Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Silverstein Links With Poland’s Richest Man in Real Estate

Larry Silverstein, president and chief executive officer of Silverstein Properties Inc. Photographer: Peter Foley/Bloomberg
Larry Silverstein, president and chief executive officer of Silverstein Properties Inc. Photographer: Peter Foley/Bloomberg

Dec. 9 (Bloomberg) -- Larry Silverstein, after more than five decades of investing almost entirely in New York City real estate, is making his first foray abroad in Poland, one of Europe’s most in-demand property markets.

The developer of office towers at Manhattan’s World Trade Center site has teamed with Jan Kulczyk, Poland’s richest man, on a 500 million-euro ($666 million) venture to buy and develop properties, beginning in Kulczyk’s home country. They made their first purchase, an eight-story Warsaw office building, in August, and are working on plans to add towers to the Polish capital’s skyline.

Kulczyk has “done everything, but one thing he hasn’t done much of is real estate development,” Silverstein, 80, said in an interview. “It took a little while to understand his goals, and to make sure his goals coincided with ours. And, at the end of the day, they do.”

The partnership is an element of Silverstein Properties Inc.’s strategy to expand beyond its New York base, which also includes building a Four Seasons hotel at Walt Disney World Resort in Orlando, Florida, and preliminary contacts in China. Poland has displaced Russia as the “strongest magnet” for foreign real estate investment in Europe, the Middle East and Africa, according to a report by Real Capital Analytics Inc.

In the 12 months ended Oct. 31, foreign investors poured $3.4 billion into Polish commercial properties, compared with $1.6 into Russia’s, New York-based Real Capital said in a report last month. Most of the demand is for retail and office buildings, according to Dan Fasulo, managing director at the research firm, which tracks commercial real estate sales.

‘Financial Capital’

Poland is appealing because of its “very stable economy,” said Mickey Kupperman, Silverstein Properties’ chief operating officer. Warsaw “is perhaps on its way to being the financial capital of eastern Europe, so we see great opportunity there,” he said in an e-mail.

For Silverstein, it’s a good time to start investing abroad because his company has “an increasing comfort about where we are in terms of the other projects,” he said. One of his lower Manhattan towers, 4 World Trade Center, is up to the 56th of 72 planned stories, according to the developer. Bases are under construction for two other buildings at the site, where the twin towers stood before the 2001 terrorist attacks. Last year, he completed the second of two apartment towers at the western end of 42nd Street.

Warsaw Skyscraper

Kulczyk Silverstein Properties, as the venture is known, plans to build a 426-foot (130-meter) skyscraper in central Warsaw to be called the Chmielna Tower. The company is awaiting final approval from the city, Piotr Krawczynski, managing director of Kulczyk Silverstein, said in a telephone interview from the capital. From there, the partnership is focused on central and eastern Europe, he said.

Kulczyk, 61, is chairman of Kulczyk Oil Ventures Inc., which explores and develops oil deposits in Southeast Asia, the Middle East and Europe. With a net worth of $2.6 billion, he’s Poland’s wealthiest man, according to Forbes magazine, and No. 440 on its list of the world’s richest people. He’s among the largest shareholders in SABMiller Plc, the world’s No. 2 brewer, whose brands include Miller, Coors Light, Grolsch and Peroni beers.

Silverstein “is able to execute things others may call dreams,” Kulczyk said in an e-mail. “On top of that, we like each other as individuals and we share views and tastes in relation to different things, not only business.”

Focus on Offices

The partners plan to spend about 500 million euros of their own money over the next five to seven years to invest mainly in office properties, according to Krawczynski. They’re aiming to invest about 1 billion euros, or $1.33 billion, including debt, he said.

Kulczyk said he envisions a portfolio of about 13 to 17 properties, primarily focused on office towers.

“The region still lacks world-class buildings and architecture” that would meet the expectations of “more and more demanding customers,” he said.

Warsaw is an undersupplied office market, said Richard Petersen, managing partner of Cushman & Wakefield Poland, an arm of New York-based commercial-property brokerage Cushman & Wakefield Inc. The third-quarter vacancy rate in the city’s central business district was 7.2 percent, lower than almost any U.S. market and the third-lowest in Europe after London’s West End and Madrid, according to the firm.

Top-Tier Space

The city has about 3.6 million square meters (38.3 million square feet) of top-tier office space, almost all of it built since 1994, he said.

“It’s about half the size it could be,” Petersen said. “We think it could go to about 7 or 8 million square meters over the next 10 to 12 years.”

Demand comes from corporations seeking regional offices in eastern Europe, banks, insurance and accounting companies, and “quite a big pharmaceutical sector,” he said.

Kulczyk and Silverstein teamed up in late 2009 or early 2010, Kupperman said. After a year of organizing and forming an investment strategy, the partnership made its first deal in August, buying the 10,678-square-meter Stratos Office Center in central Warsaw. The price was $50.3 million, according to Real Capital. Tenants include the Belgian Embassy and BRE Leasing, a unit of Commerzbank AG.

Europe’s ‘Green Light’

Poland’s economy is among the strongest in Europe and has benefited from its use of the zloty rather than the euro, according to Patrick O’Gorman, director of central and eastern European capital markets for CBRE Group Inc., the world’s biggest commercial property brokerage.

“It was the only country not to have a recession in Europe,” O’Gorman said in a telephone interview from Warsaw. “It was a green light in a sea of red, and that attracted a lot of positive attention to Poland.”

Poland is the European Union’s largest eastern economy, with gross domestic product of $469 billion last year, and the largest of the former Soviet satellites to join the European Union between 2004 and 2007.

The economy expanded 4.2 percent in the third quarter from a year earlier, above economist expectations. That’s triple the rate of the 17-nation euro zone, according to data compiled by Bloomberg.

Euro Crisis

Poland may not keep up that pace as the sovereign-debt crisis roils the euro area, which buys more than half of Polish exports. The International Monetary Fund said today it expected Poland’s economy to grow 2.5 percent next year, matching the government’s forecast.

The country faces potential fallout from the turmoil, with banks likely to limit lending as they deal with unpaid debt in such nations as Greece, said Petersen of Cushman.

While credit for property deals may “tighten up a bit,” Petersen said he expects Poland to ride out the debt crisis better than other European nations. “You can still get financing, albeit on worse terms,” he said.

An “increasing supply pipeline” in Warsaw’s office market suggests that rents in the city “could come under pressure next year,” James Purvis, a real estate economist at London-based Capital Economics Ltd., wrote in a note Dec. 6.

About 550,000 square meters of offices are under construction in the capital, which will add about 15.5 percent to current stock, according to Purvis.

Yields ‘Fairly Low’

Poland’s success has made it harder for foreign investors to profit there, said Lars Ohnemus, chief executive officer of Copenhagen-based BPT Asset Management A/S, which hasn’t bought property in the country since 2008. He said last year that Warsaw real estate “is over,” and affirmed that view in an interview last week.

“You’ve had a lot of U.S. and German investors in the market, so yields at this point in time are fairly low,” Ohnemus said. “If you’re a short- to medium-term investor, I don’t think there’s a lot to gain right now.”

The “overwhelming majority” of interest in Polish real estate is coming from cross-border investors, according Real Capital’s Fasulo. Domestic pension funds are prohibited by law from directly owning property and lack sufficient equity to compete with established money managers from outside the country, Lukasz Lorencki, a Cushman & Wakefield analyst based in Poland, said in an e-mail.

“If there’s a euro zone collapse, everything’s going to slow down,” Fasulo said. “If there isn’t, I expect more of the same. I expect Poland to outperform not only just other emerging economies but even some of the other established economies in Europe because of the strength of the underlying fundamentals.”

Kulczyk said the partnership doesn’t intend to pull back if the Polish economy slows down.

“In the real estate business, you need to take a much longer view and invest in properties that will preserve value, not only over time, but also over crisis,” he said.

To contact the reporter on this story: David M. Levitt in New York at

To contact the editor responsible for this story: Kara Wetzel at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.