What are TriGranit’s plans for next few years?
Árpád Török: We intend to implement our future projects in accordance with the city centre concept, where initially a shopping centre is erected, followed by office and residential developments in its close neighbourhood. This enables homebuyers to work, shop and spend their free time in the same location. The idea is to provide all that is needed within the same area in order to limit the daily grind of commuting.
Do you intend to pursue further investments in Poland? If so, are they going to be realised in the capital or with a greater emphasis on regional cities?
Árpád Török CEO at TriGranit Development Corporation
Árpád Török: We plan to implement further investments primarily in regional cities. We have considered Warsaw carefully but this market is still quite volatile, with alarmingly high vacancy rates. It is also more challenging for developers to work in accordance with the city centre concept in Warsaw, primarily because the commercial market in Warsaw is nearing retail space saturation, and secondly there is much less space available for this type of large and complex investment. Consequently we currently do not plan any investments in the capital. However, I can confirm that the work in Krakow will be continued. The completed Bonarka for Business project will consist of 11 office buildings, offering approximately 110 000 sqm. lease space. The other project is currently realised in Poznan, where office buildings are to be built next to the train station in partnership with the Polish State Railways with around 63 000 sqm GBA. Altogether we have a pipeline of over € 500 million of developments in Poland, consisting of 2 retail projects with 160 000 sqm GBA and 8 office buildings offering around 135.000 sqm GLA, all of which are scheduled for completion within the next 3 to 5 years.
Tomasz Lisiecki: In relation to what Árpád has just said, I can only confirm that, indeed, we plan to implement a number of investments in regional markets in the next few years, in compliance with the same strategy by which B4B is created. Indisputably our main interest still lies in developing shopping centres but, in order to meet the challenges of the contemporary market successfully, we have decided to combine these two areas. Therefore, as was the case for Bonarka, we intend to build a shopping centre first and then add office buildings nearby. We will focus on the office and retail project in Poznan but, at the same time, continue to pursue the development of Bonarka, adding a new building each year. This thus means that this project should be completed in about 5 years.
Many developers implementing complex projects choose to build a number of iterative objects with very similar, almost identical elevations. What you decided when designing B4B is to give each object each own unique character. What is the idea behind this strategy?
AT: Yes, you are right. It was a strategy and it was well thought out. We believe that, in order to erect a building complex that consists several neighbouring objects, a certain play with space is vital. And, to create a community-friendly atmosphere, it is essential to use different frontages and façades. Bonarka for Business is not our first venture of that kind. Our strategy so far has involved working with different architectural teams for each investment. That means that none of the shopping centres or office buildings we have built look the same and we intend to keep this architectural diversity in the future.
ÁT: The answer is simple: we need to create our projects in a variety of markets and surroundings, taking into consideration not only the existing but also the planned elements of the infrastructure. The buildings we create, whether they be shopping centres, offices or residential facilities, are not made of blocks. They can be considered durable goods, becoming new landmarks in the city and objects of a certain quality. In several dozen years they might develop a sightseeing value, who knows! Bonarka for Business is an interesting, community-friendly space where people like to be. This means that it quite quickly has become one of the most significant points on the commercial and business map of Krakow. It is also worth mentioning that none of our other investments in Budapest, Bratislava or Croatia resemble in any way those from Krakow. Each of them matches the fabric of the city perfectly... They are all tailored to the local markets and their long-term development prospects, as well as aiming to meet different needs of local communities.
I understand that other buildings planned within the B4B complex will be as unique?
ÁT: Yes, the new buildings will still be unique in their character but, on the other hand, they will work well with each other, creating a coherent complex, as well as with other parts of the space. Although I must say that implementing this premeditated intent has been a big challenge and has required careful consideration.
2014, on the one hand, saw the completion of several major office projects for Krakow; on the other it was a time when many projects reached the implementation phase and new projects were commenced. Are you not concerned that, in coming years, the vacancy rate in Krakow may also rise, which could entail a market slowdown and difficulties in the commercialisation of the new buildings?
TL: Currently Krakow has the lowest vacancy rate in Poland and so we believe we should not encounter problems with the commercialisation of our investments. In case, however, when the rate should become dangerously high as a result of new investments, further investments can be put on hold or significant changes introduced in order to increase their market attractiveness. We originally planned Bonarka for Business having altogether four buildings, with the last one marked with the letter D. The remaining parts were to become residential facilities that complimented the retail and office space. In the past few years, however, the office market in Krakow has grown significantly. New investors have entered the market and new tenants have appeared who are in need of modern office space... Consequently we have decided to keep developing the office part of the project. Should a possible office space market saturation come about, there is always the opportunity to return to the original plan and build residential facilities. Our current zoning plans allow us to keep this option open.
Tomasz Lisiecki Chief Development Officer
at TriGranit Development Corporation
Implementation of a huge business investment, opening five office buildings and further project development makes TriGranit one of the major developers in Krakow's commercial market at the moment. How was it to work with the city authorities and key departments for this type of investment?
TL: The area on which our investment is realised covers 19 hectares plus. I believe that our investment significantly improves the Podgórze Duchackie district’s situation. It is clear that implementation of a complicated project, important for the entire local community, requires staying in continuous dialogue with the city authorities, obtaining numerous permits and approvals. But, as long as both parties essentially share the common goal, namely for new investments to become a part of a long-term strategy for the city development, this partnership will flourish. The beginnings were, well, challenging, but we have been present in Krakow for the last ten years. In this period we have had many opportunities to show what we are capable of; now people can see that new investments support the development of the city, remaining in compliance with the arrangements agreed all those years ago. All this possibly facilitates the attitude of welcoming new projects.
Bonarka for Business provides lease space which has been particularly popular with business tenants, as evidenced by the fact that building E has been partially leased even before its official opening. Does TriGranit also implement investments that are tailored to the needs of a specific tenant, created in the build-to-suit system?
AT: Yes, we have experience in implementing build-to-suit projects. For example, we built the K&H Bank headquarter in Hungary in this way. It later became the first office building in Budapest to be awarded with the LEED Gold level certificate. But we built offices for Vodafone and Morgan Stanley in Hungary and for IBM in Bratislava also as a build-to-suit project. That means, that we have developed altogether more than 60-70 000 sqm office space in a build-to-suit construction. This type of project, however, is not very popular. It is much more common that a company decides to adapt an already erected building to meet their specific needs. Building property for a specific tenant requires numerous complicated formal operations, a high level of cooperation between the developer, architect, contractor and the party that specifies the order. Every entrepreneur has a huge impact on how interior space will look anyway; what technical solutions will be implemented and how the space will be divided. It must be emphasized that we also consider our tenants’ opinions when deciding on the architecture of construction and we keep learning from them and use their support during development. On the other hand, we strive to ensure that each project is timeless; just as in the case of our first investment made in Budapest in 1995. This project was a bank centre and this building is still one of the most important offices in the Hungarian capital. What’s more, the building received The People Choice Award at the most significant Office Market Award in Hungary this year. Combining the latest trends with the timeless determinants of good architecture makes our investments very popular with tenants, even when we have not utilised a build-to-suit process.
Thank you for the interview and I wish you more successful implementation of your unique, timeless projects.