Can you describe the office market situation in Katowice in the last few months?

The economic downturn hit the office market in the City hard last year. However, the beginning of 2010 brought a slow recovery and several important transactions were successfully concluded. Office spaces were leased by PricewaterhouseCoopers for its audit shared service center (2 200 sq.m.), PKP Cargo (5 800 sq.m.) and PZU (1 700 sq.m.) which decided to centralize company’s units in Katowice and Atrium building has been chosen. This year also brings a completion of three office projects – Katowice Business Point (17 000 sq.m.), Francuska Office Center (21 500 sq.m.) and Reinhold Center (8 600 sq.m.). The Reinhold’s project is almost fully leased by PKP Cargo and the medical centre, Enel-Med.

Additionally, a few companies such as HSBC Bank and Infiniti dealership decided to lease retail space. Both transactions were signed in Katowice Business Point for approx. 600 sq. m. each. The Infiniti’s car showroom is the second one in Poland after Warsaw. The Katowice area was chosen because of the highest expected demand among all Polish regions. The same reason was crucial for the opening of Porsche unit in Katowice last year.

Francuska Office Center has also won first tenants. Nordea Bank and Philips have decided to leased office space amounted to approx 800 sq. m.

What are the prospects for the office market in Katowice for next months?

We hope that two, the biggest, office projects such as KBP and FOC will be occupied at least in 50% till the end of this year. It strongly depends on new BPO projects entered to Katowice. New companies have to decide to invest in the city and it is extremely important to do all the best to solicit new businesses. A lot of new transactions were signed by companies already present in Katowice. Most of new deals, which are going to be finalized soon, are coming from local market. However, the biggest transactions are usually coming from new projects generate by big companies like PwC, PZU or Capgemini last year. An exemption was PKP Cargo, which due to technical reason has to relocate from DOKP building. There is no doubt, that Katowice still trying to win new BPO projects. Among other cities like Wrocław or Kraków, Katowice is still immature. Two new companies with approx. 250 new workstations would be enough for the beginning, to decrease vacancy rate amounted to 14% at the end of second quarter of 2010.

In that case, what about many office projects announced over the recent years?

All these projects need pre-lease agreements. None of banks is willing to finance new developments speculatively. Additionally, it is very difficult for large projects, where 30-40% of required pre-lease is amounted to approx. 6 000 – 8 000 sq. m. Silesia Towers is an example. There is a chance that Skanska Property Poland will start the first building of Silesia Business Park. The project will be finance by Skanska itself but the company will not launch construction works on a speculative basis. Some part of the office space has to be pre-leased to minimize the risk. Project consists four buildings for 10 000 sq. m. each and is divided into phases. 30-40% of pre-lease is approx. 3 000 – 4 000 sq. m. – possible to be achieved.

So what advantages can encourage companies to sign the pre-lease agreements?

First of all, if companies sign today this type of agreement, they receive a very favorable financial terms than it is usually offered in existing buildings. Developers are willing to offer many incentives like cash contribution, rent free periods and turn-key fit-out. In other words, they get an actual market price for a product which will be newly developed and ready to occupy in 1-2 years.

Can you characterize main opportunities and threats of the office market in Katowice?

Image of Katowice is an issue which does not helpful in attracting potential, new companies to start business here. The City still does not have city center with public areas, coffees, pubs, restaurants where inhabitants want to spend time after work nicely. When investors are visiting Katowice they have 2-3 hours for meeting in the City Hall and short viewings to visit office locations. The first impression when driving around the city is crucial and very often not positive.

The important thing is to show the real size of the Agglomeration, its advantages and present all assets which shall be compact. Very well developed roads infrastructure enables more than 2 million inhabitants to move fast between the cities and it is not a problem to live in one city and work in another. Universities located not only in Katowice but in many cities around Silesia deliver number of graduates every year which become a strong workforce for new BPO companies which are a driving force in creating a modern business in the region and which are the tenants for new office buildings, residential projects and customers for shops in shopping malls, as well as for restaurants, pubs and coffees in the center.

* King Sturge is one of the largest international property consultancies in Europe. The office in Katowice was established in 2008 and is one of the two King Sturge’s locations in Poland. The main office is located in Warsaw.

“Galeria Katowicka will be located in the very heart of the City center and will have a strong influence on improvement of public spaces quality and revival of the area. Future customers of the shopping gallery will choose from among about 250 shops, cafes and restaurants which part of them will be located at ground level with a direct access from Szewczyka Sq.” – says Agata Brzezińska, Leasing Director at Neinver Polska, responsible for commercialization of GK.

Galeria Katowicka will be connected with the new Railway Station building, a bus station and a car park for 1 200 vehicles, both located under the ground. The underground level will be created as a so called convenience center designed for smart and express travelers services. Except the ground level occupied by restaurants and open-air cafes, a food court with a view at the downtown will be localized on the second level of the building. A total retail space of Galeria Katowicka, the Railway Station building and an office facility is estimated at 52 000 sq. meters.

• The project of Modernism Route will be about 5,5km long and will include:
  - building at 13 Dworcowa St.
  - “Dom Oświatowy” at 12 Francuska St.
  - “Dom Profesorów Śląskich Technicznych Zakładów Naukowych” at 23 Wojewódzka St.
  - dwelling house at 24 Dąbrowskiego St.
  - building of the Silesian Seym and the Silesian Voivodeship Office at 25 Jagiellońska St.
  - “Gmach Urzędów Niezespolonych” at 1 Sejmu Śląskiego Sq.
  - dwelling house at 3 Podchorążych St.
  - villa at 4 Bratków St.
  - villa at 65 Kościuszki St.
  - villa of Tadeusz Michejda at 19 Poniatowskiego St.
  - villa at 46 Kilińskiego St.
  - dwelling house at 6 PCK St.
  - dwelling house at 10 PCK St.
  - “Skyscraper” at 15/17 Żwirki i Wigury St.
  - Garrison Church of St. Casimir at 20 Skłodowskiej-Curie St.
  - Bank of National Economy at 3 Mickiewicza St.

Most of enlisted buildings of the modernist architecture were erected during Poland’s twenty years of independence after the First World War. As one of the country’s main centers of an increased building movement Katowice became the City where the innovatory architectural ideas were used on a big scale, as for example a southern part of the downtown with the “Skyscraper”. Katowice, is one of the only two cities in Poland (Gdynia being the other one) where modernist structures were erected on the such large scale.

Philips is a world leader in healthcare, lifestyle and lighting with sales of EUR 23 billion in 2009. Headquartered in the Netherlands, the company employs approximately 116 000 employees in more than 60 countries worldwide.

Francuska Office Center offers 21 433 sq. meters of leasable space in total. It provides seven floors for future tenants in each of two buildings and an underground car park for 200 vehicles. The office spaces are especially designed for BPO centers but smaller units from 100 sq.m. are also available.

During they stay, the IBMers were meeting with the City authorities, Voivodeship government, academia, local businesses and organizations representatives to listen theirs opinion and to collect necessary information. In effect, the Team 2 prepared a set of recommendations which would become a part of a long-term economic development plan. The managers defined three key areas which are crucial and prospective for the future development of Katowice:

1. the City of culture and commerce (area of economic growth and marketing strategy)
2. the well planned City (area of public transport system and crisis management)
3. the City of innovation

• To develop the first recommendation (the City of culture and commerce) Katowice should implement:
  - a 3 to 5 year strategy of growth in conjunction with overall Katowice Economic Development plan
  - a City of Katowice Economic Development Plan Committee and a Project Team including key members of the Ecosystem of stakeholders
  - a Management System in support of Economic Development Plan; along with Committee concept to ensure full ecosystem commitment, participation, and confidence

• Following tactics were proposed for the well planned City:
  - an extension of an Intelligent Traffic Management System plan
  - finding ways to extend management abilities and experiences in the area of Intelligent Social Security System
  - a development of a “city services architecture” to improve a decision making process

• To become the City of innovation Katowice has to:
  - appoint an Upper Silesian Technology Committee

“We had participated in a lot of meetings here and we saw that Katowice and the whole Agglomeration offer a great cultural heritage and inhabitants show a strong attachment to the region. It was a great experience for all of us. Also we are strongly convinced the plan of City’s modernization, which we prepared together, increases a chance to develop a smarter place where all citizens will take advantage of new services and conveniences of the City.” – Mickey Iqbal, IBM Distinguished Engineer, said during the conference.

“We appreciate the IBM’s Executive Service Corps programme and the efforts of the both teams. Thanks to them we gained a know-how knowledge in cities modernizations based on a Smarter Cities concept. We want to implement the recommendations both in Katowice and the Agglomeration. What is important, the solutions are designed to be developed in all 14 cities at one time as well as in Katowice at first.” – says Piotr Uszok, Mayor of Katowice and Chairman of the Board of the Metropolitan Association of Upper Silesia.

Read previous articles about the initiative of IBM in Katowice >>>

The campaign will include three areas:

• intensification of the City’s investment attractiveness
  - benchmarking: attractiveness  of Katowice, main assets and key factors in comparison to other big cities in Poland, opinion surveys among investors
  - programme of investment activities in the years 2010-2016: priorities, effective range, short- and long-time activities

• programme of investment promotion among foreign investors
  - tools and schedule of promotion, coordination, evaluation

• image campaign among foreign investors in 2010
  - priorities, effective range, concept of promotion, marketing brief, slogan, promotional materials
  - Internet and press advertising, media plan, 30 seconds TV spot in CNN International EMEA and CNN HeadlineNews USA
  - promotion materials for international fairs at Expo Real in Munich and Global Sourcing Forum in New York (both will be held in October)

Additionally, the City Hall is also looking for a company to prepare and conduct a promotional campaign of business tourism offer and the MICE market in Katowice. The campaign will promote the City in Poland, Germany, Great Britain, the Czech Republic and Austria and is planned until 30th of June 2011. It will use press and digital media. The project is co-financed by the European Regional Development Fund.

A chosen studio will prepare a detailed project’s specification based on a winning architectural design. The second and third prize are amounted respectively at PLN 30 000 and PLN 15 000. Architects have to file their projects until 23rd of August 2010.

The new seat of the Faculty will be located on Św. Pawła St. in the City Center. A usable area of the building will cover approximately 5 600 sq. meters including a one-level underground car park. Also the architectural design has to include, among others, a 200 sq.m film studio, two photographic rooms, projection room, sound recording room and library.

The Faculty of Radio and Television was established in 1978 and is popularly known as the Katowice Film School. Education is carried out in 3 areas. The Faculty was named after Krzysztof Kieślowski, a well-known film director and an academic teacher at universities in Poland and abroad. He was one of the academic teachers at the University of Silesia. The Faculty has an academic staff of 50 teachers and 596 students at present. Every year 5 to 10 candidates apply for one position in the Faculty.

About 260 000 leaflets, advertisements in TV, radio, Internet, local press and info boards on bus and tram stops are prepared to inform passengers about the reorganization of public transport in the City Center.

It is planned to close Szewczyka Sq. for the traffic on 15th of August. At present the Square services thousands of passengers every day. After the closing all the buses stops will be moved and routes are going to be changed. A final closing of the Railway Station’s building and an opening of a temporary station is planned for the turn of August and September 2010.

Thereby, KZK GOP and the City Hall prepared various solutions to minimize the inconveniences. Except the mentioned advertisements, some interpretation centers will inform citizens about the reorganization of public transport. The centers are located in the Welcome Center (Katowice, 13 Rynek St.), the KZK GOP seat (21a Barbary St.), Passengers Service Desks (Sosnowiec, 3/17 Warszawska St.; Gliwice, 2 Piastów Sq.; Bytom, Wolskiego Sq.).

Detailed information about timetables, routes and traffic changes can be found at www.uwagaprzemiany.katowice.eu and www.kzkgop.com.pl. (Polish versions only)

reach of social campaign

After the time of market stagnation had caused by the economic downturn, the research and development unit in Katowice increased a number of workers from 5 to 12 during last six months. At present, the company is still looking for engineers, mostly for C++ software development positions. It will include design and develop applications and core library functions for company’s network display products.

According to the daily Puls Biznesu, DisplayLink wants to become a listed company in two years.

DisplayLink specializes in chips and software that enable easy virtual graphics connectivity between computers and displays over standard interfaces such as USB, wireless USB, and Ethernet. The company’s technology is used in dozens of globally branded PC accessories including monitors, docking stations, display adapters, projectors, and zero client systems that enable expansion of the desktop visual workspace at significantly lower cost and energy than traditional solutions.

Among the company’s costumers are: LG, Dell, HP, Toshiba, Lenovo, Asus. DisplayLink has already sold more than 1 million chips. Its offices are located in Palo Alto (California, USA), Cambridge (UK), Taipei (Taiwan) and Katowice.