The walls of one of Warsaw’s main retail centers, the Wars Sawa Junior, have long been able to talk of the country’s transition from communism to capitalism. Now, they can speak of its next chapter.
In late August, Los Angeles-based real estate investment manager CBRE Global Investors agreed to sell the WSJ to Atrium European Real Estate, a Jersey, Channel Islands-based real estate company dual-listed on stock exchanges in Vienna and Amsterdam, for €301.5 million. For that, Atrium obtained 280,000 square feet of retail and further 118,000 square feet of predominantly office and storage space.
The commercial space at WSJ has ebbed and flowed, however. As Wars Sawa & Junior, the combined asset was built between 1968 and 1971 as three separate department stores owned to be run by the local authorities.
After Poland transitioned from communism to a market economy, the properties were sold by government agency Gmina Centrum of Warsaw in January 2000. The buyer, which embarked on extensive renovations, was Domy Towarowe Centrum SA, part of the Eastbridge Group, a privately held real estate company based in Luxembourg.
Between approximately 1999 and 2004, the properties were rebranded as Galeria Centrum, the trading name of a department store that was by then the property’s biggest tenant. In 2004, the properties were branded back to their better-known name, Wars Sawa & Junior.
Then, in 2007, Eastbridge sold a 50 percent stake in the asset to ING Real Estate, part of Dutch bank ING, which was renamed CBRE Global Investors after CBRE Group’s 2011 acquisition of ING’s European real estate operations. It purchased the interest for an undisclosed price on behalf of its then-newly launched core and core-plus fund, Property Fund Central and Eastern Europe (PFCEE). In 2011, CBRE GI bought the remaining 50 percent stake from Eastbridge.
CBRE GI refurbished the WSJ after anchor tenant Galeria Centrum went bankrupt in 2010. As part of the operation, the department store was converted into flagship stores for international brands in Warsaw, such as British retail chain Marks & Spencer and Spain’s Zara.
While CBRE GI worked on the interior to reposition the asset, the firm was restricted in renovating the outside because of its landmark status. That did not stop interest to buy the property once again from materializing.
Robert Sninčák, fund manager of CBRE GI’s PFCEE, says the asset manager completed its business plan in 2017 and received an off-market offer from Atrium, resulting in the August announcement of the transaction, which is expected to close before year-end. Once done, the deal will place the property in a four-strong retail portfolio in the Polish capital for Atrium.
For its new owner, WSJ is expected to benefit from several significant new developments under construction nearby and set to open in 2018, further expanding the center’s customer base. In addition, the ongoing projects of the Museum of Modern Art in Central Park and additional office buildings are expected to significantly increase the footfall around the WSJ above the current 60 million visitors per year, helped by proximity to multiple public transit lines.
Atrium plans to make use of the WSJ’s hybrid shopping center-high street retail feel, benefiting both from its size and location. The real estate company expects even more footfall, with the street in front of the property being made more pedestrian-friendly. Part of Atrium’s plan, according to chief executive Liad Barzilai, is to add more food and beverage tenants to accommodate WSJ’s status as a Warsaw destination.
The building has been on something of a progressive journey, but marks of its communist past remain. For instance, one particular condition for the deal still needs to be approved to finalize Atrium’s purchase: an anti-monopoly clearance by the government.