Global central banks have raised interest rates to grapple with reemergent inflation, causing bond and equity valuations to decline in synchrony. The historical diversification benefits of traditional stock and bond investments has turned on end. Amid a continued challenging overall environment, we believe many investors will need a more sophisticated toolbox to meet their long-term goals. In this environment, we believe alternative investments can be used as multi-faceted tools for portfolio construction. Alternative investments, defined as private equity, private credit, real assets—such as real estate and real estate investment trust (REITs)—and hedge funds, have the potential to provide investors with higher returns, higher income, lower volatility and diversification benefits relative to traditional investments.1 Consequently, they can be employed to enhance potential growth, income, defensiveness and/or to provide a hedge against inflation. Benefits of investing in real estate Real assets are tangible, physical assets whose value is derived from their physical use—which includes infrastructure, natural resources and real estate. Of these, real estate is the largest segment of real assets,2 representing a diverse set of opportunities across both categories of use and geography. Real estate has historically been a source of growth and income, diversification and a hedge against inflation. Investors can access real estate in one of three ways: through allocation into publicly traded REIT stocks, unlisted real estate funds or direct assets. Real estate has historically delivered returns on par with equities, with REITs modestly outperforming unlisted real-estate funds (see chart below).  30-year Annualized Returns Through June 30, 2022   Source: Morningstar Direct as of June 30, 2022. Private Real Estate: NFI-ODCE Index; Public Real Estate: MSCI US IMI Real Estate 25/50 Index. The NFI-ODCE Index measures investment returns (gross of fees) of the largest private real estate funds pursuing a core investment strategy, which is typically characterized by low risk, low leverage (less than 40%), and stable properties diversified across the United States. The MSCI US IMI Real Estate 25/50 Index (USD) is designed to capture the large-, mid- and small-cap segments of the US equity universe. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator of future results. See www.franklintempletondatasources.com for additional data provider information.   In addition to its historically compelling return profile, real estate has typically offered yields above those of broad stock indexes as well as sovereign debt and high-grade municipal and corporate bonds over full market cycles.3 Real estate cash flows and values have also typically increased over time as the cost of marginal new supply rose and created a natural linkage to the rate of inflation.4 Consequently, real estate has tended to both sustain value relatively well during recessions and perform admirably amid heightened inflation.5  Private real estate vs. publicly traded REITs An investor can gain exposure to real estate through publicly traded REIT products or via open-end or closed-end private equity funds. The assets underlying each is effectively the same: commercial real estate. Returns on private real estate have modestly lagged public REITs, as measured by the National Council of Real Estate Investment Fiduciaries Fund Index – Open End Diversified Core Equity (NFI-ODCE Index) and the MSCI US IMI Real Estate 25/50 Index, respectively, but could be viewed as comparable assuming some allocation to value-additive strategies.6 However, private commercial real estate tends to be less empirically volatile and exhibits lower correlation to other financial assets. This is because values are determined based on relatively infrequent appraisals, whereas a publicly traded REIT is marked-to-market daily and will reflect the constant turbulence of interest rates, risk premiums and other macroeconomic variables. Public REITs also typically have lower leverage and more frequent use of unsecured corporate debt whereas private real estate can have more than 50% loan-to-value with more frequent use of first-mortgage financing. Private real estate can have a greater potential exposure to value-add opportunities as public REITs are limited by capital return requirements to maintain tax-free REIT status. However, REITs have a diverse universe of investable assets across many subsectors including towers, self-storage, timber and cold storage versus private real estate’s exposure of more traditional subsectors with fewer opportunities in more niche subsectors. Thus, investor preferences should determine which would be more suitable when making allocation decisions.  Reasons to invest in both We believe many investors should consider allocations to both private and publicly traded equity strategies to effectively take advantage of the beneficial attributes of real estate. Such an approach can potentially maximize returns, while reducing portfolio risk. The return profiles of combined portfolios exceeded those of both the 100% private and 100% publicly traded equity portfolios.7 In our analysis, this approach can also provide adequate liquidity to ensure access to capital and allow for tactical rebalancing.  Portfolio Mix of Public and Private Real Estate: 20-years Annualized Risk and Returns Through June 30, 2022   Source: Morningstar Direct as of June 30, 2022. Private Real Estate: NFI-ODCE Index; Public Real Estate: MSCI US IMI Real Estate 25/50 Index. The NFI-ODCE Index measures investment returns (gross of fees) of the largest private real estate funds pursuing a core investment strategy, which is typically characterized by low risk, low leverage (less than 40%), and stable properties diversified across the United States. The MSCI US IMI Real Estate 25/50 Index (USD) is designed to capture the large-, mid- and small-cap segments of the US equity universe. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator of future results. See www.franklintempletondatasources.com for additional data provider information. Calculation based on a monthly rebalance to the allocation referenced.   Why now is a good time to invest in public real estate In our opinion, the current environment presents a compelling opportunity to consider allocating to real estate strategies. Inflation is running high and growing increasingly persistent. Concerns about whether central banks have the will to combat and defeat inflation in the face of economic risks and imbalances are warranted. For example, industrial real estate is seeing market rent growth exceeding 20% per annum—and, in some places, well above that average—because demand far exceeds supply, vacancy is at record lows, and the cost of new construction is spiraling higher.8 Apartment rents have surged in response to consumers demanding more living space as lifestyles adjust to a new, more home-centric post-pandemic normal. Pandemic-motivated demand for self-storage has pushed vacancy to record lows and rents to record highs. Inflation is a scourge to financial assets unless, of course, one owns scarce assets that can capture and reflect that inflation. In response to high inflation, global central banks have embarked on an aggressive policy of tightening monetary policy, which has raised nominal and real interest rates. This has weighed on commercial property values, as the discount rate applied to cash flows has increased substantially in a short timeframe. In our analysis, this creates an opportunity for a well-chosen portfolio of commercial real estate that can seek to mitigate these pressures through collateralized cash flows that are hedged from the risk of inflation-related devaluation.     We’ve seen a valuation contraction in publicly traded commercial real estate, as asset values have been remarked to reflect higher interest rates. Notably, publicly traded REITs trade at an average 20% discount to net asset value (a measurement of the private market value of the embedded real estate), which has historically marked a nadir for the relative valuation of public real estate (see chart below). The combination of inflation-linked cash flows and the prevailing discount to private market value make the current environment for publicly traded commercial real estate attractive, in our view. The uncertainty surrounding the macro outlook contributes to our view that active management is especially important to discern which opportunities offer high quality, in demand, supply constrained assets and prudent capital structuring and allocation. Historical Price-to-Net Asset Value (P/NAV) Ratio 1996-2022   Source: Evercore ISI/Steve Sakwa as of September 30, 2022.   Endnotes These asset types also carry risks different from traditional investments, please see the disclosures at the end of this document for an explanation of the risks associated with private assets. Sources: Harvard Business School Online, “What are Alternative Investments,” July 8, 2021. McKinsey & Company, “Private Markets Rally to New Heights: McKinsey Global Private Markets Review 2022,” March 2022. Source: Bloomberg as of 11/30/22. Source: Forbes, “What History Teaches Us About Inflation And Commercial Real Estate,” 7/18/22. Sources: NAREIT, “Historical Real Estate Performance Before, During, and After U.S. Recessions, 11/8/22 and CRE, “Is Commercial Real Estate an Inflation Hedge?” 2011. Source: Morningstar Direct as of June 30, 2022. The NFI-ODCE Index measures investment returns (gross of fees) of the largest private real estate funds pursuing a core investment strategy, which is typically characterized by low risk, low leverage (less than 40%), and stable properties diversified across the United States. The MSCI US IMI Real Estate 25/50 Index (USD) is designed to capture the large-, mid- and small-cap segments of the US equity universe. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results.  See footnote 6. Source: JLL Research, “Industrial Market Overview: Q2 2022,” 2022. WHAT ARE THE RISKS? All investments involve risks, including the possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stocks historically have outperformed other asset classes over the long term but tend to fluctuate more dramatically over the short term. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds adjust to a rise in interest rates, the share price may decline. The risks associated with a real estate strategy include, but are not limited to various risks inherent in the ownership of real estate property, such as fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by general and local economic conditions, the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, environmental laws, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars). Investments in alternative investment strategies are complex and speculative investments, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative investments may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. Additionally, investments in private securities and obligations may be thinly traded, have no ready market or exchange and require private negotiation, and which may be restricted as to their transferability. These factors may limit the ability to sell such securities at their fair market value.  

  Kamila Oleksiak takes the role of Senior Property Broker in Office Agency at Avison Young, where she will be supporting tenants in renegotiation processes of the leasing agreements as well as leasing new office space. Kamila has been active on the commercial property market for 5 years. She started gaining her experience in the retail sector, supporting tenants in matters related to leasing contracts. For the last several years she has been operating in the office market only, both in Warsaw and Poland’s regional cities. She cooperated with such renowned clients as – among others - OTCF, ING Bank ÅšlÄ…ski, CCC, Martes Sport, Rossmann, Euronet, Pepco, Anegis, Grafotronic and BDO. Avison Young launched Office Agency business line in October 2022, by acquiring team of market professionals. At Avison Young Kamila will re-join Robert Pastuszka, Dominik Pawlak, PrzemysÅ‚aw UrbaÅ„ski and Maksymilian Sobczak – team of colleagues with whom she has worked before at Nuvalu Polska. In Office Agency Kamila will be also cooperating with Marta SypiaÅ„ska. Avison Young Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. Headquartered in Toronto, Canada, Avison Young is a collaborative firm owned and operated by its principals. In the Central Eastern Europe and South Eastern Europe the firm is operating in Bulgaria, Czech Republic, Hungary, Poland, Slovakia and Romania, offering a broad range of consultancy services. In the Polish commercial real estate market, Avison Young is providing professional consultancy services such as office agency, investment advisory, valuation consultancy, technical advisory and project management.

House and apartment prices in Sweden have already fallen by almost a fifth since the price peak in Q1 2022. And this may not be the end of this deep correction, economists warn. Meanwhile, globally, in real terms, after accounting for inflation, houses have already started to get cheaper year-on-year. House prices in Sweden have fallen by -17% since the spring peak, according to data from the state-owned mortgage bank SBAB. The launch of cycles of interest rate increases by central banks caused downward trends in real estate prices not only in this Scandinavian country, but they are most visible there. Read next: Twitter Did Not Pay $136,260 Rent, Microsoft Reported Its Worst Quarterly Results In Years| FXMAG.COM Swedish houses are getting cheaper in the eyes The forecast of the economists of the Swedish central bank assumed that as a result of the cycle of rate increases, the prices of Swedish houses and flats could fall by -20%. These assumptions as to the depth of the correction have already been almost fulfilled, and the end of the monetary policy tightening cycle in developed countries is not yet in sight. Property prices have also been falling for months in markets such as Canada, Australia and New Zealand. However, in no country have they gone down as much as in Sweden. Several factors contribute to this. This is not only about the rising cost of money and credit, but also about the deteriorating condition of the Swedish economy and prospects, and the increasingly worse social climate for living in a country with the capital in Stockholm. In December 2022, real estate prices in Sweden fell by -2% m/m. In November they fell by -2.2% m/m, and in October by -2.3% m/m. “If we see an increase in unemployment, it will be important that mortgage payments do not increase. If there is a simultaneous increase in the unemployment rate and an increase in the main interest rate, the situation will become difficult, both for borrowers and for the real estate market,” said SBAB chief economist Robert Boije . Prices of detached houses have fallen by -19% since the spring peak. Housing prices went down by -14%. Experts explain that houses are cheaper than flats because they are more energy-intensive, i.e. they generate higher electricity bills, which is not welcomed by the owners with the current increases in electricity prices. Read next: Croatia introduces Euro – what are experts' approaches?| FXMAG.COM Sweden House Price Index Source: Trading Economics Global home prices are falling after inflation What is the situation with house and apartment prices around the globe? According to the Knight Frank Global House Price Index, house prices in 56 countries continue to grow at an annual rate of 8%, although they have fallen from a peak of 10.9% reached in Q1 2022. However, in real terms, taking inflation into account, house prices are falling by -0.3% y/y. Despite this, in nominal terms, 48 of the 56 countries see price increases on an annual basis. Real estate prices are growing the fastest in Turkey (189% y/y in the third quarter), but to a large extent this growth is driven by very high inflation (the price growth rate after taking into account inflation is 58%). Real estate markets with the largest drop in prices since the peak in Q1 2022 Source: Knight Frank Source: Knight Frank

In October, the reading of the US Home Purchase Contract Signings Index fell 4% month-on-month to 73.9 points, the second lowest reading in the past 20 years. This represents a 37.8% year-on-year decline in the number of homes sold. At the same time, the Case Shiller Home Price Index (CSHPI) increased by 8.6% year-on-year. Average interest rates on 30-year mortgages have doubled since the beginning of the year to 6.3%. Could there be a collapse in this market and would it be a bigger crisis than in 2008? 2008 is still a long way off... The financial crisis of 2008 was one of the biggest financial crises in the history of the current century. It had its origins in late 2007, when problems began to emerge in the US real estate market. Many banks and investment companies invested in financial instruments based on property prices. When property prices began to fall by up to more than 10% year-on-year, these instruments lost value, resulting in losses for many financial institutions. The first victim of the crisis was Lehman Brothers, which declared bankruptcy on 15 September 2008. This caused panic in the financial markets and put many other financial institutions in trouble. In response to the crisis, governments and central banks around the world took action to protect financial institutions and stabilise markets. In many countries, assistance programmes were introduced to help companies and individuals affected by the crisis. The largest cycle of printing and cheap money in US history was also launched. At present, lending rates are at the level of the property crisis. The downward trend in building permits for new homes may also seem worrying, but here the value is nearly 50% higher than in 2008. The situation for the moment seems to be saved by average property prices, which are currently rising by 14.7% year on year. Unfortunately, the pessimistic attitude of consumers and businesses towards the coming months and the drastically declining demand may have led, among other things, to a more than 30% drop in the iShares Mortgage Real Estate ETF (REM) giving exposure to broad real estate companies. Source: Conotoxia MT5, REM, Daily Are we in for a real estate slump? The mortgage debt service payment as a percentage of disposable personal income in the USA currently stands at 3.9% and the total debt in relation to disposable income at 9.7%. These values are among the lowest in 50 years. By comparison, the same parameters in 2008 were 7.1% and 13.1%. This means that it now costs the average US citizen almost twice as much to pay a mortgage installment in relation to their earnings. It should also be taken into account that most home loans are taken out at a fixed interest rate, so that their drastic increase over the past months wouldn’t necessarily lead to a repayment problem. For this reason, an investment in the iShares Residential and Multisector Real Estate ETF (REZ) seems relatively safe. It is a passive fund that invests in real estate companies involved in residential and commercial rental and property management. It has historically performed better than the broad property market. Nevertheless, we may currently see a discount of 30% on it. Source: Conotoxia MT5, REZ, Daily   Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Confidential tenant has leased over 800 sq m. of space in the office building within the Blue City complex, situated at Aleje Jerozolimskie street. The company plans to open a new office on January 9, 2023. Walter Herz provided comprehensive consulting in the lease process. The new VFS Global visa center is scheduled to open on January 9th, 2023. It is dedicated primarily to cooperation between the Canadian government and individuals arriving to Poland from Ukraine. – For the company, we were looking for space with the capacity to serve a large group of customers in a layout corresponding to a passport office. Negotiations quickly brought the intended result, which satisfied both sides. The new tenant will generate additional traffic in the Blue City shopping center at the level of about 1 000 people a day, thanks to the nature of its operations. The opening of a branch of the state-owned PaÅ„stwowe PrzedsiÄ™biorstwo Dokument company in Blue Office also allowed us to develop mutual benefits. We provided support in the lease process of that company last summer - says Konrad RadliÅ„ski, advisor at Walter Herz. The Blue Office building provides a friendly working environment thanks to its location in the immediate vicinity of the Blue City mall, which is one of the largest shopping centers in Warsaw. The technologically advanced office building offers 32 thousand sq m. of modern space. A special recreation zone with natural vegetation and a chillout room equipped with many interesting amenities are at tenants’ disposal. Residents and guests can use free parking and bicycle infrastructure, as well as space for organizing corporate events. Blue Office users are provided with a full range of attractive services, access to many restaurants, cafes, fitness club, cinema, medical center and shops, supermarket, banks, post office, as well as entertainment establishments. About Walter Herz Walter Herz company is a leading Polish entity operating in the commercial real estate sector across the country. For ten years, the company has provided comprehensive and strategic investment consulting services for tenants, investors, and real estate owners across the country. Walter Herz experts assist investors, property owners, and tenants. They provide full service to companies from the private and public sectors. Walter Herz advisors support clients in finding and leasing space and provide consulting in implementing investment projects in the warehouse, office, retail, and hotel sectors. The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. The agency introduced the Code of Good Practice to ensure the highest ethical level of services.

Taking into account the mood and current investment activity, it would seem that the recession on global markets is only just developing. A clear slowdown in the real estate transactions has been visible since mid 2022. Several factors contributed to it, including increase in interest rates, uncertainty related to the geopolitical situation, war in Ukraine, games between the USA, Taiwan and China, as well as the instability of government and economy in Great Britain and economic problems in China. As a result, most investors, especially those who have adopted the principles of a limited risk policy, reduced their purchasing plans in Poland. Investors who are still active expect attractive prices now, while sellers are not yet ready for corrections. The widespread uncertainty observed in the markets means that investors often focus their attention on projects based around basic needs, focusing on residential real estate and convenience retail projects. These two types of assets are on the radar of a growing number of investors, as they are considered the safest. Looking on the activities undertaken on the investment market from the perspective of the end of 2022, it seems that these segments will be even more popular in 2023, provided that the costs and strategies of financing investment projects adopted by banks do not prevent it. Warehouse assets will continue to attract a lot of interest in 2023. However, investors will pay more attention to the quality of the location and the structure of tenants. Real estate acquisitions in this sector will be increasingly well-thought-out. Rising financing costs, unstable construction costs and pressure from investors to discount existing warehouse properties will affect the investment land market. Only well-prepared land, secured by lease agreements, will have a chance to be the subject of transaction. This year, there is no pressure from landowners to raise prices. Sellers who show a unique lack of price flexibility in the face of a dynamically changing economic situation, in many cases, have to put their offers back on the market. A trend that can be noticed and will become stronger in 2023 and in the following years will be the growing demand for brownfield land in the largest agglomerations, i.e. Warsaw, Tri-City, Wroclaw, Cracow and Poznan. Which is naturally related to the continuous development of last mile logistics and the e-commerce market. It should be noted that in many cases investments in attractive brownfield projects may turn out to be a better solution than the purchase of undeveloped, though serviced plots. I would also like to point out that resilience and sustainability are now extremely important topics that are often raised during talks with foreign entities investing in real estate. Energy efficiency, green solutions and ecological materials are aspects that at large extent affect the conclusion of transactions. A technical audit that would indicate a lower than expected level of the project in this respect, may lead to the suspension of negotiations. Author MichaÅ‚ ĆwikliÅ„ski, Principal, Managing Director – Poland at Avison Young

In 2023, offices will be more expensive, and their availability in the top locations of the largest cities will be lower Increases in office lease costs, limited availability of space in high-standard buildings located in central business areas and the low level of new supply are the main indicators that will affect the situation in the sector in 2023. The last three years have brought many changes to the office market. The system of work and the way of arranging space have changed. The process of rapid development of the office market over the years has been halted. The growing costs of construction and project financing make it difficult for investors to estimate the final amount of the construction budget, and therefore they are postponing the start of construction of new investments. New supply is dropping hard In regional markets, 30 per cent less office space is emerging than before the pandemic, while five times less offices is being built in Warsaw than three years ago. The availability of prime space on the Warsaw market is declining. The effect of limited, new supply with demand remaining at a lower than in 2019, but stable level is a slight increase in rental rates. This applies in particular to high-class office buildings located in the center and in business zones, situated outside the very center of Warsaw, but also the best real estate on the largest regional office markets in the country. The new office offer is modest. In Warsaw in the third quarter of this year, most of the space was provided by Varso Tower, which including the spire, is the tallest building in the European Union, offering almost 64 thousand sq m. of space. The largest amount of office space in the country is under construction in the capital of Lower Silesia. Investments underway in this city include Infinity (22 thousand sq m.) and Centrum PoÅ‚udnie III (20 thousand sq m.). Among the properties under construction in Cracow, there are Ocean Office Park B (26.5 thousand sq m.) and Kreo (24 thousand sq m.), while Andersia Silver (40 thousand sq m.) and Nowy Rynek E (20 thousand sq m.) are under construction in Poznan. Rental costs go up We have a record-breaking inflation, and forecasts indicate that it will continue to grow, which translates into the cost of office lease. The main challenge in 2023 will be maintenance charges. Due to inflation, rising costs of energy and expected increases in the minimum wage, they expect to increase. This will translate into the amount of advances on maintenance charges. In addition, utility prices will increase. Nowadays, the effective process of leasing an office and negotiating contract terms, as well as cooperation with professional advisors on the commercial real estate market, will become all the more important, because the provisions included in contracts should protect tenants in more difficult times. Negotiating optimal business and legal terms will require much more time and commitment. A new analysis and rental process should be started at least 2 years before the end of the ongoing contract. It will give more time to negotiate all items at every stage of operations and a chance for significant cost optimization. A five-year lease agreement currently does not give a chance to develop a move-in ready office without additional surcharges for the tenant. Prices of finishing works increased on average by 30 per cent. Tenants must take into account the fact that in the case of demanding projects, additional payments for interior design will be necessary. In order to compensate landlords for the increase in the cost of fit- out and lower the charges for tenants, longer, seven-year contracts are now concluded more often. Read next: In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side| FXMAG.COM Negotiating lease terms Therefore, when negotiating contracts, attention should be paid to the amount of the budget for fit-out, rent exemptions and mechanisms for limiting or controlling the amount of maintenance charges contained in the contract. Negotiating terms of lease agreements is, contrary to popular belief, a large field. One can negotiate, among others: contractual penalties, grounds for termination of the contract, the right to sublet and assign, the amount of maintenance charges, break option, and liability. We always advise our clients to attach the final cost estimate to the Lease Agreement, in order to avoid additional charges for fit-out later. Speaking of the current market, one cannot fail to mention the work system and functions of today's offices. It should be noted that the goal today is not just renting and arranging space, but creating a place that will be conducive to rebuilding contacts with colleagues, building bonds and improving communication in the company, which will translate into increased satisfaction from work. Most employers are facing the new preferences of their employees, who are reluctant to return to their offices. Despite most companies determining the proportions of remote work, which most often falls within the range of 2 or 3 days a week (on average 40-60% of working time), office attendance oscillates around 30 per cent. Hybrid mode shapes workplaces In the near future, the offices will function as creative, cross-functional, training centers. Their main function will be the exchange of ideas, knowledge and building relationships and social capital. The purpose of re-arranging offices and adapting them to this role is to create an atmosphere of the place that will attract its employees. In order to adapt workplaces to the hybrid mode, companies are currently reducing the number of desks in favor of collaborative spaces. They are switching to solutions using flexible workstations, which forces sharing. They are introducing clean desk policy. Lockers are also becoming available in the offices, ensuring a quiet, isolated space. Office space is arranged in such a way that it is as flexible and functional as possible. The offices used serve largely as space for guests and external contractors, now they primarily serve the team. Their space is supposed to activate employees and provide them with tools not available at home. Great emphasis is now placed on modern conference zones that support hybrid meetings, creative and social spaces, such as a large kitchens with dining rooms for employee integration. Often this part is extended into a chillout zone or places for less formal meetings. Mateusz Strzelecki, Partner, Head of Tenant Representation at Walter Herz About Walter Herz Walter Herz company is a leading Polish entity operating in the commercial real estate sector across the country. For ten years, the company has provided comprehensive and strategic investment consulting services for tenants, investors, and real estate owners across the country. Walter Herz experts assist investors, property owners, and tenants. They provide full service to companies from the private and public sectors. Walter Herz advisors support clients in finding and leasing space and provide consulting in implementing investment projects in the warehouse, office, retail, and hotel sectors. The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. The agency introduced the Code of Good Practice to ensure the highest ethical level of services.

  From the warehouse developers perspective, 2023 will be marked by very well-thought-out purchases. With the costs of financing constantly rising, construction costs changing, and investors pressing for discounts on the existing warehouse market, the land market will be the first to feel this accumulated pressure. Only well-prepared land with lease agreements signed by tenants has a chance to be the subject of a transaction, and not just a non-binding option from developers regarding the purchase of land. Over the last 10 months, the pressure from the owners to raise prices has definitely decreased. Those owners who did not show understanding towards the dynamically changing economic situation and represented the strategy of price inflexibility will, in many cases, have to be back on the market with their land. A noticeable change will also be visible in the approach of sellers to land security options. Many owners, tempted by high land valuations, did not care enough about the rights to permits and decisions for their land. Such permits do not pass automatically to the owner, but to the developer applying for them. As a rule, so far this has been justified in a situation where in most cases a final agreement was reached. Currently, when developers resign from purchasing part of secured land, the owners find out that all permits are the property of the buyer and the process of obtaining, for example, a building permit should be started from scratch at their own expense. Undoubtedly in 2023, owners will be more prudent about the option of securing land, placing much greater emphasis on having rights to processed permits. In terms of demand for prime land, the top 5 logistics hubs will continue to be the most liquid market. On the other hand, there is a noticeable growing demand for land along the western border and a slightly lower demand in the eastern part of the country – despite the impressive development of road infrastructure. A strengthening trend in 2023 and in subsequent years, will be the growing demand for brownfield land in the largest urban agglomerations, headed by Warsaw, Tri-City, Wroclaw, Cracow and Poznan. This, of course, is related to the development of last-mile logistics and the demand for smaller warehouse modules with office space. In many cases, the best brownfield projects may turn out to be a better solution than looking for an empty, undeveloped, but at the same time properly serviced plot. To sum up, in 2023 we do not expect any new records to be broken on the logistics land market, although it will continue to be an active segment of the market. Author: BartÅ‚omiej Krzyżak, Senior Director, Investment at Avison Young