Lordship builds on its success in Prague with projects in Brno and Bratislava
Lordship Estates is no newcomer to the real estate market. The company has been in Prague since 1991, and flourished through all the changes and challenges that have hit the market in the past 15 years. Starting small with leasing and reconstruction projects, Lordship has steadily grown and expanded, most recently with the acquisition of a large portfolio of real estate: the seven main buildings owned by CSOB bank.
“We’ve jumped to a different level of development [with the CSOB purchase],” says Martin Pilka, joint managing director of Lordship Estates. “We have lots of opportunities to grow here, and it gives us a chance to enter more deeply into another brand of development besides the office market.”
The portfolio comprises seven separate pieces of real estate in Prague 1, 2 and 3, including ČSOB’s headquarters on Na Prikope. It was purchased last January in a joint venture between Lordship and ImmoEast, a subsidiary of Austrian real estate fund ImmoFinanz. Lordship and ImmoEast collaborated on the Pankrác House project together as well.
“We are already working on plans to adapt the buildings for usage, depending on what is most appropriate for each building and its location,” Pilka says. “There will be a mixture of office, retail and hotel in the portfolio.”
That’s not the only big project on Lordship’s plate these days. The company is currently involved in four other projects in Prague, as well as large developments in Brno, south Moravia, and Bratislava.
Lordship expanded to Brno in 1997, where it has developed the Brno Business Park. The first phase of the project, comprising 16,200 square meters (174,375 square feet) in two buildings, is already open. The second phase will add 16,500 square meters, and phase three will add additional 15,000 more. Completion dates have not been set, but when the project is finished it will be one of the largest business parks in the city.
Lordship is also working on its first project in Bratislava, a downtown retail center complete with a hotel and office space. It’s a 30,000-square-meter space, and the project includes reconstruction of the Hotel Kyjev as well as new construction. Completion is projected for 2009.
All of which means that this is a boom time for Lordship.
“In Prague, we are going through a growth spurt,” Pilka says. “One major difference from a year ago for us is the scale and amount of projects we are working on. We’ve already hired eight more people.”
Still, the local market continues to offer challenges.
“The demand for office space is probably the same, but the potential supply is higher, so it’s more difficult to get tenants,” Pilka says. “In retail, demand isn’t as high as it was two or three years ago, but if you have a good product, it will succeed.”
Brno is at a different point in its development, in some ways just starting to come to fruition, though ultimately with a lower ceiling.
“The market is much better in Brno now than a couple years ago,” Pilka says. “Many tenants are coming from abroad and local companies need better quality and more space.”
So far, Pilka says, supply is meeting demand in the A-class, 5,000-square-meter-and-larger office market. But he expects that demand to taper off.
“Brno is limited by the size of its work force,” Pilka says. “Foreign companies are relocating there for the skilled work force, but when that dries up, the market will slow down.”
As for local companies, Pilka doesn’t see much of a demand coming from that direction. “The foreign market is where it’s at,” he says.
Bratislava also offers some interesting opportunities, but again with unique parameters.
“Bratislava has the strange combination of being both a capital city and a midsize town at the same time,” Pilka says. “There’s a large residential boom, but in the office market there is more supply than the expected demand. So it’s risky.”
While the mixed-use project is Lordship’s only current development in the Slovak capital, Pilka says the company has staffers in Bratislava on the lookout for new, interesting projects.
And Lordship is looking further eastward, as far as Ukraine and Russia. The company has offices in both Moscow and Kyiv.
“In Moscow we are looking for projects, while in Kyiv we are already working on some,” he says. “In both Kyiv and larger Ukraine cities, there is a demand for both retail and office space.”
As for the company’s fortunes in Prague, Pilka says the formula for success has been simple.
“Our business strategy is to work hard and fair,” he says. “We’ve tried to do that for the past 15 years, and it works.”
Truly enjoying his job probably has something to do with it as well.
“We enjoy working on something nice, creating something of lasting value,” Pilka says. “We have an unwritten rule that if someone has a talent, we will give them the opportunity to develop it.”
“Opportunity” is one of the key words in Pilka’s vocabulary, and the company reflects his attitude of always being willing to take on larger, more demanding projects.
“Last year we were thinking about what projects we would do, and this year we had so many good opportunities for developments in Prague, Brno and the regions that we are just selecting the best ones — the market is settling down,” he says. “But I’m a natural optimist, so I believe the market will always grow.”