It was another very good year for Skanska’s commercial development business in Central and Eastern Europe (CEE), reflecting strong 2018 performance in Poland, Romania, Hungary and the Czech Republic. The biggest office developer in this part of Europe sold 9 buildings for over EUR 431 million and leased 153 000 sqm in ten CEE city markets.
Summary of 2018
The constant development of the business services sector in Central and Eastern Europe as well as a GDP growth rate of 4.2 percent were the key factors influencing demand for prime office space across the CEE region. That demand is visible not only in capital cities, but also in regional ones, especially in Poland and Romania.
Skanska responded to market needs by delivering 8 buildings with a total volume of 122 000 sqm. The company also invested EUR 495 million in new developments which will increase total office stock by approx. 215 000 sqm in the years ahead. Alongside further investment, the company focused on developing and implementing brand new, sustainable and innovative solutions such as the Connected by Skanska system, perovskite solar panels or concrete pavement which fights smog.
“Another exciting year for the whole real estate market and for Skanska in CEE. As we all continue to benefit from the extended real estate cycle, we managed to reach all-time high results in terms of leasing and transactions. It is worth underlining that, as a market leader which wants to deliver futureproof workplaces, we constantly focus on maintaining the high quality of our projects. Looking at our numbers and geographical coverage, I am proud to say that we continue to be the biggest and most active office developer in CEE” – said Marcin Łapiński, acting CEO at Skanska’s commercial development unit in CEE.
Certification – the key to the futureproof workplace
Ten years ago Skanska set itself a challenge and decided to incorporate the LEED Certificate for all buildings in CEE. It began with the Polish office in Warsaw. This was a very important step in promoting the idea of green and sustainable buildings on the commercial real estate market. In 2018, Skanska started working on implementing another certificate, WELL, in two office projects: Spark in Warsaw and Visionary in Prague. These two buildings will become the first ones to achieve this certification in the region. The company is convinced that WELL-certified offices, thanks to their positive impact on employee health and well-being, will not only attract and retain good tenants, but also investors, who are always looking for high-quality real estate. Both these certificates prove the quality of Skanska buildings and innovations.
CEE still attracting new investors
The CEE real estate market is still capturing the attention of many market players. According to JLL, the transaction volume reached over €13.2 billion in 2018, which equates to an 11% increase over the previous year. Poland accounted for 54% of the share.
“For a few years now we have been observing growing interest in the CEE region from both domestic and foreign investors, even some from the Far East wanting to diversify their portfolios. In 2018, we concluded our first office transaction with an Asian investor, the ISOC Group from the Philippines, which bought our Silesia Business Park buildings C & D in Katowice. This is yet another example of the great potential of the CEE region, one which offers both A-class products and returns on investment that are higher than in Western Europe. And we predict that the demand for prime office space will remain considerable. Skanska wants to meet all these expectations and that is why we are working constantly to expand our offer” – said Adrian Karczewicz, Head of Divestments at Skanska’s commercial development unit in CEE.
Plans for 2019
Skanska began 2019 by becoming the sole owner of Business Link– the network of coworking and private offices for rent. The company has acquired the remaining shares in Business Link from Academic Business Incubators (AIP). The subject of the transaction was a company which, under the name Business Link, manages 5 Business Link offices located in the Astoria office building in Warsaw and in buildings developed by Skanska in Poznan (Maraton), Krakow (High5ive), Wroclaw (Green2Day) and Prague (Visionary).
This acquisition will enable Skanska to better match its offer to the needs and expectations of future tenants, an increasing number of which are on the lookout for fully serviced offices in the region.
Finally, nineteen Skanska buildings in CEE are under construction with a total volume of 350 000 sqm, while the company will also be focusing on continuing to implement its innovative and sustainable best practices.