Changes in energy strategy are unexpectedly reflected in real estate, which is why renewable energy investors have become interested in vacant land again.

They share the market with only those industrial developers who have secured non-bank financing. This is because players in the market without this strength are discouraged from investing in land by the challenging economic situation.

The rise in interest rates last year slowed down investments by some industrial developers in buying new sites. On the other hand, P3 Logistic Parks, thanks to the backing of its shareholder, plans to buy tens of thousands of square meters of space in the Czech Republic this year. 

P3 is particularly looking for sites with a designation for light production and logistics use, which are easily accessible by transport. The developer is ready to buy land for future construction, and also existing buildings that are either vacant or occupied by tenants. 

The drive for energy self-sufficiency and the demand for warehouses and production halls complement each other and are not in competition. For example, industrial developers are already preparing the roofs of buildings to be fitted with solar panels, so it can be said that a win-win solution is possible.

Three questions for the P3

Industrial developer P3 Logistic Parks is investing in new properties and is interested in acquiring land and existing parks in attractive locations. 

This year, the company plans to expand its Czech portfolio by tens of thousands of square metres. Ondřej Vodička, who is in charge of acquisitions at P3, reveals further plans.

Shortage of storage space has been an issue in the Czech Republic for several years. Additionally, we are also dealing with high inflation. Why is P3 going to buy now?

We manage 87 warehouses in 16 parks in the Czech Republic and their occupancy rate is more than 97%. We are currently building in three parks, and we still have 177,000 sq m of space in two of them. We simply need more new sites for our further development. While much of the market is slowing down under the weight of challenges in securing bank finance, P3 is ready to invest and can afford to, thanks to our financially strong shareholder. 

What types of properties are you interested in? For plots of land or for entire industrial parks?

We are ready to buy not only land for future development, but also existing buildings – either empty or occupied. This is an opportunity for owners who want to access their capital which is currently tied up in real estate, by releasing it in a sale & leaseback transaction. We’re focused on plots of around 50,000 sq m, or at least 30,000 sq m in the case of Brno and Prague. According to the zoning plan, they must have a designation for light production and logistics use. We are not only interested in land with good quality soil, so brownfield sites are also an option for us. 

What is the key to site selection?

Accessibility is crucial, both in terms of employment and especially transport. Equally, our parks are close to motorways and expressways, so proximity to transport networks is key. Traditionally, the greatest interest in industrial parks is in the vicinity of large cities, which is why we are definitely looking at Prague and Brno, but also South Bohemia and, in future, regions in the Karlovy Vary Region may also be interesting. Generally speaking, we invest where the opportunities are.

DELTA was founded in the Austrian city of Wels, where its headquarters are still located. In total, DELTA Group has 12 branches in four countries with more than 350 employees, where about 50 of them comprise the Czech-Slovak team. 

Although the historically first branch in the Czech Republic was purpose-built in České Budějovice, where DELTA accompanied the construction of a local shopping centre, today, DELTA is represented in the Czech Republic by their offices in Prague and Třebíč. Their CEO, Erik Štefanovič, told us more about the company’s past and present.

Is it only the Czech branch from within Delta Group that celebrates its anniversary?

In total, DELTA has been around for an impressive 47 years, which I hope shows that we do what we do well. That is why we have been working in the turbulent construction market for so long, which makes me very happy. When it started 30 years ago, it started like with many other companies. The Austrian holding company decided to expand their operation to other interestingly developing markets, and the decision fell on the Czech Republic. It was then that I joined the Austrian headquarters in Wels. Shortly after that, we agreed that I would transfer to the Czech Republic and start developing projections for the Czech market as the first employee. 

What was it like at the start? 

The Czech Republic has always had a strong tradition in industry, and strong growth and interesting trends unfolded in 1993 even here. That is why the Czech DELTA was also very much tied to industry. We worked for brands such as Magna, Fischer, Mann Hummel, dm drugstore, etc. The trend in the area of shopping and entertainment was also changing greatly, the first shopping centres connected with entertainment were being built, so we also worked on projects such as Europark Prague, the network of ASKO furniture stores, STOP SHOP, Möbelix, Billa, Kaufland or the gradual development of the CineStar multiplex network. These were the foundations that were actually created in the Czech Republic. It was necessary to create an infrastructure of – let’s say – jobs and at the same time an infrastructure for shopping. So, our first projects were mostly 50% industry and 50% shopping. Our portfolio consisted mainly of larger shopping centres in combination with industry and administrative buildings. Today, we have already moved further and head towards the construction of buildings for the health sector, construction in the field of education, culture, sports and housing complexes. 

What was the sort of important milestone during those years? 

From my point of view – as well as Czech DELTA’s point of view – it was the Europark in Štěrboholy in Prague. It was at the beginning of the operation of the Czech branch of DELTA, when we were entrusted with the international project management of this shopping centre, at that time one of the largest ones. What was also specific was that the client did not want to work with a general contractor, so we managed around 60 international companies during construction then. We had to coordinate them so that the shopping centre could be built. We learnt a lot from this and moved significantly forward. Subsequently, we built another shopping centre in Hradec Králové. It was the period when we started to grow, and our small team of five suddenly doubled and over time we got to the present form. The Czech-Slovak team that I lead now has almost 50 people who are now active in the local market. 

You are talking about the Czech-Slovak company. How does it work in today’s conditions? 

I am the manager of the Czech and Slovak branches, each of which is a limited company, and they work very closely together. Our colleagues are often experts in a particular field, which means that some Slovak employees, for instance, work on Czech projects and vice versa, because they are simply better at it. That means that we complement each other. And I believe that this is the great strength of our company, the interconnectedness of competences and at the same time the diversity of experience from individual markets.  

Was Europark the only milestone? 

Certainly not. One of the other important milestones was the fact that we started modelling buildings in BIM at a very early stage. Ten years ago, we already saw that there was a perspective in BIM and the overall digitization of construction processes for the future, so we tried to gather experience very early on. We did it – with exaggeration – almost secretly, because clients often did not even know that we were modelling the project in BIM at the same time. At that time, we were actually learning how to handle the software and we were gathering experience, which was painful in the beginning. There was nothing like it in the market, we had to prepare everything ourselves. Today, there are element libraries where almost all the necessary elements are available. It was very challenging back then, but we gained a huge lead. And it is precisely this experience with BIM that we are now able to make meaningful use of it for investor’s benefit when designing buildings. And I think that this new way of designing projects will represent a significant change in the future. Collecting and preparing the right data will make it possible for us to be able to build truly smart cities in the future and be able to connect individual objects really effectively. 

What do you consider the advantage of BIM? 

One of the main advantages of BIM I perceive is its absolute transparency, interconnectedness of information, and therefore also a change in communication for all participants. Including the elimination of errors, inaccuracies and the maximum efficiency of all processes within the entire team, from the architectural concept to final building approval and with this associated issue of passing information to the building manager or facility management. And if we go even further, BIM can also show us accurate residual sales value of the material and also provide us with a lot of other available information, for instance in terms of the building’s energy efficiency, which brings a huge number of benefits both to the investor or the owner of the building. This data that we collect about the project will help us to approach various processes in a much more meaningful way in the future. 

But it wasn’t always rosy in those 30 years, was it?

The beauty of construction is that there is always something going on. A field that is constantly developing, innovating, we are constantly experiencing changes and we certainly cannot rest on our laurels. Last year, we experienced challenges related to the lack of building material and how to optimize all subsequent processes and how to mitigate the emerging delay as effectively as possible. We expect that some materials will become less available even in the future. It is related to the behaviour towards our planet. That is why, in a few years’ time, we will be forced to focus more on recycling materials, and BIM can help us very effectively in this as well. The BIM model will contain information about a similar building that is destined for demolition, so it will be possible to buy and recycle it. We have to change our thinking and learn how to do it differently. The very power of data and information is what I consider a huge advantage. Artificial intelligence will help us in their evaluation. Nevertheless, we still lack cooperation because we are still very wasteful. Cities have certain needs, but we don’t know if we can meet those better because we don’t have enough information. In the future, I would like for the information to be available and for us to use it better for greater energy efficiency, population health and overall climate protection.

We get to the present now. What does the company structure look like today?  

About 10 years ago, there was a change in management in our company. The original founding management in Austria left and sold the company to its successors. There were in particular two of the three founders who left the company. One wanted to continue with us and stayed; 10 managers were given the opportunity to buy a share in the company, so we became co-owners of the new company. We had plans, which of course included the growth of the company, support, development in a sustainable direction, etc. Our mission is – simply put – to create a better world, and we try to enthuse our colleagues and investors in this way as well. When we took DELTA Group over in the new ownership structure, there were about 120 of us. Currently, DELTA Group has grown to more than 350 colleagues. 

What projects make you happy?

I am pleased that in recent months, I have felt investors and clients’ great effort to change their thinking. They are beginning to realize that there is time for some change. The progress is slow, but noticeable. Years ago, we set ourselves the goal that at least one element in each project should be green – and now we are really succeeding, this also being thanks to the fact that the clients are changing their approach.  

What else could help it?

It is necessary to establish a role model system, which means that the biggest players – ideally the state, but also the public sector, especially large developers whose projects are more visible and who often invest huge amounts of money – should represent the role model for others. This is what I like in Austria, for instance, where we recently opened a student campus project within the hospital area in Ried. The investor decided for maximum sustainability, and together we created an inspiring model for the neighbourhood and (not only) young people, and that is really important. 

What are your future plans? 

Now, we would like to become really profound on sustainability. Over the past year, we have brought over 30 specialists from all branches of our group from across all four countries into one interdisciplinary team, which is in charge of sustainable development. We are moving towards consulting in the field of taxonomy, ESG, we are preparing our own certification of buildings, etc. We are also trying to develop actively in this direction in the Czech Republic. Our aim is for clients to think about the project in a different way from the beginning – and I see a big opportunity in that. 

Do you have any specific examples?

For instance, last year, our group decided that, starting this year in Austria and from next year also in our country, we will not purchase new cars with a combustion engine, so the entire company fleet will consist of only electric cars. So, this is where even our Czech team will have to change their way of thinking. I think that our responsibility to reduce our carbon footprint will not only be required by legislation but will also be generally expected from our clients and partners. I really hope that Europe will become the model for others. 

Despite negative economic factors, YIT’s turnover exceeded CZK 2 billion last year and they sold just over 200 apartments. 

Last year, YIT implemented the so-called prefabrication technology to a greater extent, new for structural elements. They are also intensively devoted to recycled materials and, according to the multinational strategy, continue to fulfil the set ecological goals. “Despite the turbulent development of the real estate market in 2022, we remain optimistic and expect its recovery this year. With the reduction of inflation, there should be a decrease in mortgage rates, which will contribute to the recovery of demand,” says the general director of YIT Stavo, Marek Lokaj. He adds: “Regarding new trends, we follow the growing interest in energy-saving housing and modern technologies, such as photovoltaic panels, heat recovery and LED lighting. They are therefore already part of our new projects.”

YIT’s balance in 2022

The developer’s projects of Parvi Cibulka with 150 loft-type apartments and Koti Libeň with 140 units underwent final building approval last years. Two projects reached the rough construction stage – the Vesi Hostivař complex with 208 apartment-type units and the Kemi and Ranua stages in the Lappi Hloubětín complex. As for new projects, in 2022, YIT commenced construction and sale of a total of 119 apartments in two projects – Rivi Bachova with 47 apartments and Happi Milánská with 72 units. 

YIT is planning development outside of Prague 

“We were unable to implement further development last year because the processes of obtaining a building permit were prolonged. However, we believe that we will manage to launch it this year. This applies to the two remaining stages in the Lappi Hloubětín complex and projects in Prague 5, 11 and 12 with a total of more than 300 apartments,” Marek Lokaj describes and adds: “As part of our strategy, we also focus on regional expansion. We are therefore preparing our first development outside of Prague, in Kladno, where we plan to build in stages approximately 800 apartments.” 

Expanding the use of prefabrication

To speed up and improve the quality of construction, YIT implements innovative prefabrication technology. “In some of our projects, we are already installing modular bathrooms that are manufactured in modern factories and brought to the construction site fully equipped,” explains Marek Lokaj. The developer has already installed 300 of such bathrooms. However, the use of prefabricated elements is now expanding further. Other prefabricated structural elements are also installed in the Happi Milánská apartment building.

Increased emphasis on ecology 

YIT tries to find new materials with minimal impact on the environment. They, for instance, introduced concrete construction from recycled aggregate, which will reduce CO2 emissions by almost 3% in the Vesi Hostivař complex. As part of the ESG strategy, YIT has updated their standards. “We already pay attention to the use of renewable resources and energy-saving technology when designing all our projects. From the very beginning, each of them has a so-called ESG card, where we determine the parameters and technologies suitable for installation in a particular project,” says the general director of YIT Stavo.

In 1998, Serge Borenstein began implementing his first residential projects in Karlín, Prague. Since the devastating floods in 2002, the district has become much livelier and grew more beautiful – this also being thanks to the development company Karlín Group. 

We asked the two current owners – the founder, Serge Borenstein (SB) and Jan Ludvík (JL), what has changed in the 25 years of existence of a company that prefers creative and timeless architectural renderings in its projects.

So, let’s go back 25 years, to the beginning… 

SB: Initially, the development company Karlín Group was significantly supported by the American investor Marc Rich, thanks to whom we were able to buy a large area of ČKD Holding. This is where the long history of Karlín Group began… 

JL: I started with Karlín Group shortly after that, 23 years ago, through a part-time job during my university studies. Some 10 years later, when I gradually reached a more important post in the company, Serge was dealing with a former business partner and also with the consequences of the 2008 crisis. That is when he approached me to see if I would like to help him start Karlín Group again and offered me a share in their upcoming projects. 

Can we briefly recall the history of Karlín Group? 

SB: As already said, we started by buying a large area in Karlín, which we concentrated on. From the beginning, our philosophy was to develop the urban area and at the same time mix functions in order to create a lively district. Real estate agents discouraged us from this model, because they claimed that it was impossible to combine residential and office segments, that people would not want to live there. We wanted to create a city that would live. I saw a deterrent example here in Brussels, where the administrative buildings for the European Union are built in the central part, which becomes deserted in the evenings. It is a challenge for every developer to be involved in the development of a large urban area. We got lucky right from the start, and I really enjoyed it. It is different than some solitary projects in the city. It was nice to see the city change. 

JL: It is not only encoded in the name of our company Karlín Group, but also in the projects we proceed with. Our portfolio mainly comprises residential and administrative buildings, depending on the current market development. What is important though is that apart from Karlín, we also continued to transform larger areas, which has developed into a relatively important segment of our activity, that is land development. Only few people know that we were at the beginning of some important projects such as River Garden or Libeňské doky. In these locations, it was necessary to consolidate the land, propose a new urban plan and obtain a zoning permit, with which we subsequently sold the land for realization to other investors. We have never had the ambition to grow into such a sizeable company that would be able to build everything we designed from the ground up. 

Do you have a stable team of co-workers? How many of you are there in total?

SB: Interviews sometimes speak about Prague developers, but the people behind those companies do not get mentioned. Since day one, I have been extremely fortunate to have worked with people who have created an excellent team, and whose initial enthusiasm persists. Our team now numbers around 30 people. It is important to mention them sometimes too, because they tend to be forgotten! 

JL: We keep our team this small on purpose, and we would like to keep it that way in future. Nevertheless, the flexible work structure allows us to work on several projects of different sizes at the same time. 

What projects are you currently implementing? 

JL: Now, we are working on about six or seven projects – from the smallest to larger areas. These are residential and rental projects in Prague, which have, after all, already been written about thanks to the partnership with PPF, but also larger city planning units, some with the aim of land development. We have discovered several interesting brownfield sites that are suitable for potential transformation. At the moment, we are, for instance, organizing an architectural-urban planning workshop on land in Chuchle. Karlín Group also made their first acquisition outside of Prague – in the premises of a manufacture of jointing materials in Libčice nad Vltavou. It is a brownfield site left after a former factory complex, right next to a train station. We are mainly preparing a conversion into housing, accommodation for the elderly and other civic amenities there. 

Does it mean you are moving out from Karlín?  

JL: It is difficult to find any more suitable land for construction in Karlín. And as we still enjoy our work, we looked across the river and found similar areas in Holešovice, where we are preparing one specific project near the exhibition grounds, and together with the Prague Public Transit Company, we are trying to transform the entire area around the vestibule of the Nádraží Holešovice underground station. The Railway Administration and CPI are also involved in the project as other significant local owners. We are preparing an international architectural workshop for this interesting location, which we could possibly realise before the end of this year. We have previously implemented one project near this location, at the intersection of Na Zátorách and Partyzánské Streets – the student housing project, which is now operated under the brand name The FIZZ and belongs to the International Campus Group. We would like to continue to develop similar projects in the future.

SB: But we have other activities as well. For instance, we support the So Concrete startup. After all, you could see it at the Festival of Architecture held at the exhibition grounds in Brno. It is a remarkable project and certainly a suitable topic for Development News. It is a combination of robotic programming, innovative concrete and the most advanced practices in construction. In time, artificial intelligence might design architecture and print it at the same time! 

Karlín Group is known for paying its attention to quality architecture. Which architects do you collaborate with on projects? Do you choose a particular architect for each individual project, or do you have some ‘court’ architect?  

JL: We select one for each individual project and in that context, we try to map the scene with both renowned and young architects. It is certainly no coincidence that many architects who worked for us in the past are better known today and have many more references than when we once approached them. They also used to be much more affordable for us then but today, we probably wouldn’t even be able to afford some of them! For instance, the Keystone building, where we are right now, was designed by the EM2N studio, which are generally very renowned architects in Zurich today. And I think that it was also this earlier realization of theirs that helped them to some extent. But there are some architects that we have been happy with and have great chemistry with, and with whom we have worked on multiple projects. However, I still wouldn’t call them court architects.

Can you name some?

SB: Certainly, the already mentioned Mathias Müller and Daniel Niggli from the world-renowned studio EM2N from Switzerland, Vasa Perovic and Matija Bevk from Slovenia, Baumschlager and Eberle from Austria, David Chipperfield or the recently deceased Ricardo Bofill. But there are also Czech architects with whom we have done several projects, historically with Šafer & Hájek, Pavel Hnilička and from the young architects with Under Construction; as for the younger ones – the aspiring ones – the Edit studio or perhaps Chybik & Kristof, who are far from being beginners by now. It is very interesting to watch those young and budding architects grow. For instance, Roman Vrtiška who worked on the first model apartment in our residential project Cornlofts Šaldova. 

How will you celebrate the 25 years of Karlín Group?

SB: We are preparing a summer event that will revolve around music. Besides architecture, music is another common passion of ours. With the Metronom festival, we will also bring the popular French singer-songwriter Zaz, who has already performed several times in the Czech Republic and sold out Forum Karlín three times. Since it will be in the summer, it will be a suitable kind of celebration, where we want to invite our business partners and friends.