Poland is undergoing a huge revitalisation programme, as part of which Łódź is receiving major attention. The city is now enjoying one of Europe’s most extensive redevelopments. Regeneration spanning the 2014 to 2020 period will cost €5.82bn across Poland.
“Łódź leads in terms of the scale of real estate revitalisation [in Poland],” says the 2018 report from the Second Life Building Initiative.
A key part of Łódź’s city centre regeneration is the ‘New Centre’, encompassing 50 interlinked projects valued at €1.09bn. Alongside the regeneration of the EC-1 power plant, with state-of-the-art attractions such as a planetarium and a 3D cinema, is the €500m redevelopment of Łódź Fabryczna railway station, the oldest and largest in the city.
Another major redevelopment is the massive red-brick Manufaktura complex in what used to be the city’s largest textile factory, which now includes four museums, a shopping mall and a leisure centre.
Ranked among central Europe’s biggest regeneration projects, Manufaktura was developed by a French company and acquired by Germany’s Union Investment in one of 2012’s largest real estate transactions globally. Adjacent to Manufaktura is one of Łódź’s most exclusive hotels, Andels, which was developed by Austrian real estate group Vienna House.
Most red-brick refurbishments in Łódź have been undertaken by foreign investors. “The redevelopment process has been [facilitated] by private investors. We expect that each zloty spent from the public purse should bring 1.41 [zlotys] of private investment,” says Marcin Obijalski, head of the redevelopment office of Łódź.
A quick drive through Łódź shows up many vacant buildings. “The city has so many places in need of refurbishment, especially tenement houses. Many empty places have inheritance problems. Legal battles are ongoing and investors are lining up,” says Adam Pustelnik, director of Łódź’s Investor Service and International Co-operation Bureau.
This makes Łódź is ripe for refurbishment. Offices in regenerated areas now comprise 24% of all existing office space in Łódź, while in Warsaw they account for only 4%, according to corporate law firm Schoenherr.
Łódź is also the seventh largest market in Poland in terms of modern office stock, but is developing at an incredible pace, as evidenced by the arrival of international developers such as Echo Investment, HB Reavis and Skanska. A variety of international companies run their Polish or regional operations from Łódź offices, including ABB, Accenture, Cybercom, Ericsson, Nordea Bank and Infosys, hiring thousands.
“Łódź’s office market is maturing. The volume of new developments is [very] visible. Competitive labour costs and the availability of qualified staff make this city one of the best investment locations in central and eastern Europe, especially for the business services sector. Łódź has become a first-tier Polish destination,” says Dimitris Raptis, deputy CEO at Globalworth, a real estate firm specialising in distressed investments.
At the end of the third quarter 2018, total office stock in Łódź stood at more than 460,000 square metres with a vacancy rate of 9.7%, according to professional services and investment management company JLL. The city is expecting another 300,000 square metres of modern office space to be built over the next five years, allowing for another 30,000 workers, according to Mr Pustelnik.
Meanwhile, Łódź is playing a key role in Poland’s thriving industrial market, offering 300 hectares of industrial plots within the city, an unusually high number for the country. Panattoni, the largest industrial park developer in the world, is developing the largest consolidated industrial area in central Europe, ready for use in 2022. The Łódź hub will house the biggest Bosch factory outside Germany, and other confirmed tenants include BSH, Media Expert and Smyk.
A key area where Łódź has room for growth in the hotel sector, especially as the city’s tourism expands and it prepares for Expo Horticultural 2024. “Hotel infrastructure has been slower to improve than I’d have hoped,” says Sanjay Dhawan, president of connected services at Harman International, a Samsung company. “Investors should look into the city for that,”