(Courtesy of Ghelamco)

If a real estate project does not have a great location, then it has to do something to make its location great.

That was the problem facing Ghelamco, a Belgian-Polish developer, when it paid 85 million złoty (US$24 million) in 2006 for a two-hectare (5 acre) lot west of Warsaw’s city center. The price was four times higher than the opening bid for the lot, containing a dilapidated building that housed a shuttered military printing office.

“People said, ‘You will go bankrupt, this is crazy,’” says Jeroen van der Toolen, Ghelamco’s managing director for central and eastern Europe.

But they were wrong. Van der Toolen is speaking from a meeting room in Ghelamco’s new offices high up in the Warsaw Spire, the 220-meter (720 ft) blue glass hyperboloid that dominates the skyline of the Polish capital.

The 49-story Spire, with 109,000 square meters (1.2 million sq ft) of space, is Poland’s tallest office building and is winning design plaudits, including the best office design award at 2017’s MIPIM conference in Cannes, France.

But the gamble that Ghelamco took in 2006 was a real one. Warsaw’s office market was heating up thanks to Poland’s 2004 entry into the European Union, which boosted economic growth and made the country a growing destination for foreign investors. But by 2008 the market was stagnant, as European investors pulled back in response to the global economic crisis. Poland was the only European country not to fall into a recession, but the property retrenchment was real. The high-flying foreign funds that had been snapping up property in Warsaw and other Polish cities pulled back. Big projects, such as LC Corp.’s hopes of building Europe’s tallest skyscraper in the western Polish city of Wrocław, were truncated.

(Courtesy of Ghelamco)

Supply and Demand
It was not just the price paid, but also the question of what to do with the land that had analysts scratching their heads. Ghelamco aimed to build a massive office complex in a city, which many felt would not be able to absorb such a quantity of new supply.

“When that building was announced, you’d be lying if you thought they had a decent chance of success,” says John Banka, the head of Project Partners International, a Warsaw-based property advisory firm. “The location was debatable and the size of the building was daunting.”

But a year before Ghelamco bought the lot, the city of Warsaw had finally approved plans to begin work on its east–west subway line. And one of the key stops was at the Daszynskiego traffic circle right next to Ghelamco’s new purchase.

That gave an entirely different outlook for a part of the city filled with decayed industrial buildings—printing plants, small factories, an old brewery—mixed with weed-infested lots and serviced by badly surfaced roads.

The district, called Wola, was one of the industrial and residential hubs of prewar Warsaw. But World War II did terrible things to the area. Bombed and shelled by the Germans in 1939, it was a few blocks away from the Warsaw Ghetto, where the Germans incarcerated about half a million Jews before sending almost all of them to death camps. That part of the city was turned into rubble after the 1943 Ghetto Uprising.

In 1944, inadequately armed Polish partisans tried to oust the Germans from the Polish capital. About 50,000 people were killed, and after the war, Wola was a wreck. At the western edge of the Polish capital, it was a forgotten district known as the “Wild West” by its inhabitants.

But Poland’s economic reforms after the end of communism in 1989 turned Poland—one of the Communist Bloc’s basket cases—into an economic success story. When the country joined the European Union, there was a growing premium on open land, and developers became increasingly interested in Wola.

(Courtesy of Ghelamco)

Geographic Considerations
For decades, Warsaw’s downtown core has been slowly shifting westward from the Vistula River—something that the opening of the east–west metro line in 2015 accelerated.

“The center is moving where there is business and money,” says Paweł Szejter, cofounder and deputy director of REAS, a Warsaw-based real estate consultancy.

The hope is that city officials will take advantage of the district’s good communications—the metro, along with nearby rail, tramway, and bus lines—and properly plan for the surge in office workers so that the Wola district develops smoothly.

Developers are worried, however, because another business area to the south of downtown called Słuzew has had a much more bruising experience with city bureaucrats.

An office district also sprang up on old industrial land starting about two decades ago. But in Słuzew, the city never properly planned for the development, issuing individual construction permits with little vision for the future. The result is a hodgepodge of commercial buildings (some built by Ghelamco) that may be attractive in their own right but that form no cohesive whole. There also is little residential and retail mix, and the city did a terrible job in extending mass transit and allowing for easy commuting by tens of thousands of office workers.

Employees stuck in horrendous traffic jams now call the area “Mordor”—after the hellish home of Sauron the Dark Lord in the Lord of the Rings books.

“The city adopted a sort of laissez-faire approach,” says Jan Jakub Zombirt, associate director of strategic consulting at the Polish branch of JLL, the real estate firm. “There was no vision in Słuzewiec, and we asked ourselves if the same thing could happen in Wola. People are saying, ‘No, that’s impossible because Wola has a metro,’ as if that would solve all the potential spatial problems. But there is a wider problem of integrating workers, inhabitants, and buildings—fortunately, we are observing a growing awareness of developers, and their positive contribution to urban space is becoming a fact.”

The city of Warsaw has covered only about half of the Wola area with a zoning plan, according to JLL. Although city hall’s vision is for a re-creation of the street grid that existed in the area before the war, the city has shied away from the cost of intervening more forcefully as Wola gets built up. It has not opened any new parks or green spaces in the district, which would require expensive property expropriation.

(Courtesy of Ghelamco)

Attracting Employees
But in Wola, developers are keener to work with the city, and even push through their own urban planning vision, than they were in Słuzew. The reason is that Warsaw’s growing middle class is becoming increasingly fussy about office work conditions. In a city with an unemployment rate of only 2.7 percent, employers have to make extra efforts to recruit workers. Developers have also seen that properly planned projects can charge higher rents and are more easily sold to investors.

Van der Toolen, who has worked in Poland for almost two decades, was well aware of the mixed reputation of Słuzew when he embarked on the Warsaw Spire project.

“It doesn’t look like real estate is that important to the city of Warsaw. There is a lack of good-quality people to do proper urban planning,” he says. “From a distance, [Warsaw] looks fantastic; but when you’re in it, you see things could have been so much better.”

When Ghelamco started talks with the city on the project, planners wanted the company to build “New York–style” office buildings that came up to the sidewalk, a pattern seen in other parts of the city’s business district. That approach, with courtyards hidden behind buildings, is actually closer to the prewar vision of Warsaw.

Design Elements
Instead, Ghelamco pushed through its own €307 million (US$357 million) concept, consisting of a landmark tower to anchor the lot, flanked by two lower 55-meter (180 ft) curved satellite buildings, each with about 20,000 square meters (215,000 sq ft) of office space. That configuration allowed for dense and lucrative office space, but it left the core of the lot open, allowing the developer to turn it into a 4,000-square-meter (43,000 sq ft) public space called Plac Europejski (European Square).

“Developers used to be able to put up an O.K. building with one restaurant and that was enough. That’s no longer the case,” says van der Toolen.

The developer put a lot of thought and effort into the public area, turning to Belgian landscape architects Wirtz International to come up with a plan.

The result is striking. Instead of paving stones, which smack of corporate sterility, or grass, which is messy and quickly turns to mud, the architects chose hard-beaten earth, which has a natural feel but is clean—something appreciated by the boules players who frequent the square on weekends. The square was planted with 160 large trees and is watered by an artificial brook and a fountain, with no signs scaring off children, who are free to splash during Warsaw’s brief warm months.

The square also hosts an art gallery, part of the broader effort to give what is still private property the patina of a public space.

However, despite the appealing and modern elements of the design, the square does not really play on the historic architecture of low-rise factories and apartment blocks with internal courtyards that characterized historic Wola.

The Spire itself is a striking building, but also one that has no relationship with the older traditions of the neighborhood.

Designed by a team led by Belgium’s Jasper-Eyers Architects, the main building soars 180 meters (591 ft)—with two antennas that extend the total reach to 220 meters (722 ft). That makes it the second-tallest building in Warsaw, behind the 237-meter (778 ft) Palace of Culture, a 1955 Soviet Art Deco building constructed on the rubble of central Warsaw. The Spire’s office space also exceeds that of the palace—a building once regarded as an icon of Soviet repression but which over the years has become one of the city’s symbols.

Construction began in 2011, which involved digging 22 meters (72 ft) underground for the five floors of underground garages that hold more than 1,300 cars.

In designing the building, the architects had in mind that the most lucrative spaces are on the higher floors of the tower. That led to a design that has the center of the Spire’s hourglass shape narrowing to about 1,300 square meters (14,000 sq ft) of rentable space, while at the top and bottom it widens to 1,700 square meters (18,000 sq ft). The top floor (which includes a deck overlooking the city) has been leased by Goldman Sachs, which needed three separate power sources and its own backup generator to ensure no power interruptions to their facility.

Attracting Tenants
The project’s first key tenant was Frontex, the E.U.’s border control agency, which leased 14,600 square meters (157,000 sq ft) in 2012.

Since being completed last year, the building has leased about 95 percent of its office space, with rents increasing by about 20 percent as the project was built. Prime rents in Wola are about €20 (US$23) a meter.

“The tower was the question for me. Would it lease?” says David Brodersen, chief operating officer at Coimpex, a central European developer specializing in master planning.

Despite analysts’ worries that there wasn’t enough demand in Warsaw for such a large amount of new office space, the Spire is being used by companies to consolidate offices previously scattered around the city. Ghelamco itself now has its main offices in the building. Showing the whimsical side of Przemysław “Mac” Stopa, a Polish architect with Massive Design studio, one meeting room is designed to look like a ski gondola, surrounded by the white and blue of an alpine vista. Another has chairs and tables on artificial grass and blends into a picture of a golf course. The chairs, tables, and the rest of the furniture are all designed for the building.

“All these little details were really thought through,” says van der Toolen.

JLL consolidated three separate offices into the Spire, leasing 8,000 square meters (86,000 sq ft) on six floors. Its offices are marked by riffs on traditional Polish landscapes, with conference rooms given names such as “wheat” and “coal” and “forest” and decorated with natural elements like moss and coal.

Samsung combined three facilities into a single location, taking 20,000 square meters (215,000 sq ft) of space. The lower levels of the buildings hold restaurants and a gym, and in the basement there is parking for bikes with lockers and showers for commuters, all amenities designed to appeal to increasingly demanding workers.

Polish Prospects
Demand for space in the Spire is part of a broader upsurge in the Warsaw property market. Poland has been steadily becoming one of the world’s top locations for back-office operations. A decade ago, these were little more than call centers, but companies like Samsung are now shifting high-end research and development to Poland, taking advantage of the country’s inexpensive but well-educated workforce. Banks, some spurred by Brexit, also are looking to Warsaw. J.P. Morgan plans to shift 2,500 back-office jobs to the city.

As a result, office space in the capital has grown from about 2.5 million square meters (27 million sq ft) five years ago to about 5 million square meters (54 million sq ft) now, with a million square meters (11 million sq ft) more on the way. Total demand in the first half of the year came to 391,000 square meters (4 million sq ft), according to JLL, and the bulk of that was in the area around the Wola district.

“Moreover, it shows no sign of slowing down,” the agency notes.

Ghelamco is part of that continued Wola expansion. The company has split the Spire property into three sections, and is in talks with buyers.

Earnings from the Spire will help Ghelamco with its projects near the Daszynskiego traffic circle, an area that developers now call Warsaw’s Manhattan. Ghelamco’s new project called Warsaw Hub is made up of three buildings—two 130 meters (426 ft) tall and one of 85 (279 ft) meters—with a total of 113,000 square meters (1.2 million sq ft) of space.

Two other buildings by other developers are also going up nearby.

Standing in the Spire’s Plac Europejski, cranes crowd the skyline when one looks to the west. But toward the east in the direction of downtown, it becomes evident that Wola is still a long way from becoming encased in glass and steel. Looming over one side of the square is a group of dilapidated five-story prewar buildings—some still marked with bullets from the 1944 Uprising. Although they are worth a fortune and developers would love to knock them down, their sale is blocked by interminable fights between the city and heirs of the prewar owners.

“All we got was permission to paint murals on them so they don’t look so bad,” says van der Toolen.