By Lisa Zettlin, general director at CitySpace
city space pole

 

Lisa Zettlin, general director at CitySpace, talks to the BPCC’s Michael Dembinski about the need for greater flexibility in office-space provision – a response to the sharp rise in hybrid work and new ways of managing office work. 

The trend towards flexible office space began before the pandemic, which massively accelerated a move that was happening anyway. Last year saw a slowdown in activity across the commercial real-estate sector; how is CitySpace coping with uncertainty on the demand side? Are you more hopeful for 2024 and ’25?

The trend towards flexible office spaces indeed predates the pandemic, which only accelerated an existing shift towards more dynamic work environments. Despite broader market challenges, we’ve witnessed a significant increase in demand for our flexible office solutions. According to the Workthere Flexmark 2023 report, this surge is reflective of a broader industry trend where companies are opting for less binding commitments and recognising the challenges of home-office setups. This shift is also spurred by the growing need for community and interaction that flexible spaces uniquely provide.

2023 marked the best year in our nine-year history. We were on an all-time high in occupancy, we opened our first centre in Łódź and we expanded our footprint in Wrocław. This year we are continuing our growth, planning for new centres in our key markets, expanding our space in Katowice as a response to the growing demand for flex office space in Silesia. The trend towards flex and co-working will continue as also corporations are opting for shorter lease terms and smaller workspace investments. Additionally, we are observing a significant trend where ESG demands are increasingly prevalent in Class A buildings. Our facilities are designed to meet these high standards, promoting sustainability and efficiency. This alignment with ESG principles is not only a response to regulatory expectations but also a reflection of our commitment to the shared economy model, where resources are optimised and environmental impact is minimised. We foresee that every large office building will soon integrate a flexible space component, driven by client demand and landlord interest. This evolving landscape suggests a bright future for CitySpace as we continue to adapt and meet the emerging needs of the modern workforce.

Looking at office development in general, there still seems to be a ‘wait-and-see’ among investors and developers, as a stable pattern of hybrid work emerges. Businesses are looking for smaller spaces but in better locations. Edge-of-town campuses are less attractive, especially for the Gen Z workforce who want to work close to the entertainment, leisure and retail centres. From the point of view of CitySpace, and your parent company Echo Investment, how do you see the best locations for office space in Poland today?

At CitySpace and under the umbrella of our parent company Echo Investment, we’ve closely observed the shift in preferences towards office locations. We are actively participating in shaping ‘destination’ projects that serve as hubs for not just work, but also community engagement and social interaction. These destinations are becoming increasingly popular as they cater to a holistic lifestyle, integrating work with personal life seamlessly. While we acknowledge the appeal of central locations, it’s also important to respect the choices of those living in suburban areas who prefer closer work locations to avoid long commutes. CitySpace is committed to offering flexible solutions that cater to diverse needs across various geographies.

BPCC members are always looking out for new foreign investors landing in the Polish market. For a newcomer to Poland, starting up in a flexible space, or in co-working offices, is a logical low-risk approach to market entry. Which sectors, which countries, are showing the greatest interest in Poland right now, and how are you helping these investors find a foothold here? Which cities/regions are most attractive?

Poland continues to attract a broad spectrum of foreign investors, with cities like Wrocław, Katowice, and Warsaw leading as the most attractive destinations. These cities offer vibrant economic environments conducive to business growth and innovation. In particular, sectors such as IT, although experiencing some downturns, still show robust activity. We also see a diverse array of other sectors showing keen interest in setting up operations in Poland. More and more investors are also choosing to do business in Łódź. The city’s redevelopment efforts and growing tech ecosystem make it a prime location for innovation-driven companies looking for vibrant yet cost-effective business environments in central Poland.

CitySpace is strategically positioned to assist these new entrants by offering flexible and co-working office solutions that represent a low-risk, high-flexibility option for establishing a market presence. Our facilities in Wrocław and Warsaw, for example, have attracted attention from several British companies recognising the city’s potential. By providing flexible office spaces in these key cities, as well as flexible contracts, the duration of which depends on the needs of the client, we facilitate smoother transitions for foreign businesses entering the Polish market.

Over the past few years, we have seen significant rises in construction costs; labour and materials in particular; this feeds into higher rents which in turn discourages tenants from moving into new premises. Can flexible offices offer an answer here?

In the context of rising construction costs impacting both labour and materials, flexible offices stand out as a practical solution. CitySpace offers office spaces with high standards of fit-out, optimised for cost-efficiency and environmental considerations. This shared economy model not only reduces overheads but also enhances accessibility to premium locations and facilities, which can be crucial in attracting and retaining talent. The aesthetic and functional quality of office environments is increasingly pivotal in drawing employees back to office settings, making our flexible office solutions particularly appealing in the current economic climate. By providing our services in spaces that are adapted to the current demand of a company, we enable businesses to scale up or down based on their immediate needs. This flexibility allows companies to adjust their space requirements without the constraints of traditional long-term leases, further optimising space usage and aligning with the dynamic nature of today’s business environment.

In today’s uncertain economic environment, fewer people are taking on the risk of starting up a new business, and fewer employees are confident enough to leave a steady job to join a start-up. Are you also seeing this trend, noted by head-hunters and recruitment firms?

The current economic uncertainty has indeed led to a noticeable shift in the business landscape, with fewer individuals venturing into start-ups and a preference for the security of established employment. CitySpace has observed this trend and has adapted our services to cater more to medium and large enterprises that are looking for stability and flexibility in their office needs. This adaptation ensures we continue to meet the evolving demands of the market while supporting businesses in navigating these challenging times.

Are you noticing the impact of the Corporate Social Reporting Directive and the demands for ESG compliance when it comes to your tenants? Is the CSRD affecting your work too? What’s being done to simplify data collection and reporting?

At CitySpace, part of the Echo Group, we are deeply committed to sustainability and ESG compliance, which is becoming increasingly crucial to our clients. The Corporate Social Reporting Directive (CSRD) is indeed shaping the landscape, prompting us to collaborate closely with landlords to ensure meticulous data collection and reporting. Our efforts in ESG have been longstanding, rooted in our operations within BREEAM certified buildings that emphasise not only environmental but also social governance aspects.

We are actively working to simplify the processes associated with ESG compliance, ensuring that our tenants can easily meet their reporting requirements without compromising operational efficiency. This focus on sustainability not only aligns with regulatory expectations but also reflects our commitment to responsible business practices that benefit our clients, the community, and the environment.

The BPCC’s Real Estate & Construction working group had a meeting last year about adaptive re-use as an answer to potential stranding events, in which landlords are left with older building that no one wants to lease or buy. Are you considering repurposing such older buildings and giving them new life in the form of flexible space offices?

CitySpace is actively exploring opportunities in adaptive re-use, particularly in revitalising older buildings that may otherwise become stranded assets. This approach aligns with current market demands and sustainability principles, offering these buildings a new lease on life by transforming them into flexible office spaces.

We offer comprehensive office management solutions that cater to both landlords looking to repurpose their properties and businesses seeking modern, flexible working environments. By managing these transformed spaces, we help preserve the value of real estate assets while providing state-of-the-art office solutions that meet the needs of today’s workforce. This strategy not only enhances the utility and appeal of older buildings but also supports broader urban regeneration efforts.