still in great shape. For this issue we met up with several of the Polish real estate market leaders to hear their opinions on investments, trends and times ahead. Another undisputable factor for growth and demand is digitalization, data and the Internet of Things. There are so many things in our current business models that just aren’t ready for what’s coming. New digital trends must and will be strong drivers of investment and re-shaping of business and more. I find it super exciting as well as scary, and I wonder how we are future-proofing our present investments, when self-driving cars and drone deliveries are no longer just science fiction concepts. The future is here, and we have to adapt. Enjoy the read. Remember to take a break from the grind, lean back and contemplate life and its most precious things. Good winds in Q4. - Morten Lindholm

Michael Evans Copy Editor

Contributors

Ewa Boniecka Klaudia Górska Sergiusz Prokurat Sales

Magdalena Klimiuk mklimiuk@valkea.com Monika Makarczyk mmakarczyk@valkea.com Katarzyna Pomierna kpomierna@valkea.com PR & Marketing

Justyna Żelazińska jzelazinska@valkea.com Book of Lists

Dominik Grudziński dgrudzinski@valkea.com Monika Rozner mrozner@valkea.com Subscriptions

Magdalena Czopur mczopur@valkea.com Print & Distribution

Krzysztof Wiliński kwilinski@valkea.com Events

Magda Gajewska

Event Director, Valkea Events

mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

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@wbjpl

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OCTOBER 2019 W B J

PORTRAIT BY PIOTR NAREWSKI

EVERYBODY IS TALKING about

NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

POLAND TO LOSE €13 BLN in EU funds Poland can expect to lose as much as €13 billion in the new long-term EU budget compared to the project of the EC from more than a year ago, Rzeczpospolita newspaper reported. The EC budget envisioned a total of €91.4 billion for Poland, i.e. €14.5 billion less than is provided for in the current budget period 2014-2020 (calculated in constant prices from 2018). The reduction was the effect of both a decline in revenues (as a result of the UK’s expected exit from the EU), the need to finance new goals and a change in the criteria for granting EU funds. The negotiations on the new budget for 2021-2027 are being accelerated by Finland. From November 1, a new EC term, chaired by Ursula von der Leyen, begins.

Eurobarometer: 69% of POLES BELIEVE their voice counts in EU Some 69% of Poles believe that their voice counts in the EU, and 86% admit that Poland benefits from its EU membership, according to the latest Eurobarometer opinion poll. Only 8% of Poles rate Poland’s membership in the EU negatively. The Eurobarometer survey also looked at the issues that influenced voters’ decisions in the European Parliamentary elections in May. Among Polish respondents, the most common answer was the economy and economic growth (41%). The issue of how the EU should work in the future (38%) and the promotion of human rights and democracy (32%) were also cited as important factors.

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Further down the list were security and defense policy (29%), the fight against climate change and supporting environmental protection (23%), and immigration (20%).

home over the next two weeks. The move triggers the largest ever peacetime repatriation in the history of the UK as there were over 150,000 UK Thomas Cook customers abroad at the time of the bankruptcy.

BUSINESS

Tour operator THOMAS COOK GOES BANKRUPT British tour operator Thomas Cook collapsed on September 23 after fundraising talks with investors failed and the UK government refused to rescue the 178-year-old company. The company board concluded that “it had no choice but to take steps to enter into compulsory liquidation with immediate effect.” The government said it would work to get hundreds of thousands of tourists

POLITICS

Jerzy Kwieciński appointed MINISTER OF FINANCE, Investment and Development President Andrzej Duda has appointed Jerzy Kwieciński as Minister of Finance, Investment, and Development. During the ceremony, Duda underscored Kwieciński’s experience in managing finances, particularly European funds. The previous head of the Ministry of Finance, Marian Banaś, was appointed the president of the Supreme Audit Office (NIK) at the end of August.

>>>

SHUTTERSTOCK

SOCIETY

KIELCE

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In Review BUSINESS

POLISH COFFINS conquer foreign markets Polish coffins are more and more popular in funeral markets abroad. As many as two out of three Germans are buried in a casket made in Poland. The reason is simple: the growing number of deaths of people born during the great post-war baby boom. “There is a similar trend all over Europe. We analyzed mortality forecasts a decade ago and prepared ourselves by making the right investments,” Zbigniew Lindner, founder and president of Lindner, said. The company is currently the largest coffin producer in Poland and – as he claims – also in Europe, producing over 17,000 coffins per month. Only slightly more than 1,000 of them stay in the country; the vast majority go abroad, with Germany being the main export destination. It’s a huge market, every year 850,000-900,000 people die there. Due to the growing popularity of cremation, the company is looking for new niches – one of which may be providing coffins for Muslims. BUSINESS

IATA ADVISES POLAND to adjust aviation regulations The International Air Transport Association (IATA) has warned that without changes in aviation rules and regulations the number of employees in the sector will decline by 40,000 by 2037 compared to 2017. The sector will contribute €4.9 billion to GDP and will employ 96,700 people, IATA experts forecasted. Changes in the rules should allow an optimistic scenario, which assumes 34 million passengers, €7.2 billion contributions to GDP and 144,800 employed. The IATA has suggested, among other solutions, easing visa control procedures, and the Association pointed out that systems for automatic border control as well as detailed information for passengers could be another area for improvement. BUSINESS

CUBUS DISAPPEARS from Polish market According to WP Finanse, on September 3 a court granted Cubus Polska’s request and declared the company bankrupt. It also appointed a trustee who will deal with the liquidation. The declaration of bankruptcy means that the chain will disappear from the Polish market. However, Cubus-run stores in Denmark, Norway, Sweden, Finland, Austria and Germany will continue

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UPS & DOWNS

to operate. At the end of 2018, Cubus had about 20 stores in Poland. Last year, the retailer recorded increasing losses and decreasing sales. The latter amounted to almost PLN 52 million and was PLN 24.5 million lower than in 2017. This resulted in a PLN 19.6 million loss. The forecasts for 2019 envision a loss exceeding PLN 20 million. DOMESTIC

EPP CEO: The BIGGEST OPPORTUNITIES are in Poland Hadley Dean, the CEO of real estate investor EPP, said in an interview with CNBC Africa it is in Poland that he sees the biggest shopping center investment opportunities. “70% of retail in Poland takes place in shopping malls, which is a very rare case. Over the next ten years, we will see the middle class, which is currently growing in Poland, start spending as much money as residents of Western Europe,” Dean explained. Even the Sunday trade ban has not harmed the company; sales in EPP malls increased by 6%. Moreover, according to Dean, Polish retail will not be negatively impacted by Brexit. “Brexit will be beneficial for Poland, which is already the sixth largest economy in Europe. After Brexit, France and Germany will need a third economy for balance. In addition, no one will move their mid-office and back-office from London to Frankfurt or Paris; these jobs will be offered in Poland,” he concluded. EPP is the largest owner of shopping centers in Poland. Its portfolio includes 19 retail projects (including M1 shopping centers and Galeria Młociny in Warsaw), six office buildings and two mixed-use facilities.

Index of economic situation in Poland (Sep.) down to 100.2 points from 100.4 (Aug.) (GUS)

Percentage of smokers in Poland (2019) down to 26% from 31% (2012) (CBOS)

Industrial production in August (y/y) down 1.3% (GUS)

Inflation HICP in Poland y/y (Aug.) up 2.6% (Eurostat)

Job Offers Barometer (Aug.) up to 260.6 points (against 258.1 points in July) (BIEC)

INTERNATIONAL

Poland may start climbing in GLOBAL INNOVATION RANKINGS

New orders in industry y/y (Aug.) up 5.3%

Technology company SAP Polska estimates that a wave of innovation is rising in Poland. The country has a chance to start climbing the world rankings in this area, Andrzej Gibas, the managing director of SAP Polska, said. “For 30 years of economic growth, we have focused mainly on the construction of basic infrastructure. Therefore, we are still relatively weak in terms of innovation. There are not many cases of economic success such as ours in world history. However, the fuel for growth coming from the construction of basic infrastructure is ending. Now it’s time to care about more and more innovations,” Gibas stressed. He also stated that as a country “Poland has entered the champions league in economic terms.”

>>>

(GUS)

Number of registrations of electric cars y/y ( Jan-Aug) up 89%

(Polish Alternative Fuels Association / Polish Automotive Industry Association)

6,672

Number of electric cars in Poland (Aug.)

WBJ

In Review INTERNATIONAL

Poland overpays for ultra-modern F-35 AIRCRAFT The US Department of State has decided to approve the planned sale to Poland of 32 F-35 Joint Strike Fighter aircraft, the cost of which is estimated at $6.5 billion (PLN 25.6 billion). According to the US Department of State, the proposed sale of the F-35 will provide Poland with the defensive ability to stop aggression in the region and ensure interoperability with US forces. According to May press analyses, one F-35 costs $90 million, so it was estimated back then that 32 aircraft would cost $2.5 billion. According to Polityka weekly, Belgium bought 32 F-35 aircraft for just over $4 billion, i.e. $2.5 billion less than the price offered to Poland. F35 is a product of the US company Lockheed Martin. It is a fifth-generation single-seat, single-engine multi-tasking fighter, built to meet the requirements of all types of US Armed Forces. POLITICS

Prosecutor initiates investigation into PIEBIAK SCANDAL The District Prosecutor’s Office in Warsaw has initiated an investigation into the violation of powers by public officials at the Ministry of Justice. The case concerns an alleged “unacceptable processing of personal data.” “I hope that in the course of the investigation, perpetrators of breaches of rights and violations of the Personal Data Protection Act will be detected among public officials at the ministry,” Anna-Maria Żukowska, the spokeswoman for the SLD party, said. It was Żukowska who notified the Prosecutor’s Office about Ministry of Justice officials possibly committing a crime in connection with the scandal concerning the defamation of judges.

QUOTE OF THE MONTH

INTERNATIONAL

Poland climbs in POLLUTERS’ RANKING Last year, Poland overtook France when it comes to the amount of carbon dioxide emitted to the atmosphere, moving up in an infamous global ranking. Over the last few years, Poland has become the thirdlargest CO2 emitter in Europe, according to Wysokienapiecie.pl. The website, citing BP’s statistical review, indicates that Poland released 322.5 million metric tonnes of carbon dioxide into the atmosphere in 2018 (7.1 million tonnes more than in 2017). The country already ranks fourth (ahead of France) in the ranking of the largest CO2 emitters in the EU. Poland is in fifth place in this respect in the whole of Europe and in 19th position in the world. “This is the largest increase in the EU and almost equals that in Pakistan, which has almost 200 million inhabitants,” Wysokienapiecie.pl said. Despite last year’s increase in emissions in Poland, the amount of CO2 emitted into the atmosphere throughout Europe (excluding Russia) fell by 1.6 percent. SOCIETY

PIE: Almost 50% of middle class members have NO SAVINGS, but loans Almost half of the middle class in Poland, estimated by the Polish Economic Institute (PIE) at 11-12 million people aged 24-64, have no savings but is burdened with loans (45 percent of respondents in both cases), according to a survey carried out by PIE in April this year. The calculations do not include people under 24 years of age and people over 64 years of age. PIE explained that these people are largely not professionally active, hence assigning them a class based on their profession or income cannot be considered an accurate measurement tool.

INVESTORS

AMAZON considering further investments in Poland Although Amazon does not reveal its future investment plans, Steven Harman, vice president of Amazon Operations in Europe, pointed out in Krynica that Poland is a good place in which to invest. “Whenever we decide where to launch new fulfillment centers, we look at where there is demand for Amazon services, infrastructure and the appropriate legal environment with transparent regulations regarding the construction of centers, and where we have access to a city that meets our needs. Poland meets all these criteria,” Harman said in an interview with Business Insider Polska. Amazon has been operating in Poland for five years and already has seven logistics centers in the country. BUSINESS

VOLKSWAGEN POZNAŃ to invest PLN 2 bln and reduce employment Car producer Volkswagen Poznań will invest PLN 2 billion this year and in 2020 in development, equipment and training. The company announced that due to the automation of production, by the end of next year it will lay off about 750 employees. In June, a new logistics hall was commissioned in the company’s Poznań factory, and an extended welding hall is to be opened in the middle of next year. The company said that 450 robots are assembled and programmed there, whose task will be to perform repetitive production processes. As a result, the level of automation of the bodybuilding process will increase from 42 percent to nearly 80 percent. DOMESTIC

PM Morawiecki named MAN OF THE YEAR in Krynica Prime Minister Mateusz Morawiecki was

“Poland is still in the circle of interest of Chinese investors, primarily for three reasons. Firstly, our country is considered a gateway to the EU, and at the same time [second reason] it is a country with a large local market; and thirdly, we already have sufficiently developed know-how,” said Michał Mrożek, the CEO of HSBC Polska.

OCTOBER 2019 W B J

>>>

BROUGHT TO YOU BY DKV EURO SERVICE

Mariusz Derdziak sales manager, DKV Euro Service Polska

Fuel cards for businesses – the big for the small

What prevents small businesses or self-employed people being offered the same prices, terms and conditions as professional transport companies? DKV Euro Service, the European fuel card giant, has concluded that the answer is: nothing at all

or several weeks our fuel card has been available for anyone to “buy,” taking just a few minutes, on our internet store. The DKV card is really a range of services that includes refueling, tolls, online settlements, route planning, refueling services, vehicle repairs, car washes, as well as financial services such as VAT returns or invoicing.

5,000 is better than 500 What is the difference, apart from the price, compared to the cards offered by fuel companies? The difference is freedom. And specifically, the possibility of refueling at any brand station in Poland or abroad. Plus, there are no monthly spending limits, i.e. there are no penalties if you put the card in a drawer for six months. The card also offers billing convenience, with invoices sent online once every two weeks. Today, our network includes around 5,000 locations in Poland and nearly 60,000 abroad. It includes large brands, such as PKN Orlen, PB, Shell, Lotos, Amic and Circle K, as well as several hundred local outlets of Polish brands, including Moya, Pieprzyk, Citronex, Uniwar and Areca. They all offer the same quality, regularly controlled fuel. Savings on fuel, so far available only to the big companies, have been made possible thanks to the following two solutions. We’ve negotiated prices down by as much as PLN 0.40 per liter for all our customers at local Polish brands’ stations. We also offer an online DKV application which points out the cheapest refueling locations within a certain radius or on a particular route. Find out more at www.dkv-euroservice.com

W B J OCTOBER 2019

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In Review named Man of the Year at this year’s edition of the Economic Forum in Krynica. “It is indisputable that Poland is the only such a large economy to be developing at such a fast pace,” Zygmunt Berdychowski, the organizer of the Forum, said. “As the first country after South Korea, we were included in the group of developed economies after a ten-year break. We are also close to the G20,” PM Morawiecki said after receiving the award. Last year, the statuette was awarded to Lithuanian Prime Minister Saulius Skvernelis, and in 2017 it went to the then Polish Prime Minister Beata Szydło.

with weights assigned to them. The factors taken into consideration include the unemployment rate in this age group, as well as the number of students and part-time employees. Switzerland, Japan and Germany were on the podium of the ranking, while Italy, Greece and Spain were in the last positions. Since 2007, Turkey (although it is still in distant 32nd place), Luxembourg (22nd) and Israel (12th) have made the greatest progress in the Index. Among the countries of Central and Eastern Europe, Estonia (in sixth place) occupies the highest position.

INTERNATIONAL

Poland moved up one position y/y to 23rd place in the Youth Employment Index ranking prepared by the PwC consulting company. The ranking analyzes the professional activity and working conditions of people aged 15-24 in 35 OECD countries, the company said. The PwC Youth Employment Index ranking is based on eight selected indicators

Polish GDP per capita is expected to be the same as in the EU-15 European countries (member countries in the EU prior to the accession of ten candidate countries on May 1, 2004) in 14 years, and the country may catch up with Germany in 21 years, assuming that Polish economic growth remains at its current level, a report prepared for the economic forum in Krynica-Zdrój revealed.

Poland comes 23rd in PWC YOUTH EMPLOYMENT INDEX

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Report: Poland may CATCH UP WITH GERMAN economy in 21 years

Professor Hanna Godlewska-Majkowska said that between 1990 and 2018 Poland was the leader of economic growth in Central and Eastern Europe. The average growth rate per year was 3.2 percent. This is about three times higher than in the EU-15. Majkowska, however, warned that in the future problems with labor supply may slow down the growth in Poland. DOMESTIC

80% of POLISH EMPLOYEES think about career in their current workplace As much as 86 percent of Polish employees are convinced they have qualifications that guarantee their professional success, which means an increase of 6 percentage points y/y, according to the ADP report “Workforce View in Europe.” Some 80 percent of them are optimistic about their career in their current workplace within the next five years. According to the report, respondents aged 35-44 who have more work experience believe in their skills the most. Some 89 percent of them said they had qualifications that would contribute to their professional success.

EXHIBITION & CONFERENCE

SHUTTERSTOCK

2019

OCTOBER 2019 W B J

2019

Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

Can you predict when your employees are about to leave?

SHUTTERSTOCK

ccording to data provided by MIT Sloan Management Review, the cost of an employee leaving a company ranges from 30 to 150 percent of their annual salary. Fortunately, however, many of these employees can in fact be retained if management receives early warning of emerging risk. Currently, some of the most cutting-edge technologies are entering HR, including artificial intelligence, which can be used to predict certain phenomena such as staff turnover. Based on large data sets, algorithms create so-called predictions. They can, with surprising accuracy, predict which employees will quit soon and give possible reasons for their decisions. The technology developed by our company has a 90 percent accuracy hit rate in predicting which employees will leave the company. Our solution analyzes data for about 150 different criteria. It’s divided into static and dynamic data. Static data includes, for example, the employee’s age, length of service, place of residence and remuneration. This is basic, relatively unchangeable information. But beyond that, there are also more fluid, dynamic factors. These relate primarily to the issue of work schedule, which in many industries, such as Hotel/Restaurant/Café (HORECA), retail, call center and manufacturing, plays a fundamental role. An employee may base their decision to leave on an inconvenient schedule, low salary or maybe there are other factors involved. Individual criteria will have different weights, depending on the company and current situation. Therefore, the algorithm must constantly learn (using machine learning) based on the data received, and the longer it functions in the company, the better its effectiveness. However, it is still up to people to take appropriate action based on these predictions. Ultimately, the point is to keep the employee in the company.

Karolina Dolaś CEO Grafik Optymalny

W B J OCTOBER 2019

Opinion SMALL BUSINESSES

The ‘small business’ trap Running a small business is arguably more difficult than running a large one; it often requires staff to cover several functions and the loss of even one team member can cause a real headache. When it comes to completing transactions in a small business, there are even more challenges that come to the fore

have run both a small and large businesses, and it has certainly been my experience that running a small one is more of a challenge. When running a large company, you have resources such as specialized staff and better systems. In general, there are more resources to solve problems as they arise. When running a small company, it is often difficult to afford highly qualified staff. A small company might be lacking certain functions altogether, such as a controller, HR director or in-house counsel. If a small company loses a key staff member, it usually leaves a gaping hole. When a larger company loses a key staff member, one can usually promote someone from within. In a small company, the CEO often has to be a jack-ofall-trades, chief cook and bottle-washer, filling several operational functions at once. But this article is not so much about managing small companies, rather about completing transactions with small companies, whether it is raising equity or selling the company or, as will be discussed below, merging two small companies. It is also much more difficult to complete transactions with smaller companies than with larger companies, for the following reasons: • The greater difficulty of managing small companies, as explained above, makes them higher risk, and hence less desirable to investors. • Ironically, it is often easier to find a buyer for larger companies than for smaller companies. Strategic investors and private equity firms prefer targets

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that “move the needle,” that have a certain critical mass. In my experience, usually this threshold kicks in at a transaction valuation in the range of 10 million euros or dollars. • It takes just as much time and effort, sometimes more, to buy or sell a company valued at €2 million than a company valued at €20 million. • As an owner of a small company (say with revenue of €1-2 million), it is often difficult to afford an experienced law firm for a transaction, let alone a good financial advisor, who might be used to earning a success fee of several hundred thousand euros. • For buyers, investing in a small company, which often has a very “thin” management team, can be a high-risk proposition. If one or more members of such a management team leave, or turn out not to meet expectations, the entire investment may be at risk. • Small companies often lack audited statements, or any kind of management accounting. • In any transaction involving a smaller company, it is often challenging to obtain timely and quality information, due to lack of systems or specialized staff (such as a controller) etc. This can cause enormous strain on the management team of a small company, as well as in the negotiations between the parties. Furthermore, the valuation of larger companies is often more advantageous than for smaller companies, often commanding substantially higher multiples of revenues, cashflow, EBITDA (earnings before interest, tax and depreciation), etc.

So, what can a small business owner do in order to improve valuation and the chances of competing a transaction? Become a larger company: • First, growing the company organically to a larger size, so long as that growth can be done profitably and without endangering the financial health of the company, might be one approach. • Acquiring other companies might be another way of growing – obviously, the acquisitions should be value accretive rather than diminishing value. • Merger is another option to increase size. This is an option which is perhaps not applied as often as it might be. It is entirely possible to merge two smaller loss-making companies and create one profitable larger company. This requires careful financial engineering, and a good mix of management skills and human resources. • Qualitatively improving the small company to have it run more like a large company (e.g. with a high-quality management team, better systems, better corporate governance) can at least partially help to dig the company out of the trap. In a nutshell, completing a first transaction with a small company can be even more challenging than managing a small company. Finding expert legal and financial assistance that is capable of working within the budgetary constraints is also an important ingredient to success. Most owners will typically attempt such a transaction themselves, with assistance from legal counsel. Often it ends up being a learning experience rather than a successfully closed transaction.

Les Nemethy CEO of Euro-Phoenix (europhoenix.com), a Central European corporate finance firm, and author of Business Exit Planning (businessexitplanningbook.com)

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Opinion REAL ESTATE

How to lease property correctly?

Many building owners regularly lose money as a result of working with incorrect leasing data. Having accurate, up-to-date information could boost real estate owners’ rental income by millions over the course of a lease contract

he record disparity I have come across between a client’s actual lease space and what was on paper was 30 percent over five years. The same measuring norms and the same leasing conditions cannot increase the building size when tenants change. This is not a stand-alone case; it is a very common mistake. One of our clients charged a tenant for 50 sqm when in fact it was 250 sqm. The error was not noticed for several years, and – for obvious reasons – the tenant remained quiet. This is also a common occurrence. Correct space calculations are vital for real estate owners and, luckily, such mistakes can be remedied. After 12 years of working in real estate and having measured 6 million sqm of space, we realized there was a niche in the market. Inefficient space calculations

OCTOBER 2019 W B J

and rent rolls were generating millions in losses each year. I have seen rent rolls containing data for even dozens of buildings in one spreadsheet. The authors of these spreadsheets claim they want to make their jobs easier, but in fact they lose all control of what is in these spreadsheets. One of the key functions of Geodetic Rent Roll (GRR), a product our team created, is automatic data cross-checking between the rent roll the property manager prepares and the current measurements of the building. Our Geodetic tab contains a range of data (including space leased by each tenant, total gross leasing space, total office, retail and warehouse space etc.). This is also where common areas are calculated for each floor and for the building; both the actual measurements and those cited in the contracts. Mea-

surement data is automatically exported to the rent roll tab where the property manager can safely calculate rent, common areas, discounts, parking space fees, warehousing charges, contract dates and terms, space handover dates and insurance data etc. If they make a mistake and the control sum of the total gross building area is different from the real measurements, an alert will appear. The property manager’s work is automatically exported to the invoicing tab and can be filtered for each tenant, even when their premises are located on different floors. You can also filter by space type (e.g. warehouse, garage), which means the manager is sure that the right data is put on the invoices. Rent roll carries confidential data. That’s why we allow two-tier access – one from the Geodetic-Dropbox account and another for the Manager Member (the client), directly from GRR. Data is protected by a password that the client assigns and they decide whether they want to give access to the property manager, the accountant or the analyst. By keeping the file in the cloud, the client can maintain control over projects and be up to date with their team across the globe. It’s a convenient solution for international investors and people travelling on business. It's common that when several people work on a single file, data may be overwritten or lost. We’ve created a number of safety measures: notices, alerts and synchronizations, file retrieval for up to 120 days, to name a few. Data is of paramount importance when leasing property. We helped to generate an additional PLN 2.3 million in annual profit for a client with an 80,000 sqm office building in Warsaw. GRR means no more outdated rent roll files and no more losses due to incorrect calculations. You can learn more about the product at www. geodetic.co/grr

Adrian Hołub CRE Advisor, Investor, Geodetic Board Member, Lecturer, Author

WBJ

Opinion M&A

Poland becoming a mature M&A market

The country’s favorable economic landscape is attracting more cross-border deals. Meanwhile, Polish industry champions are venturing outside of Poland in search of acquisitions

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hirty years after the fall of communism and 15 years after its accession to the EU, Poland is today one of the fastest growing economies. It has recently become the first Central and Eastern European country and the first country worldwide in nearly a decade to be officially ranked as a “developed market” on the FTSE Russell Index, joining the exclusive group of the 25 most advanced global financial markets. Delivering strong GDP growth of more than 4 percent in recent years, having a growing middle class with increasing wages and having built close business ties not only with its EU partners but also with the US and China, Poland has developed solid foundations for mergers and acquisitions dealmaking.

Based on “CEE View M&A Inbound Report 2018/2019,” published jointly by Mazars and Mergermarket, 127 transactions with at least €5 million in deal value were registered in Poland last year, representing €5.7 billion in total deal value. High-quality opportunities have made Poland an attractive market for investors from outside CEE; it has reached a level

Jan Fido Mazars Poland, Head of Financial Advisory Services Department

of M&A maturity that makes it aligned with Western European standards and expectations, which is reflected by the robust inbound interest: 48 cross-border deals last year, amounting to €1.9 billion (33 percent of the overall M&A activity registered in the country). Transactions are mainly driven by four factors. Firstly, the need for consolidation in various sectors which allows effective cost reduction while increasing the scale of operations. Secondly, an increasing number of family-owned Polish SMEs are facing succession planning issues due to the lack of successors taking over the business. Thirdly, local and international private equity firms step up to make sizeable investments, demonstrating their confidence in Poland’s potential and stability. Last but not least, the country has so far benefited from a favorable international climate, with continuing globalization increasing competitive pressure worldwide, while UK and US investors seek to secure their interest in the EU in the perspective of Brexit. Another key new trend observed on the market is the increasing appetite of Polish companies for acquisitions abroad, both in Central and Eastern Europe (Czech Republic, Romania, the Balkan region) and in Western Europe (France, Germany, the UK). Successful firms like Nowy Styl, Wielton, Maspex or Stelmet are European leaders in their industries and, as such, are very well-positioned for growth outside Poland. M&A advisors and investors anticipate another good year for M&A in Poland. Perspectives are indeed promising, with sectors like Manufacturing, Food and Beverage, Technology and Financial Services pushing the overall dealmaking landscape. Both strategic investors as well as private equity firms will continue to eye high-quality targets which could potentially guarantee a good return on investment.

Adam Zohry Mazars Poland, Senior Associate in the Financial Advisory Services Department

W B J OCTOBER 2019

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Opinion TAXATION HIGHER WHT ON PAYMENTS FROM POLAND Since January 2019 remitters of selected payments to Polish non-residents – for intangible services, interest, dividends, royalties – need to carefully verify the nature of payment as well as the business of a contractor. Namely, they are obliged to apply due diligence when confirming the right for lower WHT rate or exemption. In case of payments of over PLN 2 million, the rule is to withhold based on domestic rates (20 percent or 19 percent, in some cases 10 percent) and only later apply for the WHT refund. In some cases, immediate application of lower rates is allowed; however, it is subject to filing numerous statements or when an opinion to that effect has been issued by tax authorities. Non-compliance with regulations or invalid or unsatisfactory supporting documentation may result not only in penal fiscal liability, but also in penalty sanctions of up to 10 percent of payments for which withholding tax was due.

Tax-safe investments in Poland

Recent developments in tax law are proving to be a challenge for investors who want to make a profitable investment while also complying with local law and tax requirements

heoretically, the Polish legislator follows EU directives, but in practice it often goes beyond the minimum criteria provided by the European legislator. What have been the biggest changes for investors in Poland in 2019? OBLIGATORY VAT SPLIT PAYMENT The split payment mechanism has already been in effect in Poland for some time, although until now it was a voluntary solution. Taxpayers, when making payments to their contractors, could choose if the VAT part of the payment should be transferred to a VAT technical account or not. The aim was to avoid VAT fraud. In addition, the paying entity could avoid liability for contractor’s VAT obligation when remitting the VAT amount via split payment.

Starting on November 1, 2019, the VAT split payment will be obligatory for a number of transactions, with related fines for not following this obligation. Among others, construction services will be covered by the obligatory VAT split payment, which is important news for real estate investors. To be precise, the term “construction services” includes not only the construction of a building, but also renovations, improvements and fit-out works. Invoices subject to split payment will include the phrase “split payment mechanism,” otherwise an additional VAT sanction of 30 percent of disclosed VAT may be imposed on the service provider. Failure to effect payment according to the split rule means a sanction of 30 percent of disclosed VAT to the service recipient.

TAX SCHEMES – MANDATORY DISCLOSURE RULES Another interesting issue in the Polish tax system is mandatory disclosure rules from an EU directive but modified by the Polish legislator in a pro-fiscal way. First of all, the obligation to report tax schemes was introduced earlier than in other European countries. Secondly, it concerns not only cross-border tax arrangements, but also local deals. What is more, penalties for non-disclosure are disproportionally higher than in any other foreign jurisdiction (reaching up to approx. €5 million). The conclusion is that a good investment is a safe one, undertaken by a conscious investor; someone who has sound knowledge of Polish domestic requirements and complies with them while investing.

Katarzyna KlimkiewiczDeplano Managing Partner, Tax adviser, Advicero Nexia

W B J OCTOBER 2019

Interview ECONOMY

Peak of the cycle or bump in the road?

A dip in German exports and growing US-China tariffs are echoing in economies worldwide. How much is Poland exposed to the current downturn? Is there room for easing policies if things take a turn for the worse? WBJ talked to UBSâ&#x20AC;&#x2122;s Michael Bolliger about the potential risks and the outlook for the coming months

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OCTOBER 2019 W B J

INTERVIEW BY BEATA SOCHA

WBJ: The US-China trade war continues. Tariffs have been raised

again. Where do you expect the conflict will lead? Michael Bolliger: Since tariffs were first imposed early last year, President Trump has gradually implemented all those he announced. If this pattern is any guide, we have to expect a further increase in tariffs, following his statements made at the G7 meeting in Biarritz, France. However, history also suggests that the US president pays attention to the effect tariffs have on the US economy, business sentiment, and financial conditions. And there is also little evidence that he values predictability as part of his tariff policy. China has previously responded to US actions without escalating the conflict though. We believe China will avoid a hasty response going forward, but if the US follows through on its proposed tariff increases, China seems prepared to increase its measures in response. In sum, therefore, we need to assume that further tariffs will be implemented on both sides, but likely in a highly erratic and non-linear manner. Tariffs, and the uncertainties that come with them, will further weigh on global growth prospects, in our view. There is tangible evidence that a downturn has already begun, with more and more alarming data coming from Germany. How much will it affect Poland and other CEE markets? Poland and the rest of Central and Eastern Europe are highly exposed to these adverse growth dynamics. Recent data from Germany, which is by far the most important trading partner for the region, confirms that weak export growth is weighing on the economy. Germany’s GDP contracted by 0.1% (q/q) in the second quarter, in part because of the contraction in net exports. And most leading indicators point toward softer growth in the third quarter. This will also weigh on the growth outlook for Central and Eastern Europe, although to varying degrees. Poland looks most resilient, followed by Hungary, whereas the Czech Republic would suffer the most. We don’t expect any of these countries to enter recession, however, because domestic consumption is fairly strong and policymakers have room to step up easing measures going forward.

A simple tweet can indeed change a lot, but it will be crucial that markets, politicians, and entrepreneurs consider it credible

Thus far, Poland has enjoyed remarkable growth. Do you think it is just the peak of the business cycle or will the country withstand the negative signals from Europe and the US? We expect growth in Poland to hold up comparatively well, partly thanks to robust private consumption. Labor markets remain fairly tight, which should add resilience to this important part of the Polish economy. In addition, EU funds are independent from the economic cycle, and absorption is likely to peak only in 2020-22 as the EU budget cycle ends. But Poland is not immune to developments elsewhere. Weakening growth in the US, the eurozone and China will all affect the Polish manufacturing sector – directly or indirectly – in the quarters ahead, and from there transition into private investment and consumption. As such, we expect growth to slow from around 4.2% this year to 3-3.5% next year. The risks are skewed to the downside, however, especially in the case of a further escalation of US-China trade conflict. There have been signals that the Monetary Policy Council (MPC) may consider lowering interest rates if the global conditions continue to worsen. Do you think this is a likely scenario? We expect more central banks to open easing taps in the months ahead. In Poland – and elsewhere in the region – inflation is likely to overshoot central bank targets, limiting the room for maneuver for the MPC. Tight labor market conditions should allow for only

a limited slowdown in wage growth. Hence, we think the MPC will stay on hold for now, and only ease policy conditions in the case of a more rapid growth deceleration. In UBS’s latest analysis, your colleague Mark Haefele wrote: “… it is true that President Trump could send the markets higher if he tweeted he is ending the trade war.” Do you think that the looming crisis could be mitigated by a shift in US policy? To what extent? Can so much depend on a simple tweet? It is important to remember that private consumption holds up fairly well in large parts of the world. Unemployment is low and real wage growth remains positive. This is essential for our view that the US should be able to avoid recession in 2020. A credible announcement that the trade conflict between the world’s two biggest economies is over could therefore not only support sentiment in financial markets, it could eventually even revive trade and investment spending. Hence, a simple tweet can indeed change a lot, but it will be crucial that markets, politicians, and entrepreneurs consider it credible.

Michael Bolliger Head of Asset Allocation Emerging Markets at UBS Wealth Management

W B J OCTOBER 2019

WBJ

Interview POLITICS The Swiss Ambassador Jürg Burri at the “Swiss Innovation Trail” inauguration in Warsaw’s Łazienki Park. The exhibition was organized as part of the celebrations of the centenary of the establishment of diplomatic relations between Poland and Switzerland.

A hundred years and counting

Over the past century, Poland and Switzerland have forged and developed close economic relations, particularly in tech and innovation industries. WBJ talked to Swiss Ambassador Jürg Burri about the scope of cooperation amid growing environmental concerns and labor shortages

WBJ: This year we are celebrating 100 years of relations between Switzerland and Poland. How would you describe the past century in terms of Polish-Swiss relations?

Jürg Burri: Polish-Swiss relations, which are based on long traditions and cover various areas, have never been better. Before and during World War I, a number of famous Polish exiles found refuge in Switzerland. Between 1940 and 1945, Switzerland

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also took in some 13,000 Polish servicemen. They had been enlisted in the French army and entered Swiss territory to escape the German advance. Since the fall of the Iron Curtain, relations between Poland and Switzerland have become closer and have developed rapidly ever since. Having observed the hard work and effort made by the country throughout the past few decades and the strong position it holds today, I am confident that our mutual connections

will continue to thrive. Our economic relations have been developing very fast in recent years. Both countries work hard to embrace innovation and digital transformation. As an example, the annual PolishSwiss Health dialogue explores new ways and tools to improve the health sector in our countries. Switzerland is one of the countries in Europe most affected by climate change – some experts say that temperatures in

INTERVIEW BY BEATA SOCHA

Swiss companies in Poland are mostly run by Poles. It is a sign of mutual engagement and trust Switzerland will rise the fastest among European countries. What is your country’s strategy to combat/prepare for the upcoming changes? As elsewhere in the world, where since the 1980s global warming has generally sped up, the past 30 years in Switzerland have seen particularly large increases. There is an urgent need to act globally, nationally and locally and to think out of the box. Climate change is also an opportunity to foster new innovative technologies, enhance circular business models, and create new lifestyles, so that future generations have a valuable and healthy life. There is fast growing awareness of climate change in Switzerland and it has become a very important domestic political topic. The CO2 Act, the heart of Swiss climate policy, pursues an emission reduction and is concerned with different instruments for buildings, transport and industry. Switzerland also invests/transfers a lot of funds to EU countries – including Poland – that are used for e.g. thermal outfitting to increase energy efficiency. What do you think about Poland’s environmental policies? For Switzerland a sound environmental policy is a keystone for long-term economic success and well-being. The majority of Swiss people are aware of the importance of energy efficiency and renewable energies. In May 2017 Swiss voters adopted the new energy act by 58.2 percent of the vote. This should enable Switzerland to maintain its high supply standard and at the same time reduce Switzerland's energy-related environmental impact. We appreciate the dialogue and cooperation with Poland and other countries. Under the Swiss Contribution financial mechanism, we supported Polish partners in projects dedicated to asbestos removal, installation and promotion of renewable energy sources and increasing energy efficiency of selected hospitals, among others. These initiatives brought tangible results which not only helped to reduce pollu-

seasons. In general, the diversity of the lifestyle Switzerland has to offer makes it an appealing destination for people of many backgrounds and interests. This is a valuable asset for our country.

Jürg Burri, Switzerland’s Ambassador to Poland

tion, but also improved the quality of life of thousands of people. Let me also give you another, topical, example of Polish-Swiss cooperation and dialogue: This year’s Polish-Swiss Innovation Day is dedicated to the topic “Better Urban Life” and takes place on October 10, 2019. It provides an opportunity for our countries to discuss sustainable solutions for city growth and development. A focus point of of the conference is two remarkable skyscraper projects, VARSO and ENSEMBLE, in Warsaw and Zurich respectively. Switzerland is one of the most desirable places to live in Europe. What do you think makes it so attractive? The livability of countries has become an international benchmark, which is crucial in attracting talent. I guess Switzerland lives up to its reputation of being safe, efficient and clean. Children can walk by themselves to school during the day and the streets are safe at night. Located in the heart of Europe, the country has outstanding transport infrastructure. Major intercity connections make it easy to get anywhere in an efficient manner. Lovers of sports and outdoor activities enjoy exploring the enormous selection of lakes and mountains, and they are spoilt for choice in all

How do the Swiss see Poles? Are they considered valuable partners and a source of talent? More and more Swiss people are becoming familiar with Poland. In my personal experience, Swiss and Polish people have many things in common. You may observe many hardworking and open minded people in both countries. And Poland has also become more diverse and attractive to foreigners in recent years. Swiss companies in Poland are mostly run by Poles. It is a sign of mutual engagement and trust. I hope that even more Swiss people will discover Poland and vice versa. There has been a tremendous trend for more overnight visits to Switzerland by Polish guests in recent last years. Fostering talent is key to both our countries. That’s why we would also like to share our experiences when it comes to professional training. There are a number of Swiss companies investing in Poland. Do you think that Poland will continue to attract investors from Switzerland in the future? Poland offers many opportunities to Swiss and other international companies looking for the best location for their investments. It is one of the leaders in attracting foreign direct investment, not only in the CEE region, but in Europe generally and even globally. Poland is the most important destination for Swiss foreign capital in Central and Eastern Europe. Swiss companies have created 50,000 workplaces and invested CHF 6.5 billion so far. At the moment, the labor market is slowing down a little bit, but I am confident that the positive trend will continue. More and more investments also focus on high-quality, sophisticated businesses. Recently we have also seen Polish companies investing more in Switzerland. This is a promising sign as well.

W B J OCTOBER 2019

Interview POLITICS

From union to union

Poland and Lithuania have a long, common history; they even formed one country for over 200 years. Despite differing views on this history, the two countries remain closely linked. WBJ talked to Ambassador Eduardas Borisovas about PolishLithuanian history and current economic, political and military paths

WBJ:

The new President of Lithuania, Gitanas Nausėda, chose Poland for his first foreign visit and described this as a sign of how intense our friendly neighborly relations are after a period of “certain stagnation.” In Lithuania’s new coalition government, composed of four parties, for the first time two members of the EAPL–CFA party, which represents the Polish minority, were appointed to ministerial positions. How do you view our relations at the moment? Ambassador Eduardas Borisovas: I think that we are witnessing a return to what may be termed a natural situation characterized by mutually close links shaped by our geography, security considerations, state of mind, history, culture and our role in European development. Lithuania has always been a multicultural country, with Belarusians, Poles, Jews and Lithuanians living there in various periods of history. Lithuania’s national identity and power was influenced by various nations and it developed and spread over large areas of Europe. Lithuania is now a democratic country that respects minorities, including Poles, which make up 7 percent of the population. The appointment of Rita Tamasuniene (family name Sadowska) as minister of the interior, and Jaroslaw Narkiewicz in the position of minister for transportation and communication – both of whom are members of parliament elected from a party representing Poles – proves the equality of all our citizens. Will Lithuania regulate the issue of the Polish spelling of Polish names in Lithuanian documents, as demanded by many members of the Polish minority? This issue should be resolved but for this to happen our Parliament needs to vote on it, which hasn’t happened so far. I think that the sooner the matter is resolved the better, but we have to be patient. Parliament has taken three different positions on this matter and it is deliberating on it, so let us wait. But the issue of putting Polish names on street signs in places largely inhabited by the Polish minority has been regulated positively. Let me return to the historical event in 1569 when the Union of Lublin was created, a pact between the Kingdom of Poland and the Grand Duchy of Lithuania, the Commonwealth of Two Nations, which lasted in Europe for 226 years. In

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July of this year celebrations were held in Lublin to mark the 450th anniversary of that pact. The celebration was linked to the anniversary of Poland and Lithuania joining the EU and it was said during that ceremony that the Union of Lublin was a predecessor of the EU. What is Lithuania’s perception of the Union of Lublin? In the past our view of the Union of Lublin was not univocal, some historians regarded it as a tool of Polish domination. Now it is regarded as a historical effort to build a union of two equal nations serving their interests and influencing European development. We were pioneers in creating such a law-based structure on our continent, so it is unsurprising that it is compared to the process of building a common union by so many European countries, all of which have had a different history and experience, to serve development and peace on the continent. What will our cooperation within the EU look like, with the new Members of the European Parliament and the new people in high positions in the EU? I believe that our cooperation will be very good; we have similar positions on various issues and there is a very high degree of support for the EU in our societies – the biggest among all member states. We will cooperate within the Three Seas Initiative group composed of 12 member states situated in the area between the Adriatic, Baltic and Black Seas in order to catch up with Western Europe in terms of infrastructure, better connectivity, transport, economic development and strengthening energy security. Lithuania has 11 MEPs, who will be sitting in various EU parties and groupings, the majority of them will be in the European People’s Party. Our countries are glad that the European Parliament will not be dominated by Eurosceptic populists. We do not want to speed up the federalization of the EU, but we do wish to build a strong union, to speak in one voice on the international scene, particularly in relations with China and Russia. Our countries will support the Eastern Partnership, which links states willing to join the EU, including, among others Ukraine, Georgia and Moldova. However, it will not be easy now in the EU to obtain a decision regarding financial support to build infrastructure linking Poland, Lithuania and

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INTERVIEW BY EWA BONIECKA

other Baltic States with the south of Europe, but all those projects will bring us many profits, especially in economic terms. How are Lithuania and Poland intensifying bilateral economic and trade relations at present? We have been intensifying them for the last few years. All the relevant talks are going very well in the Polish and Lithuanian ministries of energy. The gas pipeline connecting our countries will be ready this year. Next, the Polish-Lithuanian energy electricity interconnector and synchronization projects will integrate Baltic States with the European electro energy system. A ferry connection between Szczecin and Klajpeda is being considered. Poland is developing its investments in Lithuania and Lithuania is increasing its investments in Poland. Polish firms are importing products manufactured in Lithuania, like machinery and chemical products. Our countries will be involved and linked in building European interconnection infrastructure, such as Rail Baltica and Via Carpatia. For Poland and Lithuania the problem of security and military cooperation is extremely important. We are both members of NATO and we cooperate in strengthening the Eastern flank of NATO. Lithuania also operates the Airspace Surveillance and Control Command system, which controls and defends air space over Lithuania and other Baltic states. What is the state of Poland’s and Lithuania’s cooperation between their military industries and military forces? Lithuania and Poland have the same opinion about the importance of security on the Eastern flank of NATO. We see the threats posed by the imperial and aggressive policy of Russia, which was evidenced by the annexation of Crimea and the occupation of some eastern parts of Ukraine and before that with the occupation of parts of Georgia. We have drawn conclusions from this and our strong cooperation in the military field is the result of our common attitude towards such threats. NATO is aware of this. We have the NATO Multinational Corps Northeast in Szczecin, the Multinational Division North-East located in Elbląg and an air force base in Šiauliai in Lithuania, where our air force soldiers, Polish pilots and pilots from other NATO

countries are serving 24 hours a day, 7 days a week policing our air space and that of other Baltic states. As President Andrzej Duda said during talks with our President Gitanas Nausėda during the latter’s visit to Poland: “the security of Lithuania is extremely important to us.” Having said this, I wish to add that we do not want to see Europe divided into zones of influence. We want peace in Europe and we want Russia to act according to internationally recognized standards and law. We support the Eastern Partnership of EU with Ukraine, Georgia and other countries which aspire to join the EU. The EU should play a strong and important role in global policy and it should strive to ensure economic, social and human development for everyone.

We do not want to see Europe divided into zones of influence

You have been serving as ambassador of Lithuania to Poland since January of this year. What would you like to achieve between present-day Lithuania and Poland? I wish to develop a better understanding of what modern life is like in our country. I understand that some Poles have a large sentiment for Vilnius, but I would like them to travel to the whole of our country; to visit all other places and to understand that many groups of people have influenced our culture – Jews, people from modern-day Belarus, Ukraine, among others. I would like to intensify cooperation between our universities and cultural institutions, to organize person-to-person exchanges on both sides. We remember our common history and we treat it as it is. There are Polish monuments in Vilnius and Lithuanian nobility palaces in Warsaw. Throughout our history we have had different moments and we went through them together and this is also the case now between contemporary Lithuania and Poland. We cooperate in all aspects and we are best friends in Europe.

Eduardas Borisovas Lithuania’s Ambassador to Poland

W B J OCTOBER 2019

Interview TRANSPORT

Far at sea

Sea transport remains the cheapest form of shipping and is the backbone of international trade. WBJ talked to Dawid Graczyk and Janusz Witanowski, Seafreight Branch Managers at Raben Group, about the trend to build ever larger ships, the future of autonomous sea vessels, as well as political uncertainties and their impact on sea transport

WBJ: In connection with environmental trends, the pressure to

reduce CO2 emissions and carbon footprints, it is often said that sea transport is the only sensible alternative to air freight. Do you think that sea transport is the future? Janusz Witanowski: We believe that ocean freight will always be part of any volume-based, long-distance transportation. It is common knowledge that this mode of transport is the most effective cost-wise, allowing the transportation of huge amounts of cargo in one go. Considering the impact of transport on the environment, also known as carbon footprint, ocean freight has one of the lowest – about 14 times lower than air freight. Shipping lines are searching for the most effective means to limit CO2 emissions, such as utilizing different types of fuels like LNG or bio-fuel. Additionally, some are already presenting their customers with data regarding the carbon footprint generated by their shipments to turn their attention to environmental concerns. The rapid expansion of rail transportation,

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especially on the China-Europe new Silk Route, also presents great opportunities to limit CO2 emissions. This is a great alternative to both sea and air transport, with much shorter transit time than the former and lower cost per unit than the latter. But we need to remember that availability of rail capacity for goods is still limited and remains a bottleneck at present. Automation in transport is becoming a reality. Autonomous trucks are already being tested. Is the same in store for sea transport? Dawid Graczyk: Automatic and automated development is already being tested on aircraft and ocean vessels. Most vessels have an “auto pilot” mode, as do aircraft, and this has vastly reduced the need for human involvement in piloting and navigation. However, due to the many additional parameters involved (air and sea travel is a lot more complicated than road or rail), we expect that completely automated voyages will take further development before they

become a widespread reality, even if it’s already technically possible. Based on the opinion of experts, we can expect autonomous ships transporting containers in the near future, at least in some areas. While autonomous ships can carry bulk cargo, unmanned ships will not be able to carry dangerous goods. Unmanned vessels are also friendly to the marine environment, as autonomous ships will have electric propulsion and thus zero emissions. However, the introduction of unmanned ships poses legal challenges. There are still no provisions authorizing unmanned craft to operate. An important element of transport that needs to be addressed is the exchange of information between ships. Fast information exchange is the key to safe unmanned ship travel. Another problem is liability for disasters and destruction of cargo. The responsibilities of the land operator, shipowner and software designer should be clearly established. Unmanned ships are coming and will be in use in the near future, but we must first prepare well for them.

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INTERVIEW BY BEATA SOCHA

In August, the largest container ship in the world, with a capacity of 23,000 TEU (twenty-foot equivalent unit), arrived in Gdańsk. Is there a trend to build larger and larger ships? JW: Yes, this has been the case for the last few years; however, such ships pose certain problems. Not many ports can receive such vessels due to draft and size of berths. The size of cranes used at even the largest terminals is another limitation, as there is a finite number of container rows that can be reached on a vessel. This also decreases the number of ports of call and results in a need to arrange additional transport, increasing total transit time, because smaller feeder ships, rail connections or trucks will need to ferry goods to a central hub port for loading onto these larger vessels. So even if it reduces the cost of the long-haul section of the journey, it can also increase the total cost due to the potential additional handling, extending the loading/unloading process in ports and necessary new investments in infrastructure. After all, it if takes longer for a vessel to complete port operations, it will either result in fewer journeys per year, or it will require increased speed, thereby generating additional fuel expenses. Sea routes such as the Panama or Suez Canals also pose a limitation. For example, despite recent modernization of the Panama Canal, it is still unable to accept large container ships (over 14,500 TEU). It seems that a further increase in vessel size and capacity is not likely, at least until container terminals catch up in this race. Is sea transport more competitive than other modes of transport? DG: Ocean freight costs are still among the most competitive today compared to rail and air. In the case of trade with overseas countries, maritime transport has been and will be the main driving force of economies around the world, despite the significant increase in the importance of rail transport, particularly from the Far East in recent years. For goods where we can afford a delivery time of about four to six weeks, sea transport seems to be optimal. Given the fact that the economy in Poland and Europe is growing steadily, our producers are opening up more and

more to new distant markets, including North and South America, as well as Asia, and the role of maritime transport for shipments of large quantities of goods in the coming years will continue to be important. A number of companies using air transport are looking for alternative, cheaper rail and sea solutions. In recent years, significant investments have been made in Polish ports, in particular the port of Gdańsk DCT (Deepwater Container Terminal Gdańsk), where the number of transhipped containers increased from 1.2 million TEU in 2016 to 1.9 million TEU in 2018. Will Brexit make it easier or harder for sea transport to compete with other modes? JW: This really depends on the nature of the UK’s trade deals with the EU and the potential customs implications. The UK is traditionally an import market for EU countries. It will naturally be impacted if the EU and the UK don’t come up with a Brexit trade deal. If the UK did turn to the US for a trade deal, exports from Poland and other European countries will definitely be affected. Still, no operators are saying they will limit service options to the UK after Brexit. Rather, they are working on how to organize it in the best way around Brexit. Customs formalities, especially if we see a hard Brexit, may create severe bottlenecks at entry points to the UK for land trucks. Unaccompanied container transport might be a natural choice, costwise. Road transit time, bearing in mind possible long queues at borders, may in effect be similar to the sea option. It is worth mentioning that short sea container transport has always been popular between Poland, the UK and Northern Ireland. At present it is being offered by several short sea operators and main liners.

Dawid Graczyk Seafreight Branch Manager, Raben Group

What are the biggest limitations to the development of sea transport in Poland? DG: Infrastructure is one of the challenges; not only the ports, but also the connectivity to rural areas by inland waterways, rail and road. Political conditions are also a very important factor. The imposed restrictions or blockades force customers to look for alternative solutions and other outlets. The best example of this is the significant increase in the export of Polish apples to the Middle East, Egypt and Asia markets. Is it true that sea transport has contributed to the worldwide popularity of Polish apples? DG: Poland is one of the largest apple producers in the world. For years, Russia was the main outlet for Polish producers. Due to political decisions, this market was blocked and we had to open up to new opportunities overseas. The high quality and condition of our apples have allowed us to gain new customer bases and build an exclusive brand on the Egyptian and Indian markets, even in Vietnam. We can compete with apples from the US, France or Italy. Huge amounts of Polish apples, potatoes and other crops are exported by sea every year. Indeed, the volume needed to be shipped is really only possible by sea because of the long distances, low cost and the possibility to load such huge amounts of goods. Also, the special way of transporting apples in cold storage and ventilated containers is vital to keeping them fresh for when they get to market. So, yes, I believe that sea transport contributes a lot to the availability of Polish apples. Raben, as a specialist in the transport of fresh products, helps Polish exporters in entering new markets. Thanks to the availability of Reefer containers (refrigerated units), we can guarantee our customers safety and assistance in deliveries to far-off, overseas destinations.

Janusz Witanowski Seafreight Branch Manager, Raben Group

W B J OCTOBER 2019

Interview LOGISTICS

Anticipation is key

WBJ talked to Blanka Borkowska, HR Director FM Logistic Central Europe, about eco trends in logistics versus increasing pressure on speedy delivery, autonomous vehicles in the TSL industry, labor shortages and how the company is preparing for the coming Christmas season

WBJ:

The rapid growth of ecommerce puts extra pressure on quick deliveries. How do you reconcile that with the growing awareness of environmental impact and sustainability? Blanka Borkowska: We are perfectly in tune with these areas at FM Logistic. The innovations we introduce are created with the future in mind and in line with the principles of sustainable development. Technology can support us in this and we can use it. A good example is the CityLogin system we introduced in 2017 which we use to service clients operating in the largest cities, including in Warsaw.

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We use cars with hybrid and electric engines for CityLogin. This modern and environmentally friendly fleet is operated with the help of specialized software that enables management of the entire supply chain, from loading the car to optimizing the delivery route, thus enabling real-time vehicle control. We own and create numerous proecological and ultra-modern innovative tools, including software, that make our business closer to the “green ideal.” We believe that such investments in today’s world are necessary, primarily for the benefit of future generations. The challenges of sustainable development also

create an opportunity to improve the quality of our services. We also see that our responsible attitude is becoming an increasingly important argument for potential clients and employees. Using solutions of this type is expensive, but we know that there will be a return on this investment. At FM Logistic, we look to the future and that is why we understand that sustainable development is a global commitment, but also a very tangible one. In our case, this translates into real declarations. By 2022, we intend to reduce energy consumption by 12 percent and reduce the carbon footprint

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INTERVIEW BY BEATA SOCHA

associated with storage by 20 percent. By 2030, we want to completely neutralize the carbon footprint associated with our activities. The first tests of autonomous delivery vehicles are currently underway. Some say autonomous vehicles will revolutionize freight faster than passenger transport. Do you think this will be the future of logistics? In what time perspective can this be expected? Autonomous vehicles used in the right way can facilitate human work. They can be intended, for example, for storage spaces. When it comes to autonomous transport, security and legislation will be the biggest challenge in our industry and other areas. In the case of FM Logistic, we are open and ready to apply all innovations that will become useful to people. We are testing some solutions today, and we keep up to date with the latest developments. We have knowledge and human capital that allow us to search for our own solutions using cutting-edge technologies. Of course, we know how to do it in a cost-effective and lawful manner. The logistics industry has been struggling with labor shortage for quite some time. How are you handling it? FM Logistic is a global corporation that has its roots in a family business. These values are still key to us. In the current market situation in Europe, where many of our competitors face staff shortages, we are able to meet our needs. This is because we have an active policy to support our team at every level of the organization. We take into account the diverse requirements of people working in different positions and look forward, anticipating new needs. It is the employees who can best show us where innovative solutions can be used. To engage them, FM Logistic has once again announced an innovation competition. Last year’s results were an announced in December in Roissy, France, where teams from seven countries met. Poles took second place with a proposal that halves the time needed to change the copacking line. In building a stable team, care for security and strengthening competences are key. We are very active in this field. For example, FM Logistic has created its own ergo-skeleton design, protecting against

Logistic success also depends on whether the operator is able to meet the challenges of specific sales periods

overloading, which improves safety and comfort at work. Our platforms meet the highest security standards. We design special vehicles and other tools, such as drones, to facilitate the hardest and most tedious work. At the same time, each innovation is properly implemented. We train our employees in an effective and convenient way. Innovations are implemented at every level of the business and we all remain in constant development. This system works. This is best demonstrated by the fact that some employees have been with us since the beginning of the company’s presence on the Polish market, i.e. for 24 years. Is the coming Christmas season going to be a challenge? Logistic success also depends on whether the operator is able to meet the challenges of specific sales periods. FM Logistic offers its clients effective solutions while ensuring optimal working conditions for its staff. Here again, we reach for some innovations, such as cobots (collaborative robots). They are extremely useful, for example when unloading pallets. Machines take over the most difficult and repetitive tasks, especially during periods of increased production activity. Crews also use them in copacking processes and for special tasks related to product packaging. Cobots ensure consistent, high-quality work and they significantly accelerate certain processes. How will Brexit, particulraly a hard Brixit as it is shaping up to be, affect

logistics? Can you prepare for it? This question shows how much our industry is on one hand “invisible” to the average recipient, and on the other hand it is crucial. We are a global company and as members of the international community we take all important events into account. Continental Europe is the traditional market for FM Logistic. Our connections with the UK are limited. We offer transport services to and from the UK for some customers, but the associated revenues are relatively small compared to other markets. For example, we have no employees in the UK, nor any of British descent, we have no business operations there. In our case, the UK’s decision to leave the EU has no direct impact on day-today activities. We monitor the development of events related to Brexit on an ongoing basis and we will do everything to make sure it has the least impact on us and our clients. When Brexit becomes a reality, we will continue to focus on meeting our clients’ needs in both transport and logistics. In the TSL industry, anticipation is key.

Blanka Borkowska HR Director FM Logistic Central Europe

W B J OCTOBER 2019

Interview LAW

Passion in action

WBJ sat down with Kinga Hanna Stachowiak, Partner and Managing Director at Skarbiec law firm to talk about the most common problems companies face with taxes, as well as growing an international law firm, from scratch

WBJ:

What problems do entrepreneurs want to be solved by the law firm most often? Kinga Stachowiak: At Skarbiec Group, we mainly deal with strategic consulting, crisis management and protection of entrepreneurs against future creditors, which are the core of our legal activity. We also provide ongoing legal and tax consultancy services, as well as helping entrepreneurs in establishing companies in foreign jurisdictions around the world. Entrepreneurs often complain about various obstacles they encounter when doing business in Poland. It concerns both legal barriers and the unfavorable attitude of tax authorities.

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There is a lot of talk about the fact that government offices are becoming more friendly towards companies and that hostility is becoming more and more incidental. Would you agree? We have quite the opposite observations. The scale of this hostility has been growing for several years. Some new regulations and the simultaneous tightening of fiscal policy are unfortunately affecting companies that conduct completely lawful activities. Budget revenues from VAT often increase at the expense of reliable entrepreneurs. How can these bad practices be countered? Is this where the escape to foreign

tax havens comes from? I wouldnâ&#x20AC;&#x2122;t call it an escape, but entrepreneurs are certainly looking for friendly tax systems or places offering legal stability and flexibility. A good example is Malta, which has become the most popular destination due to the ease of obtaining a tax residence. The law firm is also a specific company or entity. How does it currently function in Polish conditions? In recent years there have been a lot of updates in the regulations, or completely new regulations, and actually there are probably few lawyers who embrace all these changes. These changes force

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INTERVIEW BY KRZYSZTOF MACIEJEWSKI

increasing specialization and this trend of new niche branches of law is becoming stronger. As a law firm that has to offer holistic services to clients, we are also moving in this direction. We employ many experts and cooperate with many others from abroad. Certainly, running a consulting company is becoming more complicated; compliance with regulations requires a lot of administrative activities and knowledge of many multiple areas. Our clients also often ask us if we are able to help them with a specific task that they have been presented with. There are more and more such queries due to changes in regulations. They simply want to focus on managing their own business – not on the bureaucracy. Outsourcing of this type of work has become very fashionable in recent years, and we are part of this trend. Is managing a law firm with offices in other countries a challenge? Actually, it is more like having partners all over the world. They are law firms, accounting and auditing companies. There is also a branch of Skarbiec in Malta. From my point of view, it is above all a very interesting experience being in a multicultural environment of professionals. At the same time, it is not only about copying foreign patterns, all the more so because labor standards in Poland are definitely higher than those in Mediterranean countries. Poles are great at international contacts and they are very open minded when it comes to differences – even if some say that they aren’t. We have a good reputation in these circles, because we are representatives of a country that is developing dynamically. I believe that we build our success through hard work. Does this mean that there is currently no problem with employing lawyers in the country? At the moment, lawyers with well-developed so-called “soft” competences and sales skills who easily find a common language with business are most in demand. It is often about people who are advisors of management bodies in companies. There are certainly not many such lawyers and there will always be a demand for them. It is similar with tax or accounting advisors. And what is the number of business clients at the moment? We are an office that probably has the

largest inflow of business clients within the law firms in Poland. Within a month we receive 100-200 queries from potential customers. We mainly serve enterprises with Polish capital and wealthy private individuals. The scale of inquiries is related to the marketing model that we adopted from the very beginning of our business. How did it start? We have been around for 12 years. We come from the website Skarbiec.biz, which from the beginning gave us good recognition. We are also still present on the internet and in the printed press. I remember that at the beginning, me and my partner (attorney Robert Nogacki) were surprised how many people look for legal advice on the internet. The subsequent organic development of the law office

Poles are great at international contacts and they are very open minded when it comes to differences

went towards servicing legal entities. That is why we are present in social media, we have profiles on relevant websites, but we do not gain new customers through them – the heads of companies seeking strategic consulting services do not contact the law firm via Facebook or Instagram. Are any new trends related to the management and organization of law firms appearing or is it rather a conservative activity? We are constantly moving in the area of credibility. So, how can you become a credible leader? How can we make people want to work for us? The methods change, of course, but authentic and trustworthy leaders win at the end of a day. My experience in this field is specific because I usually manage people much older than me with a lot of knowledge in their areas of specialization. I focus on passion in action and

celebrating common successes – it gives me the feeling that more can be done. Do women managers have a harder time in the legal industry than men? Is the famous “glass ceiling” still evident? I created the company from scratch, so if it exists I avoided it somehow. I think it’s easy to find many women who also refute the glass ceiling concept.. With their hard work, they gain really high positions and achieve success, effectively combining professional activity with family life and raising children. There are no hard-andfast rules, but instead of complaining it is always better to take matters into your own hands. The road to the top can be just as exciting as its achievement. It is worth remembering that such a career must be full of failures along the way, sometimes very severe, but they are an indispensable factor. And all this is about the law industry? Not exclusively. I have also been managing real estate companies for 11 years, running highly complex projects. Sometimes legal problems are combined with technical issues. In addition, sitting in the chair of the president of these companies I am responsible for the construction of facilities. That is, at all stages; starting from the selection of a given property, through obtaining specific permits, and ending with the selection of the contractor for the investment and its subsequent acceptance. Very often it comes to real estate with various legal defects, with markings that should be demolished etc. I started with investments in land, but over time I focused on the implementation of commercial projects. I focus primarily on small and high-quality boutique investments.

Kinga Hanna Stachowiak Partner and Managing Director at Skarbiec law firm and President of the Management Board in several companies in the real estate industry

W B J OCTOBER 2019

FEATURE / PHARMA

A CURE FOR THE DRUG CRISIS Pharmacists, doctors and, above all, patients are warning that there is a deepening shortage of medication on the market. Millions of patients are affected, and the situation is not getting any better. Who is to blame and is there a solution in sight? BY SERGIUSZ PROKURAT

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he shortage of prescription drugs in Polish pharmacies has become a common occurrence. Patients come to a pharmacy with a prescription, but the medicine is missing. Sometimes a substitute can be proposed, but if there isn’t one? It’s quite normal to hear: “We’re sorry – there is no such medication and we have nowhere to order it from. When is it going to be available? We don’t know.” Which medicines are missing? Mainly those for chronic diseases: diabetes, hypertension, thyroid diseases, asthma and allergies. Some of these are life-saving drugs and are crucial for everyday life. Oncological and neurological drugs are also beginning to be in shortage. To make matters worse, the list of medicines at risk of non-availability is constantly growing: in January 2017, 173 drugs were in short supply, in November 2017 – 197, in May 2018 – 208, in September 2018 – 266, in November 2018 – 311, in January 2019 it was up to as many as 338 items. And more and more items appear on the list. The list is created on the basis of pharmacies’ reports of wholesalers’ refusal to provide a particular drug, and as such can be quite inaccurate. Although 60 percent of medicines from the list are not available in more than half of pharmacies, they may still be available somewhere in Poland. There may be as many as 500 medications that are hard to find in Poland. At the end of July 2018, the database included over 16.6 million reports of refusal to process orders for medications – currently it is many more. What should a patient do if the medicine they need is not available in the pharmacy? The Ministry of Health claims that it is working to ensure the best availability of medicines. In July 2019, a helpline was launched which was to help everyone find out where their medicine is available. On the first day of operation, the helpline recorded as many as 20,000 calls. The ministry claims that it is operated by 30 consultants. I make a call. Once connected, a voice that sounds like something from the underworld announces that I have connected to the patient helpline and – after three wait signals – the same voice announces that all consultants are busy, suggesting that I call again at another time. Even if I did finally get through, I would probably hear that the medicine is available in a pharmacy 400 km away and I have to hurry because someone might snag it before I get there. The helpline is little more than a smoke screen. Patients can get the same information on websites such as KtoMaLek.pl and GdziePoLek.pl.

W B J OCTOBER 2019

FEATURE / PHARMA

In 2009, patients paid PLN 10.24 for one 40 mg dose of Clexane on prescription; the National Health Fund paid an additional PLN 107.61. The final price without prescription was PLN 117.85. Currently, in 2019, patients pay PLN 35.49 for the drug on prescription, while the remaining PLN 77.13 is paid by the National Health Fund. The recommended market price in the UK is £56.50 (PLN 280). In 2009 there have already been problems with its availability in pharmacies.

WHO’S TO BLAME? While desperate patients make pilgrimages from city to city in search of vital medication, the hunt for the guilty party is still in progress. On the one hand, the Ministry of Health pretends not to see the extent of the drug crisis, while on the other hand, it is eager to point fingers: pharmaceutical companies or suppliers of active substances from China; the EU serialization requirement, i.e. the obligation to place codes and special stickers on medication packaging in order to be able to verify the authenticity of each package before it is admitted to trading; and above all, the “medicine mafia,” which exports medicines from Poland to countries where they are sold at a higher price. Meanwhile, the crisis associated with the drug shortage has not affected hospital wards, and this means that the medicines are in fact supplied by manufacturers. If the medications are in fact being produced, where do they go?

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Drugs in short supply: EUTHYROX (thyroid disease)

GLUCOPHAGE XR (diabetes)

SUPPLY AND DEMAND Poland currently has some of the cheapest medicines in Europe. Polish regulations on the drug market set rigid prices for drugs and limits on manufacturers’ margins. The state negotiates with drug manufacturers over which products should go on the special list of reimbursed medicines. When a particular medication is put on the list, the state covers most of its price, guaranteeing the manufacturers some profit. Getting on this list is a question of “to be or not to be” for many medications, particularly those that are so expensive that patients might never be able to afford them. The list changes every two months, which does not always serve stabilization, but it allows patients access to cheap medication. The price of reimbursed drugs is influenced by criteria such as the average salary. Poland has one of the lowest in the EU, so the negotiated prices are also lower than in other countries. For example, Clexane, an anti-coagulant

XANDERLA (prostate cancer)

medicine, costs about PLN 120 in Poland, while in Germany it costs about PLN 300. These differences in drug prices are the main reason drugs are being exported and sold abroad at much higher prices. According to the calculations of the market controlling institution (Chief Pharmaceutical Inspectorate), every third medication may be exported from Poland, and according to research companies, one out of ten pharmacies ships drugs abroad. Polish reimbursed medicines go mainly to Germany and the UK, and the value of their illegal export is estimated at over PLN 2 billion. SHADY BUSINESS The ministry declared the export of medications illegal and its originators have been called the “medicine mafia.” This has led to the creation of a list of medicines that cannot leave the country without the Chief Pharmaceutical Inspectorate’s approval. Within six years, it has initiated proceedings against 600 pharmacies and wholesalers. However, after several years of this fight against the “medicine mafia,” not a single financial penalty has been imposed. In the case of the record-holding pharmacist, who funneled out medicines worth PLN 45 million, the court dismissed the case, citing low social harm. The scale of this shady business has become so large that the government has taken steps to tighten the law even further. Since June 6, 2019, the export of medicines abroad is punishable by up to ten years in prison for exporting a drug that is on the “shortage list.” Legal changes also mean more efficient inspections and audits. The inspectors can be supported by the police, the border guard and even the Internal Security Agency. The government is pulling out all the stops to fight this phenomenon. However, what we call “mafia” in Poland, in the West is a completely legal practice known as parallel sales. LOOKING FOR THE ANTIDOTE What’s next? The opposition party, seeing the sluggishness of the government, has proposed intervention buy-ins from abroad. This would cost unimaginable amounts of money. After all, Poland would buy medicinal products at Western rates. An antidote could be a common EU policy and price setting, but Poland is obstructing this idea because it could mean an increase in domestic medicine prices. It would be political suicide for the ruling party. It would then be necessary to use EU subsidies to level out the disparities. Another option would be to simply raise medicine prices to levels similar to those in

TAMOXIFEN SANDOZ (breast cancer)

SYMEX (breast cancer)

FLUTAMID (prostate cancer)

OESCLIM (treatment of menopausal symptoms)

CLEXANE (anti-coagulant medicine)

BERODUAL (lung diseases)

neighboring countries, while increasing the amounts of reimbursement. Patients would not notice any changes and medicines would be more available. However, it would mean delving into the budget and could mean tax increases. Each of these remedies involves intervention from state institutions and maintains a price regulation system. The government is playing for time, because it expects the situation to straighten itself out once e-prescriptions are fully implemented. Their introduction should facilitate control over all entities involved in the pharmaceutical trade. The act has already been signed by the President and IT preparations are ongoing. Some clinics are already issuing prescriptions that consist of a four-digit code that is to be used with the patient’s Social Security number (PESEL). The obligation to issue prescriptions in this form will be in force from 2020. But whether e-prescriptions will solve the drug shortage problem is doubtful. As long as there is a price disparity between countries in Europe, medications will continue to be exported. Nearly a century ago, in 1922, Ludwig von Mises wrote in his book Socialism that “Speculation has a role to play – it predicts and adjusts supply and demand in time and space. This sad truth will be valid as long as prices are set by the governments.”

very third “E medication is

exported, and one in ten pharmacies ships them abroad

METFORMAX (diabetes)

W B J OCTOBER 2019

TECH i n s i g h t s TECH NEWS

Facebook’s Libra posing a threat to the euro, national currencies – Deutsche Bank

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Libra, Facebook’s planned cryptocurrency, could put many financial system institutions in a difficult situation. Those at risk include central banks, credit institutions and payment service providers, Deutsche Bank Research experts warned in a report. Facebook’s goal is to offer the new cryptocurrency to 1.7 billion people worldwide who do not have a bank account. The basic difference between Libra and other cryptocurrencies is that Libra’s value will not be directly determined by the market. The value of the currency is to be linked to a basket of global currencies and physical assets spread all around the world. Libra’s partners include companies specializing in payments, such as Visa, Mastercard, PayPal and PayU. In addition, the project is also supported by companies including Uber, Vodafone and Spotify. According to Deutsche Bank Research experts, Libra will help its creators gain an advantage over banks thanks to the support of Facebook and other companies that have millions of customers in Europe. Social media platforms accumulate a huge consumer base and each of them could become a potential user of the cryptocurrency. The success of Facebook’s international cryptocurrency could lead to a decrease in the importance of the European Central Bank. In addition, governments’ and legislators’ abilities to introduce and enforce regulations would be limited. European rules on personal data and taxation would not be able to fully cover Libra. This, in turn, would mean for Europe a deprivation of monetary power, which would be in the hands of a consortium of private companies, most of which are based in the US.

>>> W B J OCTOBER 2019

TECH

VC investors identify most promising start-ups in Europe In 2018, American venture capital investors invested a total of $5.3 billion in start-ups from Europe. Indicators show that interest will continue in 2019, and BI USA asked VC investors to indicate which European start-ups have impressed them the most in 2019. They selected 15 companies. The group includes companies valued at hundreds of millions of dollars, such as WorldRemit ($407.7 million) or the Internet bank of the future Monzo ($324.7 million), but also smaller companies, such as Brolly, offering AI-controlled insurance ($1 million).

Internet of Things drives business development – KPMG The Internet of Things, robotics and artificial intelligence will be the main drivers of business transformation in the next three years, KPMG analysts forecasted. KPMG created a list of ten key technologies for business transformation based on a survey with representatives of technology companies. Most respondents mentioned the Internet of Things, i.e. the connectivity of devices. Robotics Process Automation (RPA), i.e. use of software robots that perform repetitive tasks, was in second place.

Retail chains to focus on technologies – Savills The role of shopping centers is evolving to respond to new consumer needs, changing lifestyles and technological development according to global property agent Savills. Marta Mikołajczyk-Pyrć, director of the commercial real estate team in the real estate and asset management department at Savills, noted that all contact points with a given brand are currently merging, creating an omnichannel strategy. “The future of the retail industry will be based on the use of new technologies.

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The world in which we shop by swiping the screen will soon undergo another revolution, as a result of which we will order products using voice technology, and then those products will order themselves thanks to the Internet of Things. The latest IT solutions, due to the use of artificial intelligence and data collection, allow for a better understanding of how the customer behaves today and then a tailor-made offer can be prepared on this basis,” Mikołajczyk-Pyrć said.

Poland to launch Cyberspace Defense Force Poland will launch a cyberspace defense force by 2024 made up of around 2,000 soldiers qualified in cybersecurity, Mariusz Błaszczak, the defense minister said after formally approving the plan. Błaszczak said that the force’s command unit would begin operation in 2022. Poland would have enough IT graduates by 2024 to provide the force with 2,000 personnel qualified in cyberdefense, he added.

Shopping Cart 2019: cyfrowe. pl, wittchen.com recognized as most buyer-friendly In this year’s edition of the largest website quality survey of online stores in Poland, Shopping Cart of the Year, cyfrowe. pl and wittchen.com were recognized as the two most user-friendly sites, Twisto Polska reported. For three months, user experience specialists tested the websites of the 100 largest online retailers, looking at over 200 criteria and paying attention to difficulties and improvements during shopping. Playing the role of regular customers, they checked how websites work in both desktop and mobile versions. Researchers rated stores in terms of criteria created on the basis of tests with users. Points were deducted for persuading users to buy unwanted products, misleading cross-selling, automatic adding of products or additional services

to the basket, mandatory registration, complicated forms, incomprehensible language and lack of after-purchase support. Websites were awarded points for intuitive solutions, fast page loading and transparent communication with clients.

Scanway to bring space to industry Domestic space sector company Scanway expects its ScanSAT observation microsatellite, which it is still working on, to be launched into Earth’s orbit at the turn of 2020/21. The project is being developed with financing obtained from the Fast Track program of the National Center for Research and Development. “The technological demonstrator that will be sent to space in a year is a multispectral imaging device, which in practice allows, for example, assessment of the condition of agricultural crops, assessment of the level of soil hydration or reporting on the general state of the environment on our planet,” Jędrzej Kowalewski, President of Scanway, said. He added that he has managed to convince other scientists and several of the largest companies operating in the domestic space sector to embrace the technique. The start-up has already started cooperation with PGE.

LeadsMansion creates blockchain-based platform Polish fintech company LeadsMansion Group, which provides financial leads on the Polish and US markets, is working on a new generation affiliate platform based on blockchain technology. The project, called Leadorium, is to use the mechanisms offered by decentralized databases and address the main challenges of the global affiliate market, such as settlement transparency, security or unfairly generated traffic. Leadorium will ultimately be offered in the form of a subscription tool (SaaS) available to all market participants and allow widespread use of the affiliate experience of creators.

INTERVIEW

BEGINNING OF A JOURNEY WBJ CATCHES UP WITH DARIUSZ ŻUK, COFOUNDER OF AIP BUSINESS LINK AND AIP SEED FUND, TO TALK ABOUT AIP SEED FUND’S LATEST DIVESTMENT AND THE GROWING NUMBER OF M&A DEALS IN TECH START-UPS INTERVIEW BY BEATA SOCHA

WBJ:

You’ve recently exited another profitable tech start-up, Primeon. How big was your ROI on the transaction? Dariusz Żuk: Unfortunately, this information is confidential, but it was a multiple return on our investment and a seven-digit amount appeared in AIP Seed’s bank account. What have been some of the best ROIs in AIP Seed’s history? So far, the best was last’s year exit from Callpage – a 22-fold return on capital, and previously Qpony gave us a 10-fold return. We also did a few others. [smile] How many of your investments turn out a positive return? Does it offset the ones that fail?

Patryk Chmielewski (Primeon), Dariusz Żuk (AIP Seed), Mariusz Wójcik (Primeon), Tomasz Swieboda (Inovo Venture Partners), Michał Bartosiński (Primeon)

We still have over 60 active companies in our investment portfolio and we have completed a few good deals so far. We sold some of the shares in companies headed for liquidation. Despite this, the current balance of AIP Seed is positive, and we have very good prospects for the future; we still hold shares in the fastest growing companies in Poland.

these in Poland, and in the tech market in particular? It’s a very rare type of transaction on the Polish VC market (over 70 percent are IPOs or sale to another fund/strategic investor, according to the latest Startup Poland Foundation report). MBOs are more frequent in more developed capital markets.

How do you select your start-up portfolio? What was the reason you invested in Primeon? With Primeon we invested in a strong team of founders and a very good education market perspective, business scalability and the possibility of achieving global leadership in the field of language school software. In building our portfolio we select companies with the greatest potential based on the team’s competence and willingness to cooperate, product quality, past successes and our faith in generating growth by selected companies (which we will devote the most time to).

The number of M&A transactions in IT has been growing for the past five years. So has their value. How mature would you say the market is right now? Does it attract a lot of foreign capital? Poland is still a developing market. Forecasts for the coming years for the Polish VC market are an increase in investment by 100-200 percent year-on-year, and it must translate into the value of M&A transactions. The best companies will raise financing more effectively, conquer the market and, as a consequence, take over the competition. We still see great potential to increase foreign capital activity. For the Polish start-up sector, it is still only the beginning of the journey.

The Primeon exit was an MBO (Management Buy Out). How common are

W B J OCTOBER 2019

TECH

WBJ:

MEASURING HONESTY THROUGH SOCIAL MEDIA

SOCIAL MEDIA IS A LIMITLESS SOURCE OF DATA FOR BUSINESSES AND CAN BE APPLIED TO MARKETING, CUSTOMER SERVICES AND EMPLOYEE TRAINING. WBJ TALKED TO ANDREA FRONZETTI COLLADON, WORLD EXPERT ON BRAND INTELLIGENCE, WHO IS SET TO SPEAK AT THE MASTERS & ROBOTS CONFERENCE INTERVIEW BY BEATA SOCHA

You have created a metric called Semantic Brand Score. What does it measure? Andrea Fronzetti Colladon: The Semantic Brand Score (SBS) is a novel metric designed to assess the importance of one or more brands in different contexts and whenever it is possible to analyze textual data, even big data. Brand importance is at the core of brand equity. Indeed, the SBS was partially inspired by well-known conceptualizations of brand equity and by the constructs of brand image and brand. Brand importance is measured along three dimensions: prevalence, diversity and connectivity. Prevalence measures the frequency of use of the brand name, i.e. the number of times a brand is directly mentioned. Diversity measures the diversity of the words associated with the brand. Connectivity represents the brand’s ability to bridge connections between other words or groups of words (sometimes seen as discourse topics). By “brand” one can also mean the name of a politician, or a set of words that represent a concept (for example, the concept of “innovation” or a corporate core value). How do you evaluate if an opinion is “honest”? We have machine learning tools which can do that and also profile social media users – identifying their virtual tribes, interests and ideologies. These tools are based on text mining and the study of similarities in language use by different sets of people. Accordingly, communication style and word use can help reveal if an opinion is “honest.” What other knowledge and insights can you obtain through social media analysis? Provided that you identify and use the right metrics, I think the list is endless. Social network analysis can be used dynamically to reveal people’s behavior and metrics such as the SBS can show opinions and preferences. For example, I have been using information extracted

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from social media to forecast the price of oil or tourism demand, to evaluate leadership styles or stakeholders’ interests towards company core values. Profiling social media users is also possible to find influencers, opinion leaders, rotating leaders who make virtual communities grow, and so on. You’ve also worked on Collaborative Innovation Networks (COINs). What are they? Yes, since 2016 I have also been coorganizing a conference about COINs (coinsconference.org). Collaborative innovation networks, or COINs, are cyberteams of self-motivated people with a collective vision; to innovatively collaborate by sharing ideas, information, and work enabled by technology. COINs are powered by swarm creativity, wherein people work together in a structure that enables a fluid creation and exchange of ideas. Patterns of collaborative innovation frequently follow an identical path, from creator to COIN to collaborative learning network (CLN) to collaborative interest network (CIN). Your study of how employees respond to client emails yielded some interesting results. How important is it, for example, that a client has only one point of contact with the company? What other aspects increase client satisfaction? How did you analyze the data? It is very important indeed, as well as providing fast answers and using a simple language. Employees should use communication styles aligned with those of their customers. We analyzed email big data from Genpact through the software Condor. We measured employees’ honest signals of communication and collaboration (along the three dimensions of social structure, interactivity and use of language). We organized virtual mirroring sessions to show employees their virtual behaviors and coach them on more effective communications. We helped them reflect on their style and compare it with others.

INTERVIEW

WBJ:

SURFING THE TSUNAMI

HOW QUICKLY WILL OUR SKILLS BECOME OUTDATED? IS IT STILL WORTH PURSUING A CAREER IN IT? WBJ ASKED JOWITA MICHALSKA, PRESIDENT OF THE DIGITAL UNIVERSITY FOUNDATION, ABOUT THE FUTURE OF THE JOB MARKET INTERVIEW BY BEATA SOCHA

Digital transformation means that the job market is changing more rapidly than ever. In which areas is the transformation most apparent today? Jowita Michalska: The reality is that people have no idea how fast things are changing. Yes, we have ideas from our limited point of view if you are an AI expert or data scientist or a CEO. But it’s the convergence of all these technologies that is transforming the future. Every single company, every single type of business is going to change; not in 30 or 20 years, but within the next decade. So, what do we have to do? We have to have excitement and the agility to surf on top of this tsunami instead of being crushed by it. It took five years and Apple’s market capitalization has doubled that of Google or Amazon. Facebook has won the battle with traditional blue-chip companies that build physical things. They are creating global platforms and huge ecosystems that are impossible to compete with. They only compete with each other now. Technology invasion has already taken over advertising, and retail business is now focusing on finance, healthcare, manufacturing and education. Does it mean that some people who are being replaced by machines will be excluded from the job market? Only those who say no to any change in their business life and this will happen in a longer perspective. It is true that robots and AI-based technologies are having an impact on many sectors in business such as deliveries or customer care, healthcare or medicine but they are not going to take over most of our jobs within the next 10-20 years. You can check how likely your job is to be replaced by robots by typing your occupation into the search engine on a dedicated website to see what score it gets. There are a lot of articles that say humanity is facing an industrial revolution that will pose a threat to the structure of society where all the lawyers, writers, medical experts, accountants etc.

will lose their jobs, but if you look at the recent World Economic Forum report about the future of jobs, it estimates that 75 million jobs could be replaced by technology, while 133 million new roles will emerge within the next few years. That means that we all should focus on reskilling and lifelong learning to survive. Do you think that a future where machines do all the work and people become a “leisure class” is possible? Do you think it will be a utopian future or a living nightmare? I don’t believe in this kind of future within the next 50 years. Yes, there will be many changes, so we should be prepared that our jobs will become a combination of humans, machines and algorithms collaborating, but there will still be space for humans. What we all need to do is to prepare adaptation strategies that must be put in place to facilitate the transition of the workforce to the completely new world of work. There will be huge demand on roles like data analysts and scientists, ecommerce and social media specialists; generally those roles that are based on the use of technology. But on the other hand, the world of machines will make us more human because we expect to grow the roles that leverage “human” skills like empathy, creativity, critical and analytical thinking. The IT market currently has the highest salaries across all industries. Do you think this might change in the next five to ten years? There will be a demand for a variety of new specialist jobs related to understanding and leveraging emerging technologies: AI and machine learning specialists, big data specialists, process automation experts, information security analysts, human-machine interaction designers, robotics engineers and blockchain specialists. It means that salaries will probably grow in these areas as there is now lack of experts, but some traditional IT jobs may decline.

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TECH

THEY’RE NOT SMART, THEY’RE INTELLIGENT JUST IMAGINE LIVING IN A HOUSE WHERE YOUR HOME APPLIANCES SAY “HELLO” TO YOU IN THE MORNING AND ASK YOU IF YOU FANCY A CUP OF COFFEE, WHETHER THE TEMPERATURE IS RIGHT OR IF YOU FEEL LIKE HAVING A NICE BATH, JUST TO TURN ON THE AUTO-FILL THE MOMENT YOU SAY “YES.” THIS IS NO LONGER A VISION OF THE FUTURE YOU SEE IN SCI-FI MOVIES. SMART TECHNOLOGY HAS BEEN PART OF OUR LIVES FOR A WHILE NOW, BUT THE BEST IS YET TO COME BY KLAUDIA GÓRSKA

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SMART HOMES

he times when the internet used to be associated just with computers and mobile phones are in the past, and, thanks to the Internet of Things, we can now use our smartphones and tablets to remotely control other elements of our house, such as home appliances or lighting and heating systems. It may all seem a bit unreal, and some would say that home automation is a luxury few can afford. Meanwhile, it is becoming a standard in new homes, and the popularity of this trend is skyrocketing. The numbers say it all. FIBARO, the Polish leader of the world’s smart technology market, observed a 47 percent growth in sales in 2018. The IDC report, in turn, states that by the end of 2019, some 832 million smart home devices will have been purchased globally. By 2022, the number is expected to rise to 939.7 million. A big driver of that growth is the global trend towards minimizing our carbon footprint. It goes without saying that the new technology introduced to buildings holds great potential to limit the impact of human activities on the environment through a significant reduction of energy expenditure, leading to a decrease in the emission of harmful gases. According to the EU directive 2010/31/UE on the energy performance of buildings, each EU member state is obliged to obey the requirements concerning the effective use of energy in both new and old buildings.

HOW DOES IT WORK?

The elements that make homes smart can be divided into two groups: sensors and actuators. The former read and collect

data on the building’s conditions, such us temperature, and transmit it to the central hub. The Building Management System, in turn, gathers the information delivered by sensors and connects with home appliances called actuators. This way, if the temperature is too high compared with the one we have set as optimal, the windows will close automatically and the air conditioning will be switched on. Those who are fond of minimalistic interiors will be happy to find out that a great majority of smart components, such as cameras and sensors, go completely unnoticed. This means that it’s possible to upgrade our house without interfering with its design. What’s important is that the idea of making homes smart is not based on developing separate systems. Instead, it focuses on integration. It is the “dialog” between particular devices that makes buildings a holistic ecosystem. The KNX standard for home applications, supported by over 300 producers, connects each and every device, equipped with dedicated software, into a coherent network transmitting data between all elements.

SAFE AND SOUND

One of the main benefits of smart home technology is the possibility to increase the safety of both houses and their inhabitants. According to a 2018 Smart Living report, Poles most often opt for motion and smoke sensors, as well as security cameras that send out a mobile alert every time an intruder enters their property. Advanced security systems are in fact the most commonly used type of home automation

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TECH

SMART HOMES HOLD A TREMENDOUS ADVANTAGE OVER TRADITIONAL HOUSES IN MINIMIZING ENERGY EXPENDITURE AND MAXIMIZING COMFORT AT THE SAME TIME

systems. Around 41 percent of Polish homeowners and 26 percent of those residing in apartment buildings claim to be using or considering installing these smart home components. One of the most useful features that takes houses’ safety to the next level is the intrusion detection systems. Combined with a smart lighting system, the technology allows presence simulation when the residents are away. It can be achieved thanks to motion sensors that recreate your typical day’s scenario and switch the lights on and off

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accordingly. And while you’re basking in the sun on a tropical island, security cameras footage can be accessed in HD on your smartphone any time. Alternative gate codes that send out a silent SOS message add another security layer to your home. As soon as you type in the SOS code, the gate will open as usual, but the security firm will receive an urgent alert. It’s can be a life-saving feature when you enter your property with an unwelcome stranger, as your security system will send help in no time.

If you’ve ever forgotten to unplug the iron or left the oven on rushing to an important meeting, Smart Plugs are a real game-changer. They have a significant impact on energy costs, but what’s even more important, they also help to prevent serious accidents. When installed in our house, any electrical device can be turned off remotely using a smartphone. Smart Plugs also offer a feature called scheduling. After they have been set up, devices will turn on and off according to the time that has been set.

SMART HOMES

BUDGET-FRIENDLY

Whereas smart home devices tend to be pricy, they play a crucial role in preventing malfunctions that put our savings at risk. After all, a water leakage or a fire outbreak can cause enormous damage. Szymon Ochociński, Strategic Clients Manager at FIBARO, points out that smart home technology not only protects us from spending great sums on fixing our equipment, but it can also help us save on our bills. Thermostat controls and a mobile app are an easy combination that lets you set the right temperature according to your individual preferences. This feature is immensely useful given that over 30 percent of total energy consumption in both housing and commercial buildings comes from heating systems. The temperature can be set via a smartphone, meaning you can turn off the heating when no one is around and switch it back on when you’re on your way home to avoid entering a cold house. Air conditioning and blinds system are controlled in the exact same way. Smart blinds, by limiting the amount of sunlight coming into the house, contribute to maintaining optimal temperature. This, in turn, minimizes the necessity to activate air conditioning, and therefore diminishes energy costs. A weather station is another component worth purchasing. By adjusting the amount of water used to water plants depending on the amount of rainfall, you avoid water waste and provide optimal conditions for your garden. Producers of KNX devices claim that smart homes hold a tremendous advantage over traditional houses in minimizing energy expenditure and maximizing comfort at the same

time. The authors of the Energy Efficiency with KNX report state that smart technology is vital for reducing energy use by up to 40 percent through the automatization of blinds and shutters systems and by 60 percent by equipping our house with smart lighting and ventilation systems.

brainchildren can react to voice commands too. The technology is not infallible, though, so one needs to be extra careful. Siri by iOS, Cortana by Windows or Google’s Assistant may react to your words or TV sounds, even when you least expect it.

LUXURY OR STANDARD?

The prevalence of smart home technologies has raised the bar for developers, too. Home automation systems are quickly becoming standard in newly developed apartment buildings. According to Waldemar Olbryk, member of the Echo Investments’ Management Board, the safety and comfort of potential residents have become top priorities for new projects. Today’s housing estates commonly feature electric vehicle charging stations, car-sharing systems and parcel lockers. The first smart housing estate built by Echo Investments are Warsaw’s Widoki Mokotów and Moje Miejsce, as well as Wrocław’s Ogrody Graua. In the coming years, the developer plans to deliver around 4,500 apartments featuring the Echo Smart technology. It seems the market for smart devices has nowhere to go but up. As demand grows, producers’ approaches are changing at a surprisingly rapid pace. While 2018 was all about selling as many smart accessories as possible, this year Amazon and Google are instructing consumers how to create advanced networks of smart devices. When it comes to the remote control of those systems, smartphones are predicted to be substituted to a great degree by smart watches. They are expected to play the main role in controlling almost 20 percent of all smart buildings in the coming years.

When you put all these elements together, outfitting your home with smart devices can be quite expensive, but it doesn’t have to be. The world’s best smart devices producers offer modules for separate rooms, which lets us upgrade our house gradually. There are multiple options that make it easy to choose the sensors that suit our preferences and, most importantly, our budget. A basic set by FIBARO costs around PLN 2,000 and if you top it up with an additional PLN 500, you will get a central hub, a set of sensors and a Smart Plug. But if you want to invest more, the sky is the limit. Smart fridges, for example, are equipped with the View Inside feature. Footage from cameras installed inside the appliance are transmitted directly into the smartphone so we know what we need while shopping in the supermarket; grocery lists become completely obsolete. Another innovative option on the market are light strips equipped with Zigbee technology. These adjust the light temperature in our interiors to the time of day. After a quick and easy setup, cool lights give way to the warmer ones in the afternoon, making our quiet time more pleasant. The brightness and color of light can be configured with the help of Alexa – Amazon’s virtual assistant. Other market giants’

HIGHER EXPECTATIONS

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Latest news in the office, retail, hospitality, logistics and residential sectors

Interview with Nicklas Lindberg of Echo Investment

Large office lease deals

Interview with Jeroen van der Toolen of Ghelamco

Interview with Magdalena Szulc of SEGRO

Interview with Filip Ryczowolski of Geodetic

Investment market

ULI’s Places + Spaces conference

SKANSKA sells three office buildings for €214 mln Developer Skanska has sold the Nowy Targ office building in Wrocław and two office buildings in the High5ive complex in Kraków to real estate funds managed by Credit Suisse Asset Management Global Real Estate for a total of €214 million. The buildings comprise a combined 60,300 sqm of GLA, including 22,800 sqm in Nowy Targ and 37,500 sqm in High5ive. The Wrocław property was completed in July, while the Kraków buildings are to be ready in Q4 2019 and Q1 2020. >>>

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LOKALE IMMOBILIA | NEWS

Investment market (continued) BRIEFS

€5.47 bln the total value of investment transactions closed in the commercial property markets of Central and Eastern Europe in H1 2019 Source: JLL

Echo sells Kraków office building for over €47 mln Developer Echo Investment has sold the third building in the O3 Business Campus office complex in Kraków to a joint venture established by EPP and Henderson Park for €47.2 million. The transacted property offers 18,900 sqm of space and is currently 73 percent leased out with its tenants including serviced offices operator City Space and private healthcare services provider Lux Med. O3 Business Campus totals 57,000 sqm of GLA. EPP and Henderson Park are also the owners of the other two buildings in the complex.

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ORANGE SELLS WARSAW PROPERTY FOR €81 MLN Telecom operator Orange Polska has sold a complex of buildings located on ul. Nowogrodzka and ul. Św. Barbary in downtown Warsaw to a company affiliated with Zeitgeist Asset Management for €81 million. The seller will lease back part of the space in the complex until 2026 so that it has time to move its infrastructure to a different location. Since 2007, Orange Polska has been carrying out a program of selling buildings and plots that it no longer needs. Many of the properties, which often house technical infrastructure used in the telecom industry, are attractively located in the centers of large Polish cities. Since the beginning of last year, the company has offloaded properties valued at a total of over PLN 650 million. In the future, the operator wants to sell properties valued at an estimated more than PLN 1 billion.

METRO OFFLOADS FIVE POLISH CASH & CARRY STORES Metro Properties has sold and leased back a portfolio of 11 Cash & Carry stores in Poland, Hungary and the Czech Republic. The portfolio – which includes five Polish stores, located in Warsaw, Wrocław, Kraków and Lublin – was acquired by Vienna-based invest-

ment manager FLE, a subsidiary of the French LFPI Group, with the value of the transaction exceeding €250 million. Metro and Makro Cash & Carry will continue to operate the sold stores on the basis of long-term lease contracts.

CHEAPER HOTELS TO ATTRACT MORE INVESTOR INTEREST – CBRE

Major real estate investors looking for hotel properties in Poland have to date been mainly focusing on four- and five-star products, but these are in short supply and the trend could change in the near future, according to CBRE experts. In the coming years, demand for hotels featuring three or even fewer stars is expected to increase significantly. A number of chain hotels representing the economy and budget market segments have been completed in the country in recent years. Those hotels, which are now often three or four years old and will soon start to bring profits after a stabilization period, should soon appear on investors’ radars. “Such investment products will certainly attract much investor interest, even though the value of those transactions will not exceed PLN 100 million,” commented Rafał Rosiejak, head of hotels, Poland, at CBRE.

LOKALE IMMOBILIA | NEWS

Office BRIEFS

JLL to commercialize major Gdańsk project JLL has been appointed as the exclusive leasing agent for Airport City Gdańsk, a project that will see the development of around 120,000 sqm of usable space and which will be the first major commercial scheme in Poland located next to an international airport. The investment will consist of seven buildings offering office and service space, complemented by restaurant areas and a hotel. Construction work on the first office building, which will be called Alpha and will comprise 8,500 sqm of GLA, is scheduled to launch this year and finish in Q3 2021.

KRAKÓW WITH RECORD OFFICE LEASING ACTIVITY IN H1 – CRESA

TORUS COMPLETES GDAŃSK DEVELOPMENT

Almost 135,000 sqm of office space was leased in Kraków in the first half of 2019, a volume that is nearly two times bigger than the volume recorded in the same period of last year, according to Cresa data. The biggest transaction signed in H1 2019 involved the lease by Sabre of 16,000 sqm in the Tischnera Office building. Despite tenants remaining very active, the vacancy rate in the city increased to 10 percent in the first half of this year as developers kept delivering new space. As many as 12 office projects, comprising a total of almost 90,000 sqm, were completed in the Kraków market in H1. This brought the city’s total office stock to 1.35 million sqm.

Developer Torus has obtained an occupancy permit for the first phase of its Officyna office project in Gdańsk, which comprises 5,000 sqm of leasable space. The scheme, which was designed by the APA Wojciechowski Architekci studio, will feature a LEED Gold certificate for energy efficiency and environmental performance. Torus is already working on the second phase of the Officyna development. It is scheduled to be completed at the beginning of 2021 and will deliver 7,300 sqm of GLA.

OGÓLNOPOLSKI SZCZYT GOSPODARCZY. OSG SIEDLCE 2019

Patronat Honorowy

Partner Energetyczny

Partnerzy Główni

Partnerzy

26-27 WRZEŚNIA 2019 OSG2019.PL

OCTOBER 2019 W B J

Sponsor

Współpraca

Retail

Cromwell completes Janki shopping mall extension

Stara Papiernia mall in Konstancin to be expanded

Investor and manager Cromwell Property Group has recently completed its extension and refurbishment of the Janki shopping center near Warsaw with the value of the project amounting to â&#x201A;Ź65 million. The mall has got an additional 21,000 sqm of space, which has brought its GLA to a total of 94,000 sqm. Among the additions is a new food and beverage area with 20 establishments. The biggest tenants of the Janki center are Leroy Merlin, Media Markt, Cinema City and Auchan, which are complemented by 170 medium-sized stores.

Master Management Group (MMG) will be responsible for the commercialization of a new part of the Stara Papiernia shopping center in Konstancin-Jeziorna near Warsaw. The mall will grow by 5,100 sqm of GLA with the project meant to improve the center as a mixed-use destination and to better integrate it with the local community. Today Stara Papiernia consists of two buildings offering a total of 4,500 sqm of leasable space. It opened for business in 2002 after the renovation of a historic post-industrial property.

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LOKALE IMMOBILIA | NEWS

Hospitality

Logistics

BRIEFS

BRIEFS PANATTONI COMPLETES HUGE BSH FACTORY IN ŁÓDŹ

Developer Panattoni Europe has completed and officially opened a 57,000-sqm industrial project in Łódź which was commissioned by household appliances manufacturer BSH Sprzęt Gospodarstwa Domowego. The scheme, where the client will produce dishwashers, is the biggest industrial development in Panattoni Europe’s portfolio and the largest household appliances factory in Europe. Up to 1,500 people will be employed at BSH’s Łódź plant in the future. The company will produce three million dishwashers a year at the plant.

RONSON COMPLETES WROCŁAW APARTMENT HOTEL

Developer Ronson Development has finished construction work on its Miasto Marina apartment hotel project in downtown Wrocław. The scheme, which is located near the bank of the Oder river and is the first development of this kind in the company’s portfolio, has delivered a total of 151 units in five buildings. Almost 80 percent of them have already been sold. The prices of the apartments that are still on offer, which are sized from 42 sqm to 63 sqm, start at PLN 400,000.

FEWER APARTMENT/CONDO HOTEL PROJECTS IN BIG CITIES – REPORT

The growth of the apartment hotel/condo hotel market in the biggest cities in Poland is slowing down, according to the latest report by InwestycjewKurortach.pl, an industry website. Over the last year, the market grew by 36 percent, while a year ago its annual growth amounted to 174 percent. Within the last 12 months, 17 new projects with a total of more than 2,950 units were announced or got under construction, down from 29 new schemes a year earlier. A number of planned developments have been canceled, with experts pointing to weaker sales and growing interest of international investors in Polish hotel properties. Some developers may have concluded that the development of a hotel and its sale to a fund is a better option that the sale of individual hotel units. InwestycjewKurortach.pl data shows that existing, under-construction and planned apartment hotel and condo hotel investments in Poland’s big cities currently comprise a combined 11,185 units. Warsaw, Gdańsk and Wrocław account for 43 percent, 21 percent and 17 percent of the volume respectively.

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EXETER WITH NEW PROJECT IN SZCZECIN

Real estate investment manager Exeter Property Group will in the coming days start construction work on a new logistics park project in Szczecin. Called Exeter Park Szczecin, the scheme will total 79,000 sqm and will be located close to the company’s existing 62,000-sqm Northwest Logistics Park development. Offering an expansion opportunity for the investor’s current clients was one of the reasons for launching the new investment. Exeter Property Group now owns or manages over 650,000 sqm of warehouse space across Poland.

MLP LAUNCHES WROCŁAW LOGISTICS PARK SCHEME

Developer MLP Group has launched construction work on its second logistics park project near Wrocław. Called MLP Wrocław West, the scheme will sit on a 16-hectare plot located in Kąty Wrocławskie in the south-western part of the agglomeration and will comprise a total of 70,000 sqm of space with the first areas scheduled to be completed in October next year. The company has already signed the first lease agreement for space at the development, but its details have not been revealed yet.

7R PARK TCZEW PROJECT COMPLETED

Developers 7R and Hillwood Polska have officially opened their joint 7R Park Tczew warehouse project in the Pomorskie voivodship in northern Poland. The scheme, which was built by general contractor Dekpol, comprises a total of 46,700 sqm in two buildings, with tenants including Dovista and Huber+Suhner.

Residential ASBUD launches Warsaw residential project Developer Asbud has launched construction work on its Central Garden Apartments residential project in Warsaw with builder Budimex acting as the scheme’s general contractor. The development is located in the northern part of the city’s downtown, close to the Arkadia shopping mall, and will comprise a total of more than 1,100 apartments in five buildings. The first phase of the investment, offering over 500 housing units, is scheduled to be completed in 2021.

BRIEFS GHELAMCO FINISHING WORK ON LUXURY WARSAW APARTMENTS

NAPOLLO WITH NEW RESIDENTIAL SCHEME IN WARSAW

Developer Ghelamco Poland is now finishing construction work on its Foksal 13/15 luxury residential project in downtown Warsaw. The scheme entails the renovation of two historic tenement houses dating back to the late 19th century and is the most time-consuming development in the company’s history. Obtaining all the necessary administrative permits took a decade, while the construction process itself took four years, noted Jeroen van der Toolen, Ghelamco’s managing director in CEE. The original details of the buildings’ facades and interiors have been meticulously restored. Foksal 13/15 will comprise 55 apartments sized from 47 sqm to 260 sqm, the first of which should be turned over to their buyers by the end of this year. Their prices range from PLN 25,000 to PLN 40,000 per sqm. The developer has to date sold approximately 60 percent of them.

Developer Napollo has launched sales in its planned Apartamenty Niemcewicza 19 upscale residential project in Warsaw. On offer are 56 apartments sized from 45 sqm to 123 sqm. The scheme, which will be located in the city’s Ochota district, next to the company’s already completed Apartamenty Niemcewicza 17 development, was designed by the renowned JEMS Architekci studio. Construction is scheduled to begin at the beginning of 2020 and be ready two years later.

GOLUB COMPLETES KRAKÓW DORMITORY PROJECT

Developer and investor Golub GetHouse has opened the LivinnX Kraków dormitory project, which it developed in cooperation with investor CA Ventures International. The scheme, which entailed the remodeling and modernization of a post-industrial building, was designed by the IMB Asymetria architectural studio and built by general contractor Unibep. The development offers a total of 710 beds in 290 units and numerous amenities covering a combined 2,000 sqm of space.

YIT ENTERS GDAŃSK MARKET Finnish developer YIT, which entered Poland four years ago and has to date been focused on the residential market in Warsaw, has bought land for its first project in Gdańsk. The site is sized over 1.5 hectares and is located close to the

historic center of the city, near the European Solidarity Centre. YIT will build its first Polish mixed-use scheme there. The planned development will comprise a total of almost 40,000 sqm of usable space, including office areas, which will be delivered in several phases.

MURAPOL PUTS OVER 2,000 APARTMENTS UP FOR SALE Developer Murapol has, for the second time this year, simultaneously launched sales of a total of more than 2,000 apartments in over ten residential projects located across nine Polish cities. The units are offered within both new schemes and new phases of already ongoing developments and are located in Warsaw, Kraków, Wrocław, Poznań, Łódź, Gdynia, Katowice, Gliwice and Wieliczka. Murapol’s strategy for the coming years envisions putting up for sale from 3,500 to 4,000 new apartments annually.

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LOKALE IMMOBILIA | MIXED-USE

EVERYTHING UNDER ONE UMBRELLA

Mixed-use projects are developersâ&#x20AC;&#x2122; response to the growing need to create better urban space, building destinations which are open to the public and that foster integration. Echo Investment will be increasingly focused on delivering such placemaking schemes, says Nicklas Lindberg, the CEO at the company INTERVIEW BY ADAM ZDRODOWSKI

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WBJ: “Mixed-use” seems to

have become the new “green” in the commercial real estate market. What are the main reasons for mixed-use projects’ growing popularity with developers? Nicklas Lindberg: The drive towards creating neighborhoods with a whole range of urban functions reflects people’s natural need to have a place where they can meet and socialize. Today, in the internet and social media era, we do not meet as much as we used to and many of the residential and office areas that have been developed in the last few decades are isolated islands that do not foster integration and are not 24/7 open to the public or inhabitants. For us as a developer, the mixed-use concept means building new parts of cities, communities or, in some cases, even moving the city center. That is something that has just started and will continue to grow both in Poland and in other countries around the world. Of course, “mixed-use” can mean many different things to different developers, but what we understand under the term is its full meaning; that is including all the various functions in the mix, from residential through resi for rent and offices to convenience retail. Additionally, when you look at mixed-use projects like our Warsaw Brewery scheme in Warsaw’s Wola district, they help bring back the former glory and beauty of long-neglected historic areas, transforming them into high-quality public areas and thus contributing to the revitalization of entire neighborhoods. In Warsaw Brewery, we are renovating historic buildings of a former brewery complex and the cellars in which beer used to be stored. Where did the impulse come from? We drew a lot of inspiration from other countries and we also saw that some of the newly developed

The Warsaw Brewery project will be ready next year

areas in Poland simply did not work. In Warsaw, for example, the office function was too dominant in Mokotów, while the residential function was too dominant in Wilanów. What is city officials’ attitude to mixed-use developments? Generally speaking, they like them and see them as bringing additional value to the city. Of course, you still need to go through all the administrative procedures to get a building permit, but I would say that the approach of city officials Many tenants to mixed-use projects is much only want to sign lease more positive than to some other agreements schemes as they are clearly makin mixed-use ing cities more welcoming to their inhabitants. projects Do tenants like such investments? Many tenants, which today need to think about the comfort of their employees while looking for a new office, actually only want to sign lease agreements in mixeduse projects. What we have experienced in both Warsaw Brewery and Fuzja in Łódź is that for many companies which hire a lot of young people these days, includ-

ing those who are just starting their careers and cannot yet afford or do not want to buy their own apartments, the inclusion of a resi for rent component in a mixed-use scheme is very important. Is it difficult to obtain bank financing for mixed-use projects, which tend to be big? The scale and nature of mixeduse projects are not a problem for banks. They are usually positive about such projects, but the fundamentals need to be ok. What really matters for banks is the location and the credibility of the particular developer. What about investment funds, which tend to be more cautious than tenants? Investors love such projects. On the one hand, they have seen them in many other places around the globe. On the other hand, they believe in destinations more than they believe in standalone buildings as they know that in the long term the uniqueness of such projects will be difficult to copy. This does not mean that they have to buy the entire development – very often, an investor

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LOKALE IMMOBILIA | MIXED-USE buys just one building in a given complex, but that still means they buy part of a destination, part of a place-making project. What are the main challenges you encounter while developing mixed-use schemes? Is their scale a problem when it comes to the size of the plot and the amount of money that needs to be invested? The scale itself is not a problem for us – we like big investments. I would say that the most challenging element is the logistics, the need to coordinate the construction of many buildings with many different functions at the same time. The good thing about mixeduse projects is that you can start with many different functions at the same time and thus complete them within a relatively short period of time. This is important for us as the investor in terms of the expected returns and it is also very important for our tenants and residents, who do not want to work or live on a construction site. The development of Warsaw Brewery will take less than four years – not much for a citytransforming project featuring over 60,000 sqm of offices and more than 1,000 apartments for sale and rent. How is work on the Warsaw Brewery project going? The entire development will be ready in October or November next year. We have three office buildings completed or under construction there – the first of them has already been sold, the second one has been fully leased out, while in the third one lease agreements for all the available space are now being negotiated. The apartments in the first three residential buildings have been sold, with sales in the fourth building proceeding apace. The prices of the apartments in this project have gone up a lot since we started building it.

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We saw that some of the newly developed areas in Poland simply did not work

And what about Fuzja in Łódź? There is huge interest in both apartments and offices in Fuzja, where the historic component will be even more visible than in Warsaw Brewery – the complex will feature 14 red-brick buildings! We are now working on the first two residential buildings and expect to launch construction work on the first office phases later this year or at the beginning of 2020. Apart from apartments and offices, Fuzja will also include rental units and a hotel. The entire investment should be completed in five or six years. Earlier this year, you unveiled the architectural details of a huge mixed-use project that you want to build on ul. Towarowa in Warsaw’s Wola. When will you be able to start that scheme? Warsaw City Hall is now working on a master plan for the area, which is now in the final stages. We are part of the discussions and we are glad to have a good dialogue with the city. Once the master plan is in place, we will need to go through a number of administrative procedures including application for a building permit. Towarowa 22 will bring together almost all the pos-

sible functions, from residential, through resi for rent, offices and convenience to culture and entertainment. It will also bring a green area that is open 24/7 into the city center and really create an urban destination that will be unique for Poland. Do you have any other mixeduse investments in the pipeline? We have recently acquired the Tesco site in the Kabaty area in Warsaw’s Ursynów district. We will replace the existing store with apartments, convenience retail, restaurants and greenery, and the planned project is at an early design stage. In Kraków, we have a five-hectare site that is located just next to the main railway station, near ul. Wita Stwosza. The project will combine residential, office, retail and hotel functions. So, mixed-use will remain important in your development strategy in the coming years… Mixed-use projects currently account for 42% of our business and we want the figure to keep growing in the coming years. We think we are one of the few true mixed-use developers offering all the competences under one umbrella.

The Fuzja scheme in Łódź will include 14 red-brick buildings

Echo Investment is planning a huge mixed-use project on ul. Towarowa in Warsaw's Wola

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PARTNER HIGHLIGHTS

REVITALIZATION OF POSTINDUSTRIAL FACILITIES

Polish shopping centers are already fourth generation buildings. From large hypermarkets to small shopping arcade, they have become multifunctional commercial, socio-cultural concepts combined with urban fabric. They also have significant historical value. Apsys Polska is an example of a service developer that is able to successfully revitalize post-industrial facilities

ttractive locations, especially in large cities, are slowly becoming a scarce commodity. This is the effect of the continuing investment boom. According to the report “Property Lending Barometer 2018” prepared by KPMG – the value of investment in real estate in the first half of 2018 in Poland exceeded €3 billion, which makes up as much as 58 percent of the total value of investment in Central and Eastern Europe.

Investment potential

With such huge market saturation, investors are increasingly leaning towards post-industrial facilities. And those, after the restructuring of the industry since the second half of the 20th century, have increased significantly. Postfactory, post-mining, post-production or railroad complexes – neglected for years and largely degraded – still have great potential. In addition to undeniable advantages, such as an attractive location, a huge area for development, a functional urban layout and aesthetic values, we should also consider the demanding historic architecture with restrictions from the restorer and complicated formal and construction procedures.

Satisfying consumer expectations

The acquisition of such areas has been in line with current trends in the development of large-scale commercial facilities heading for the creation of completely new formats. According to the PRCH and EY Report “Socio-economic importance of the development of modern commercial real estate in Poland” (October 2018), current consumers, in particular young generations (Millennials, Generation Z), perceive shopping centers as meeting places, modern services and entertainment spaces. The data collected by Colliers International together with IQS and published in the report “Is change coming? A new dimension of entertainment and recreation in shopping centers,” suggests that Manufaktura in Łódź ranks first in terms of the variety of entertainment and recreation on offer among the 18 centers surveyed in Poland (2018).“The revitalization of the industrial urban fabric has become a base for us to implement mixed-use projects that fit into the urban lifestyle and that meet the needs of consumers. We are a pioneer among service developers in generating innovative solutions which mean that shopping centers built and managed by Apsys meet the aspirations of modern customers and tenants,” said Maciej Wróblewski, Vice-president of Apsys Polska.

The example of Manufaktura in Łódź shows how the restoration of historic areas has gained a revitalizing momentum, unprecedented in Poland. As a result, the 19th-century buildings of the former textile factory have become one of the largest and most innovative shopping and entertainment complexes in Central and Eastern Europe, appreciated internationally by the commercial real estate industry.

Architectural challenges

On the Polish investment market, it was common to tear down damaged industrial buildings and create new ones. In the case of Manufaktura, we were dealing with pioneering revitalization in the full sense of the word – rebuilding buildings and giving them a new function. The entire surface of the devastated complex of 28 hectares remained under the supervision of a conservator. The level of detail went as far as the choice of joint colors, as the shade of the bricks was important. The building’s commercial marking also required the conservator’s approval. The factory buildings did not have technical documentation or it was incomplete. The design process had to be preceded by opencast excavation, during which foundations were uncovered from non-existent floors that were sometimes not included in the plans. The setup of modern installations, such as air conditioning, ventilation, heating etc. in historic buildings was an architectural challenge. Moreover, a river runs under Manufaktura! Construction teams regulated its course, installed collectors and built a new channel. A special hydrophobic system for drying the walls and the whole area was also used, which was needed in areas with high groundwater levels. The soil structure under the existing foundations was also strengthened. The basements of buildings were developed, often re-created to adapt to new functions.

Respect for the past

Investing in brownfield sites is guided by one of the conventions of Apsys Polska’s activity – preserving the identity of a given place. The developer builds its image and brand based on the historic pedigree of the object. Recreating the original elements of architecture is the aesthetic value of the mall and it also carries a large emotional weight for the local community. “We are aware that trade has for centuries played a central role and has activated the lives of residents. Therefore, we restore cities’ forgotten spaces. We respect the specificity of the place, its natural character, historical and cultural tradition. We want the concepts we create to be consistent with the surroundings and to be environmentally friendly,” added Benoit Charles, President of Apsys Polska. Manufaktura in Łódź is also an example of how multifaceted respect for cultural heritage can evolve considerably. “Man from Manufaktura” – an outdoor opera staged at the mall, telling the story of the factory and its employees – is the result of cooperation between Apsys Polska and the Grand Theater in Łódź, and it has been hailed as one of the most important cultural events of the season.

Apsys is one of the leading operators of the shopping center industry in Poland and France. The company was founded in 1996 and acts as an investor, developer, rental agent, project manager and property manager. Apsys creates innovative, tailor-made projects, taking into account the specificity of a given place, social context and the natural environment. The company’s largest investments on the Polish market include Manufaktura in Łódź and Posnania in Poznań. Apsys Polska currently manages approx. 1 million sqm of GLA in 24 shopping centers located in the 17 largest cities in Poland. The company and its projects have been recognized many times, including by PRCH, ICSC, EuropaProperty and CIJ in the fields of development, management and marketing.

LOKALE IMMOBILIA | OFFICE

OCTOBER 2019 W B J

LEASING BIG

Several very large lease agreements have been signed in Warsaw’s office property market this year. The number of companies able to take up tens of thousands of sqm of space remains limited, but could we see more big deals in the coming months? BY ADAM ZDRODOWSKI

he Polish office real estate sector has been putting up a very strong performance – evidenced by high supply and demand volumes in both Warsaw and the biggest regional cities – for several years now, but the boom seems to have gained a new dimension in recent months. This has been a year of spectacular lease transactions, enabled by companies’ growing space requirements and some tenants’ decisions to consolidate offices and take up larger areas in the new office skyscrapers currently being built in the Polish capital.

RECORD DEAL

Insurer AXA in July renewed its lease agreement for nearly 13,000 sqm at the Warsaw Trade Tower building

Banking group mBank in July finalized its lease agreement for 45,600 sqm of office space at the Mennica Legacy Tower project, which investors Golub GetHouse and Mennica Polska are now building in the Wola district of Warsaw. This is the biggest lease deal to have ever been signed in Poland’s office property market. As a result of the transaction, which was brokered by Colliers International and Cresa, the scheme – offering over 65,600 sqm of office area – is currently fully commercialized.

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LOKALE IMMOBILIA | OFFICE building and will stay there until 2030. Last but not least, lender Bank Gospodarstwa Krajowego (BGK) in July leased 12,400 sqm of office area at the 144,000-sqm Varso Place mixed-use development, which HB Reavis is now constructing in the downtown of the Polish capital. According to JLL data, approximately 406,000 sqm of office space was leased in Warsaw in the first half of this year. The lease volume recorded in the Polish capital in Q2 2019 – standing at over 265,000 sqm – is the highest quarterly volume in the market’s history. The most office area was taken up in central locations and in the city’s Mokotów district. The vacancy rate decreased to 8.5 percent at the end of H1 (the lowest level since 2012) and is expected to see further compression in the near future.

Largest office lease transactions in Poland, January-July 2019

CITY

BUILDING

TENANT

APPROXIMATE SIZE (sqm)

Warsaw

Mennica Legacy Tower

mBank

46,000

Warsaw

The Warsaw Hub

Getin Noble Bank

18,500

Warsaw

The Warsaw Unit

Warta

17,500

Kraków

Tischnera Office

Sabre

16,000

Warsaw

Marynarska 12

Confidential

13,200

Warsaw

Varso

BGK

12,400

Kraków

Vinci Office Building

Akamai

11,200

Warsaw

Neopark

Play

11,000

Gdańsk

Olivia Star

Nordea

10,800

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CONSOLIDATION TREND

While last year saw an increased leasing activity of flexible office space operators, this year has so far been marked by the activity of the biggest tenants, with the demand having been mainly driven by companies from the BFSI (banking, financial services and insurance) sector. Experts point out that the availability of large office areas within one building in a situation when a number of office towers are now under construction in Warsaw has led those companies to rethink their lease strategies. Indeed, some of the biggest transactions signed in the city in the last few months are the result of consolidation processes. Real estate advisors argue that if properly advised, large tenants have, generally speaking, this year been able to secure very favorable leasing terms. “This is a very good moment – never before have we seen such a large volume of planned office space in very attractive locations,” claimed Artur Sutor, head of the office department at Cresa Poland. Those looking for areas sized more than 10,000 sqm need to start negotiations early on and sign pre-let agreements. In Sutor’s opinion, next year tenants’ negotiating positions will be much weaker than they are now, and very large office areas will be difficult to find. The pool of companies with very big office space requirements, totaling 10,00020,000 sqm or even 30,000 sqm and more, is relatively small and mostly includes banks, insurers and telecoms, as well as – in regional cities – major BPO/SSC sector companies.

GROWING POOL

Although very few in number, these occupiers are instrumental in shaping the “configuration of power” in the office property market. “Securing such a tenant gives an office building owner the sense of financial security for many years,” Sutor noted. Accord-

Source: Colliers International.

Also in the city’s Wola, insurance company Warta in June took up almost 20,000 sqm at Ghelamco Poland’s ongoing Warsaw Unit development. The over 200-meter investment will comprise approximately 57,000 sqm of office space and will be ready in a year and a half. In May, the same developer signed up another major financial institution – Getin Noble Bank – for its under-construction The Warsaw Hub project. The tenant will occupy almost 18,500 sqm at the 113,000-sqm mixed-use scheme and will move there in the second half of 2020. Meanwhile, an existing office skyscraper in Wola, the Warsaw Trade Tower, has kept another big insurer, AXA. The company in July renewed its lease agreement for nearly 13,000 sqm of office space at the 45,000-sqm

ing to Mateusz Polkowski, head of research and consulting at JLL, the group of very big tenants, generating demand totaling 15,000-20,000 sqm or more, is growing. Admittedly, those tenants do not always decide to lease the space they need in a single building. Nevertheless, in Polkowski’s opinion we will yet see a number of major office lease transactions in both Warsaw and regional cities this year. He pointed out that many of the biggest tenants are expanding within their current locations or into new locations in Poland. This is well visible in the BPO/SSC sector, which is behind many of the largest lease deals signed outside the Polish capital. JLL data shows that in H1 2019 the sector accounted for almost 190,000 sqm of leased office space in Poland, a fourth of the period’s total volume. Much as transactions signed in such markets as Kraków, Wrocław and the Tri-City – where business services companies account for a bigger share of the aggregate lease volume than in Warsaw – are smaller than the biggest deals in the Polish capital, they can still be impressive. According to Colliers International data, three of the ten biggest office lease agreements signed in Poland in the JanuaryJuly period were closed outside Warsaw (see table). The largest of them saw Sabre taking up almost 16,000 sqm at Tischnera Office in Kraków. Polkowski revealed that several spectacular lease agreements involving BPO/SSC companies are now being negotiated, with the major regional cities remaining very attractive locations for such tenants. Also, Poland could yet attract new global players with big office space needs. Such giants as Goldman Sachs, Standard Chartered, JP Morgan and Citibank have entered the country in recent years. Poland’s very good macroeconomic situation encourages decisions to enter the Polish market, said Paweł Skałba, head of the office agency at Colliers International.

We will yet see a number of major office lease transactions in both Warsaw and regional cities this year

mBank's take-up of 45,600 sqm at the Mennica Legacy Tower project is the biggest lease deal to have ever been signed in Poland’s office property market

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LOKALE IMMOBILIA | OFFICE

NEW CITY CENTER IN THE MAKING

Warsaw’s Rondo Daszyńskiego area has become an established office location that now attracts the most prestigious tenants and major international real estate investors. Ghelamco, one of the most active developers there, is planning new office towers in the neighborhood, says Jeroen van der Toolen, the company’s managing director in CEE INTERVIEW BY ADAM ZDRODOWSKI

WBJ: Ghelamco and Madison International Realty earlier this year sold the Warsaw Spire office tower located in the Rondo Daszyńskiego area in the Polish capital’s Wola district for €386 million. What does the huge deal say about the location’s potential? Jeroen van der Toolen: The transaction proves the fact that the city center of Warsaw has been redefined and now also includes the Rondo Daszyńskiego area. In recent years, we have seen the new office projects in this area attract tenants which previously occupied space in the most prestigious office buildings located in what was historically regarded as the Central Business District of the Polish capital. Now, the biggest investment funds – which tend to be more conservative and cautious than tenants – have also recognized this area’s potential. Crucially, unlike many other parts of downtown Warsaw, this neighborhood has every chance of becoming a very well-planned area with a proper mix of urban functions. When the ongoing schemes are completed, you will have office, retail, hotel and residential space here. Already the area boasts one of the most popular cultural facilities in the city, the Warsaw Rising Museum. The increasing attractiveness of this part of Wola is well reflected by the growing demand for new apartments, whose prices have gone up significantly of late. So, you’re saying that investors’ perception of the area has changed… Definitely. There is no difference in yields between the Rondo Daszyńskiego area and, let’s say, the Plac Piłsudskiego or Plac Trzech Krzyży areas in the very center. I would even say that this area, which

is already well known to investors, will in the future have the best yields. Does the sale change anything for you as one of the tenants of the Warsaw Spire tower? No, we are not planning to move out, at least for now. Our lease agreement expires in approximately three years and we will stay here during this time. We love the building; its development is one of the most important milestones in our history. Besides, sitting here we have a nice view of the sites that we are developing now, as well as those which we will start developing here soon. We could move to one of our new schemes, but they are attracting a lot of tenant interest anyway so there is no commercial need for this. Several very large lease deals have been signed in the Rondo Daszyńskiego area in recent months, with two of the biggest agreements having been secured by Ghelamco. Can we expect to see more major transactions in the area later this year? Yes, we will see more large lease transactions here, even of a scale comparable to the mBank deal. The reasons for this include the continued growth of companies already present in Poland and, in some cases, their consolidation of office space. What is equally important is the entries of new companies to the country – in The Warsaw HUB, for example, almost 50% of the office space will be occupied by foreign companies which are not yet present in the Polish market or those moving new divisions here. Also, we can expect big lease deals signed by companies that currently occupy large areas in C-class buildings. Some of these companies will move into new office projects in the near future and their cur-

W B J OCTOBER 2019

LOKALE IMMOBILIA | OFFICE

There is no difference in yields between the Rondo Daszyńskiego area and, let’s say, the Plac Piłsudskiego or Plac Trzech Krzyży areas in the very center

rent offices will be demolished to make room for new investments. Developers today are very lucky – when we and our major competitors announced all the new office skyscraper projects here a few years ago, some people were skeptical and doubted that the boom would continue for long. But, in fact, the office market in Warsaw is still very hot. How is the commercialization of The Warsaw HUB and The Warsaw Unit going? In a few weeks, the leasing level at The Warsaw HUB will reach approximately 80%, which is a satisfactory level considering the fact that the entire development is scheduled to be completed in mid-2020. At The Warsaw Unit, we have leased almost 20,000 sqm to date. What are your further development plans in this part of Warsaw? In the Rondo Daszyńskiego area, we have sites for four more office towers. We cannot reveal the details of those projects yet – our policy is to announce schemes once we have secured building permits. We expect to be able to announce the first of those investments next year. How long can the development boom here last in terms of the availability of sites? Indeed, most of the best sites have already been developed or secured by developers for future projects. There remain quite a few plots of land in the Rondo Daszyńskiego area which could house new office schemes, but many of them are not in private hands – they are owned by the state, by such entities as Polish State Railways. Additionally, some of the sites that are available for purchase are in the

OCTOBER 2019 W B J

hands of owners with very high price expectations. But we are constantly looking for land acquisition opportunities here. Ghelamco used to be very active in the Służewiec area in Warsaw’s Mokotów district, which is one of the biggest office hubs in Poland but has been criticized for its office monoculture for a long time now. Are you planning anything new there? We continue to believe in Służewiec – although there are still major transport problems there which the municipal authorities are yet to solve through investment in several crucial road infrastructure projects, the situation has actually improved a lot of late. The area has attracted many residential developers, so its nature is changing and it already has a very different mix of functions than in the past. Office schemes in Służewiec have always leased well and the area has actually lost relatively few tenants in recent years. We have one office site with a building permit there on which a project with 32,000 sqm of space can be built. Admittedly, we will probably wait a bit for the market there to pick up before we launch it. In the past, we tried to buy more land in Służewiec, but we did not succeed as we were not able to compete with residential developers. They can afford to pay a higher price for land than office developers because the construction of a residential project is cheaper than the construction of an office scheme. What about regional cities? Warsaw remains the most important market for us, but we will continue to be active in some of the biggest regional markets as well. Next year, we want to start building new office projects in Łódź, Kraków and Katowice.

LOKALE IMMOBILIA | LOGISTICS

Clockwise from top left: Magdalena Szulc, SEGRO Logistics Park Wrocław and SEGRO Logistics Park Stryków

URBAN OPPORTUNITIES

Big-city population growth and the continued development of e-commerce with its same-day delivery requirements and last-mile logistics needs will keep generating demand for urban warehouse space, says Magdalena Szulc, Central Europe Business Unit Director at SEGRO INTERVIEW BY ADAM ZDRODOWSKI

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WBJ:

Almost 1.1 million sqm of new warehouse space was completed across Poland in the first half of this year, which is the best H1 result in the market’s history. Will developers remain equally active in the coming months? Magdalena Szulc: In the coming months it will still be possible to observe increased development activity, which is due to the unflagging demand for warehouse space in our country. Dynamically growing sectors, such as retail

and logistics, have a large share in this, and companies in those sectors will continue to look for warehouse facilities in attractive locations to meet the needs of their business operations. The share of speculative projects in the total volume of space under construction has reached approximately 50%. Does the current market situation justify speculative building? Developers’ decisions to invest in speculative facilities can be encouraged by both good market conditions and high demand. A significant growth of this type of construction has caused a slight increase in the vacancy rate, but with the growing demand this space will soon be absorbed by the market. Although the core strategy of our company is to build after securing a pre-let agreement, we have recently also decided to construct half-speculative buildings. The H1 2019 demand level stood at over 1.8 million sqm and was 14% lower than the level recorded in the same period of last year. Is it a sign of a possible slowdown in the market? What has recently become a challenge for the warehouse real estate sector is certainly the rising costs of materials, the shortage of employees and the slight economic slowdown noticeable in western markets. The lower demand is the result of a correction in comparison to the record demand seen in previous years, which doesn’t change the fact that our market is still very attractive for investors. Who is now driving the demand for new warehouse space in Poland? As in previous years, logistics, production and retail (including e-commerce) are the main industries that are driving the development of the warehouse space market. The growth of the e-commerce sector, which generates demand for both urban ware-

houses dedicated to last-mile delivery services and large-scale facilities servicing not only deliveries but also returns, is one of the key development opportunities for the warehouse market in Poland. Will the trend towards building urban warehouses continue in the near future? As shown by the SEGRO annual report, across Europe as much as 67% of our assets (by value) are urban warehouses. The increasing population of large agglomerations, the growing importance of e-commerce and the trend towards same-day deliveries are some of the factors that support the decisions to build or acquire this type of facility in the near future. Building so-called small business units within cities allows for increasing the efficiency of The growth the supply chain, which plays an of the eimportant role in providing supcommerce port for so-called last-mile logissector is one tics. What is also important is the of the key fact that many companies open development opportunities their offices in urban warehouses, for the ware- thanks to which it is possible to house market concentrate all the important elements of a company’s operational in Poland activity in one place. There has been an upward pressure on rents for some time now, but because of the ample supply of new space we have not seen any major rent increases yet. Could this change soon? Rents are largely dictated by the increase in the prices of building land in prime locations and the rising costs of general contracting. These factors will, sooner or later, impact rents in Poland. What does the availability of sites for new warehouse investments look like? In Poland, we do not yet have to deal with the situation that is present in Western countries where the big challenge is to acquire land available for construction. For this reason, multilevel warehouses are being built in the biggest cities in countries

such as the UK or France, which allows for the maximum use of each sqm of space. An example of this type of investment is the two-level Paris Air2 Logistique SEGRO platform located in Port de Gennevilliers in France. In Poland, developers will still find interesting plots of land on which modern warehouse parks can be built. A relatively large pool of sites is undoubtedly an advantage of our country. What are SEGRO’s development plans for the coming months? In the coming months, as in the past, we are planning a parallel implementation of new development projects and growth through careful acquisitions. We try to have plots of land in all key locations, which means both our current and potential clients can strengthen their business in the vicinity of the most important Polish agglomerations and major transportation hubs. Are you only interested in the main logistics markets in Poland or are you also looking at some of the emerging locations, for example in the eastern part of the country? At the moment, we are focusing on implementing projects in locations that are reliable and proven in terms of logistics. Acting as a long-term investor, we believe that warehouse and production investments located in the vicinity of large agglomerations will always be a desirable product. This is where we secure land and make investments. In the near future, we also plan to strengthen our potential in the area of urban warehousing. SEGRO has bought some existing warehouse space in Poland over the last year. Are you planning any further acquisitions in the Polish market? We are planning to consolidate our position in the regions where we are currently present by both constructing and acquiring big boxes and urban warehouses.

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LOKALE IMMOBILIA | BIM

WHAT GOOD IS OUTDATED BIM?

While undoubtedly valuable, Building Information Modelling (BIM), seems to have hit a wall in its adoption in Poland’s real estate industry. On the one hand, 3D modelling technology seems difficult to ignore if you think long term. It’s supposed to provide all the details and improve transparency at every stage of a building’s lifecycle. But it is not nearly as widespread as it should be. WBJ talked to Filip Ryczywolski, Geodetic Board Member, about the main issues limiting the expansion of BIM technology in Poland INTERVIEW BY BEATA SOCHA 72

OCTOBER 2019 W B J

WBJ:

BIM is touted as a new dimension of real estate investment. What does it mean? Filip Ryczywolski: In “Geodetic” Vol. 2 (2018) Aleksander Szerner, the president of the BIM for Polish Construction Association wrote: “Naturally, BIM is information, which shows the entire construction process in a transparent way; from the first draft design, subsequent stages of construction and project management, through to its demolition. Using it to prepare timetables and combine with technologies like construction machines, drones, VR/AR and

Internet of Things, we can significantly facilitate the process and minimize potential risks.” I agree entirely that this is the real idea behind BIM, which is becoming important in building design. However, just like Aleksander, I think that Polish investments still have a long way to go before they reach the proper level of BIM use. Is BIM only used in the design and construction stage or is it used for building management too? At conferences and industry meetings you can hear that everyone is implementing BIM these days. When you look closer, it turns out that BIM is only used for design and only for certain buildings. A BIM model can be invaluable when doing cost projections and calculating materials; it allows for more efficient project coordination, minimizing potential conflicts and stoppages. In our line of work, we ofIf you use the technology well, it ten ask: who can save up to 30 percent of the updates BIM entire construction and maintewhen tenants nance costs. change and While there are buildings man- floor plans are aged within BIM, most architects rearranged and BIM consultancies often fail to take that into account. In our line of work, we often ask: who updates BIM when tenants change and floor plans are rearranged? Other than laughter, we often hear that it is implemented at the design stage and there is no need to update it afterwards. I disagree. Why would building owners implement BIM, which is expensive, if it isn’t updated later on? How expensive is it? Implementation (software, workstations, training) can cost tens of thousands of PLN per employee, depending on the building size and the amount of data included in the model. Small and medium-sized companies providing services for investors may not be able to afford it. Meanwhile, BIM managers working for building owners and outside contractors often don’t know all the technical aspects of

the building. It’s a stalemate situation. Who should manage a BIM model then: employees inside the company or should it be outsourced? Some developers and architectural firms have started creating BIM manager positions. We’ve heard from BIM advocates that a newly constructed building was handed over to the owner within two hours and that one of the greatest advantages of BIM is how quickly information can be uploaded into it. But there is a question as to where the data comes from and whether it is verified. Can an outside company that manages several real estate projects process so much information about each building under its supervision? These are buildings that are evolving practically every day during construction. There should be a team of specialists and utilities experts working on the building, both during construction and afterwards. Ideally, how detailed can BIM models get? We’ve seen BIM models as detailed as numbering each desk, as well as computers and the employee assigned to them. We’ve seen a model which sends out alerts when certain space is used inefficiently, by measuring body temperature. Is this common in Poland? Not yet, these are examples from the US. It’s also important to note that when data sets are different, you can’t really compare two buildings of the same type.

BIM is supposed to improve transparency in real estate transactions. Does it really? When negotiating a contract or the building’s design and during other processes, parties may want to share some details and hide others. A good example is the documentation for the space measurements used for price calculations when a building is being sold. In our 12 years of experience and nearly 6 million sqm of space measured, never have we seen the seller willingly hand over documentation to the buyer. And when the latter wants to measure the building on their own, the seller refuses, claiming it would interfere with tenants’ work. The buyer simply has to trust the space measurements, indicators and parameters the seller has provided. Oftentimes, once the building is purchased and proper measurements are made, the reality is different from what’s on paper. Is there a solution then? Will BIM become standard in Poland? While the situation in public tenders for bridges and roads is clear as the construction doesn’t change after being built, real estate is a “living organism” that requires ongoing updates of data, which is often confidential. Does the real estate market need it then? International BIM experts say administrative bodies approving building permits won’t be ready in the next few years for widespread BIM implementation. Still, we hope BIM modelling succeeds in Poland, because it is the right way to go.

Filip Ryczywolski Geodetic Board Member, commercial and residential real estate advisor in due diligence, space measurements, legal and standard geodetic surveying and architectural inventories

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LOKALE IMMOBILIA | URBAN PLANNING

proved highly efficient in Vienna. For many years now, the Austrian capital has been ranked as the most livable or one of the most livable cities in the world. Maria Vassilakou, until recently the deputy mayor of Vienna, pointed to a number of policies which have contributed to the city’s huge success. She noted that even though Vienna continues to attract thousands of new inhabitants every year, the city manages to accommodate the population growth. This is enabled by a number of well thought-out policies, including ensuring a high availability of affordable subsidized housing – such units account for more than 60 percent of the total number of dwellings and two-thirds of apartments in every new residential project. The municipal authorities earmark approximately €600 million each year for this purpose. The result? Vienna has virtually Ways of making cities more livable no districts where only rich or were discussed during ULI Poland’s poor people live, and people with latest event lower and higher incomes are spread more evenly across the BY ADAM ZDRODOWSKI city, Vassilakou said. The authorities of the Austrian capital also put a lot of emphasis on ensuring high density and he best practices in on the development of mixedrecreating urban spaces use projects and proper transport and creating sustaininfrastructure. City officials make able and people-friendly efforts to keep Vienna green – cities were the subject the goal is to keep green areas of the seventh Places + Spaces no more than 300 meters apart. conference, which the Polish The issue of affordability was also branch of the Urban Land Instiaddressed by Alexandra Notay, tute (ULI) organized in Warsaw Build to Rent Fund Director at PfP last month. The more than 100 Capital, which is part of Places for participants in the event had the People, one of the largest compaunique opportunity to learn about nies operating in the residential a whole range of interesting sector in the UK. architectural and urban planning She talked about proper investideas that have already proved ment planning and including both to work or will soon be tested in regular and rental apartments (as several cities across Europe and well as other functions such as outside it. retail) in regeneration schemes Much of the discussion focused so that the negative effects of on the solutions which have gentrification and the creation of

LESSONS FROM VIENNA

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enclosed urban enclaves can be avoided. Lars Funding, the chairman of Copenhagen’s Urban Rigger, presented an original residential concept which could help enliven the waterfronts of many coastal cities. His company is working on the creation of floating platforms that house transport containers with apartments. Viggo Haremst, partner and design director at the renowned studio Henning Larsen Architects A/S, stressed the importance of taking into account the local conditions and the needs of the local community during the implementation of the “smart city” concept. Architects should design for communities not for organizations, he argued. He also claimed that cooperation is crucial as no single party involved in investment processes has enough knowledge to face the challenges of implementing sustainable projects. While Warsaw still has a long way to go to emulate Vienna’s success, it already boasts examples of impressive revitalization schemes. Marc Lebbe, the managing director of Liebrecht & wooD, pointed to the company’s Centrum Praskie Koneser development. The investment made a previously neglected postindustrial site open to the public again. Nicklas Lindberg, the CEO of Echo Investment, said that the developer’s Warsaw Brewery project will be a place-making scheme and a destination in itself.

Warsaw Business Journal was one of the media patrons of the seventh edition of ULI Poland’s Places + Spaces event. The conference was moderated by our editor-inchief, Morten Lindholm.

PA RT N E R H I G H L I G H T

Tischnera Office will comprise almost 34,000 sqm of leasable space

A GREEN OASIS AT TISCHNERA OFFICE

Kraków’s Tischnera Office was awarded Investment of the Year: Office Space Market at this year’s Prime Property Prize

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n elegant glass building with an excellent finish, energy-saving solutions, huge green terraces and a convenient location – this is Tischnera Office, one of the largest and most modern classA office buildings in Kraków. No wonder Cavatina Holding S.A. was awarded Investment of the Year in the office space market category for the building. The aesthetic value of the building was recognized at the 2019 Prime Property Prize competition. On September 11, during a ceremonial gala in Warsaw, Tischnera Office was honored with this prestigious title. The Prime Property Prize competition selects companies and projects that, over the past year,

have had the largest impact on the commercial real estate market as well as leading personalities whose work has played a key role in the development of the whole industry.

KRAKÓW – THE ONLY LEADER

Tischnera Office will enrich the Kraków real estate market by almost 34,000 sqm of state-ofthe-art office space. This is obviously not Cavatina’s final word in the city. The next construction phase of Equal Business Park has just been initiated on ul. Wielicka and other investments are currently being developed. Thanks to Cavatina Holding S.A., Kraków’s market will grow by nearly 78,000 sqm of office space in the next three years.

ing conditions and the most modern environment conducive to their development,” said Sebastian Drzewiecki, Managing Director of Sabre Polska. He admitted that it took quite a long time to find the right place. “It should not only accommodate our team, giving us the opportunity to continue development and investment, but it also has to be well connected with the rest of the city,” he added. “The size of the available office and green area at Tischnera Office is unprecedented among Kraków office buildings. The huge amount of attention paid to the quality and quantity of green and relaxation areas makes this building one of the most wonderful office buildings in the city. Let us not forget about the beautiful terraces, which are rare in currently implemented projects,” stressed CBRE’s Tyszkiewicz. Cascade green terraces will be one of the defining features of the building

It should also be mentioned that by the end of the year, apart from the space in Tischnera Office, over 60,000 sqm will be delivered in the capital of the Małopolskie voivodship. Kraków will thus be able to boast almost 1.35 million sqm of office space. It means that among regional office markets Kraków is the undisputed leader. “The strong interest in Kraków as an office location is not weakening, which is confirmed by the growing number of new contracts and renegotiations as well as frequent expansions. Particular interest in office buildings is seen among technological centers and BPO/ SSC companies,” said Kamil Tyszkiewicz, Office Space Department Director, Head of Regional Operations at CBRE. “One of the largest lease agreements this year was

A GREEN OASIS

signed by Sabre Polska and Cavatina Holding S.A.,” he emphasized. Sabre Polska, the Polish branch of Sabre Corporation, will rent 16,000 sqm of the 34,000 sqm offered and will occupy six of the ten floors in the Tischnera Office building. Sabre Polska will be the largest tenant at Tischnera Office. The company is a leading American technology solutions provider in the tourism industry. Sabre Corporation offers reservation systems, including mobile solutions, which are used by hundreds of airlines and thousands of hotels virtually all over the world. The first office of Sabre Polska in Kraków was opened in 2000 with just ten people working there. Nowadays the Polish branch has over 1,500 employees. “We would like to provide our team of experts with the best work-

This is obviously not Cavatina’s final word in the city

The hosts of the building also emphasize that tenants renting space on the third and higher floors will have access to the cascade green terraces, which cover 1,600 sqm. There will also be an inner courtyard of over 1,000 sqm featuring special green areas and street architecture. In the summer a pond and fountains will add to the tranquility of the space. What is more, the the patio can also be used as an event area. A great asset of Tischnera Office is the parking lot with 671 parking spaces for cars and around 100 spaces for bicycles (with dedicated changing rooms and showers for cyclists). There will also be a canteen, a press lounge and a diagnostic center with CT scan and magnetic resonance. In Kraków one cannot dream of a better location. The building is located in the vicinity of the Łagiewniki bus and tram terminal. Additionally, a cycle path runs just behind the building.

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EVENTS

Warsaw Business Journal relives the most important recent business and industry events

WARSAW BUSINESS RUN 2019

The fastest relay team needed only 1 hour and 14 minutes to cover the distance of 5x4 km at the sixth edition of charity relay Warsaw Business Run 2019. Proceeds from the run, which took place on Sunday in the Służewiec business district, will help nine beneficiaries of the Poland Business Run Foundation from the Mazowieckie voivodship. The event was part of the nationwide Poland Business Run joined this year by a record-breaking number of over 27,000 runners. Since its beginnings the relay has always been a charity and helps people with reduced mobility get back on their feet. “We are delighted that, despite the unfavorable weather, we could count on runners from Warsaw. Thanks to them we have raised over PLN 330,000 to help amputees and people with impaired mobility. From the registration fees we received PLN 309,240, and PLN 20,758 from voluntary payments as part of the ‘I Help More’ initiative,” said Agnieszka Pleti, President of the Poland Business Run Foundation, the main organizer of the event. The run started at 10:30 and was completed by 3,762 participants. Attendance at the starting line was 94.25 percent. Each runner from a team of five people had to cover the same 4 km lap. Start and finish lines were located in Domaniewska Street, while the run village was in Empark Business Park Warsaw, which co-organized the event.

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Some of the beneficiaries also came to the run, among others were Inez Wrzesińska, who has a spinal cord injury and suffers from limb paresis due to an accident; Joanna Szyłak, who lost her leg due to cancer; and Adam Fierasiewicz, whose legs were amputated because of a traffic accident. Even though this was a charity event, the route provided runners with a true challenge and participants were full of competitive spirit. Among those taking part were both experienced runners and those who debuted at Warsaw Business Run as a sport and charity event. First place went to Live Well at Citi 1 – CitiFX Pulse Masters. The Polish Paralympic Committee team was second, followed by Santander 25 – Kompletni Amatorzy. The run was organized by the Poland Business Run Foundation locally supported by Goldman Sachs, DPS Software, Immofinanz and Galeria Mokotów. Among the sponsors of the event were Standard Chartered, Citi Handlowy and Galeria Mokotów. Across Poland, some 27,253 participants joined the run. Thanks to them, to help amputees and people with motor disabilities, almost PLN 2.3 million was raised, which will support over 60 beneficiaries of the Poland Business Run Foundation. More info: www.polandbusinessrun.pl

EVENTS

Warsaw Business Journal relives the most important recent business and industry events

AZRIELI MUSIC PRIZE WINNERS AT POLIN MUSEUM

2018 Azrieli Prize winner Kelly-Marie Murphy basking in the afterglow of the European premiere of her double concerto for cello, harp and orchestra. Photo: Magda Starowieyska / POLIN Museum

Violinist Lara St. John performing with the Sinfonia Varsovia under Maestro Yoav Talvi. Photo: Magda Starowieyska / POLIN Museum

The Azrieli Foundation celebrated the two 2018 Azrieli Music Prize winners in a concert on September 15, 2019 at POLIN – The Museum of the History of Polish Jews. The famed Sinfonia Varsovia performed the European debuts of works by the winners, Kelly-Marie Murphy and Avner Dorman, as part of the composers’ prize package. Established in 2014 by the Azrieli Foundation, the Azrieli Music Prizes offer opportunities for the discovery, creation, performance and celebration of excellence in music composition. Celebrated violinist Lara St. John joined the Sinfonia Varsovia in Avner Dorman’s Nigunim for violin and orchestra and COULOIR (cellist Ariel Barnes and harpist Heidi Krutzen) joined for Murphy’s En el escuro es todo uno (In the Darkness All is One), a double concerto for cello, harp and orchestra. In 2018, the Azrieli Foundation awarded Israeli-American composer Avner Dorman The Azrieli Prize for Jewish Music for writing “the best new major work of Jewish music” for his composition, Nigunim for violin and orchestra. The original violin sonata version of Nigunim was premiered in New York in 2011 by the renowned Gil and Orli Shaham, for whom it was written. Also in 2018, The Azrieli Commission for Jewish Music was awarded to Canadian composer Kelly-Marie Murphy for the work En el escuro es todo uno (In the Darkness All is One). Seeking to encourage composers to creatively and critically engage with the question “What is Jewish music?” the Azrieli Commission for Jewish Music is given to the composer who proposes a response in the shape of a musical work that displays the utmost creativity, artistry and musical excellence. Israeli conductor Yoav Talmi led the orchestra in both works plus one of his own – Elegy for Strings, Timpani and Accordion (Dachau Reflections). The program was completed with Moishe Weinberg’s Rhapsody on Moldavian Themes and François Vallières’s arrangement of O Let Him Kiss Me and I am Dark but Lovely from Seven Tableaux from the Song of Songs by prolific Canadian-Jewish composer Srul Irving Glick, featuring soprano Sharon Azrieli. Fulfilling the philanthropic legacy of David J. Azrieli, the Azrieli Foundation has been funding institutions as well as operating programs in Israel and Canada since 1989. Driven by a strong belief in the powerful role and responsibility of philanthropy, the foundation empowers and supports a broad range of organizations in eight priority areas including music and the arts, science and education.

COULOIR perform Kelly-Marie Murphy’s Azrieli Prize-winning commission, En el escuro es todo uno. Photo: Magda Starowieyska / POLIN Museum

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LAST WORD

WHEN CALLING A TECHNICAL SUPPORT LINE, I am always struck by how well-trained these people are in calming down an agitated client. It’s part of their job. When a client calls with a problem that they can’t solve, sometimes after hours of trying, it’s only natural that they will be anxious. It got me thinking about where I could apply these tactics in my own life. When you get into an unpleasant email exchange with a dissatisfied business partner, client or coworker, your first response is usually to stand your ground. If you’re sure you are right, and the other person is wrong (which is usually the case), it’s a perfectly normal response to want to defend your position. The most heated exchanges usually happen between coworkers, as there is no formal barrier between them. After all, they are not a client you need to retain. But before you hit “send” on an angry email to your workmate, perhaps it’s a good idea to consider a few things: • Take a breather. Responding to an email in the heat of the moment almost always results in even more unpleasantness. Give yourself an hour to think things over. • Draft your response and wait. Read it again once your emotions are no longer running wild. See if you can perhaps make it more palatable if you delete or change a few phrases.

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• Keep your eye on the prize. Think about what you want to accomplish with that email. Is proving your point really worth escalating the conflict? It won’t save you any time, as the problem won’t just go away. Instead, you will have an even more difficult relationship with your coworker and achieving the desired outcome will be that much harder. • Make a list of the points you are willing to concede for the sake of a swift and successful resolution. Winning on all counts is unlikely, because no one wants to admit defeat. Let your colleague feel like a winner too. • When expressing your rationale for your position, try to include as many of your coworker’s points as possible. For instance: “As you said yourself – we don’t want to limit our audience to just tech-savvy professionals, so we should take another look at how to make the presentation simpler to follow.” This way they will feel heard and it may establish grounds for further dialogue. All of us could probably take a page or two out of the helpline employee’s playbook. Conflict will arise and diffusing it is also part of our jobs. The manner in which we do it will determine not only the atmosphere in the break room but may well set a course for future careers. – BKS

SHUTTERSTOCK

Angry emails