By Mark Twomey
From an HR perspective 2012 saw the most new hiring activity in the CEE real estate market since the good old days of 2007. The most interesting phenomenon during 2012 was that for the first time since 2007 we saw salaries rise. Candidates are once again in demand and companies now need to meet the demands of the candidates, should they wish to secure their services. The pendulum has swung.
Much of the hiring in 2012 was done by the agencies, as they have all expanded their teams to meet the new demands coming from the market. The dust has settled on the "new" Jones Lang LaSalle teams and they are now setting the pace for the others to follow. CBRE, Cushman & Wakefield, DTZ and Savills are also putting up a fight -- but it is not easy. A number of boutique service providers joined the market in 2012 -- Sharman & Church and Aspenn in particular. Both of these are offering high-end value-add services to clients they have strong relationships with from their past lives.
New commercial development was still a little slow in 2012 with the exception of Skanska, Echo and Ghelamco. Many other developers have been focusing more on providing 3rd-party asset management services, since it is recognised that asset management is still lacking in CEE. TriGranit was the latest developer to establish a 3rd-party services company. It is being led Philip Evans. This follows in the footsteps of the likes of AIG Lincoln and Avestus.
Retail development was slow in 2012: most of the new development was in the sub-regional cities, and only time will tell if these have been worthwhile investments. One thing is for sure, they are very difficult projects to lease. There have been a significant number of retail refurbishments and extension projects which aim to brighten up some of the tired-looking centers in the large cities.
The volume of transactions in 2012 was slightly lower than that of 2011, but the average size of transactions in 2012 completely dwarfed those of 2011. Poland transacted roughly €2.5 billion during 2012. The last 12 months saw the big-hitting institutional funds like Union Investment and Allianz come back into the market and once again start purchasing prime commercial assets. There were also a number of "smaller" transactions completed, but there are clearly not as many "deals" around on the market as there were in 2011. It has been interesting to witness some funds step out of the normal routine and into diversified assets. Heitman, Hines and Blackstone have all purchased logistics portfolios in Poland in 2012.
So what is to come in 2013? It’s hard to say: according to a poll posted on Tara HRC's LinkedIn group page, opinion seems to be split as to whether 2013 will be better or worse than 2012. Many are looking to the potential knock-on effect of the US fiscal cliff and how that might stunt growth in Europe.
In Poland, office development will lead the way in 2013 with over 700,000 square meters of office currently under construction. There is roughly 400,000 of new office under construction in the other regional cities of Poland. Retail will likely see more transactions rather than new development. High Street Retail is expected to grow in 2013, especially in Warsaw. PKP's station redevelopment plans will also create some interest in retail.
Warehouse and logistics will also see more transactions than development; we expect to see a number of portfolio deals in this sector. We expect one capital house to off load some if not all of its assets during 2013.
Hiring in 2013 is expected to be even stronger than 2012. With over 1 million sqm of new office space coming on-line, there will be a big demand for leasing and property management. Asset management will continue to be a strong requirement. Acquisitions specialists and financial analysts will also feature strongly, especially for those funds that are not already present on the market. Retail will still require strong leasing people for the regional centres. Retail expansion and redevelopment will also require good project managements. There will be an increase in the requirement for LEED and BREAM specialists.
Mark Twomey is managing partner of Tara HR Consulting
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