Report RADOM

ECONOMIC SITUATION IN POLAND

Statistics (06.2013) Location Foreign Direct Investment Poland is located in the heart of Europe. Conve- After a very strong year in 2011 when the inflow nient location at the junction of the East-West and of foreign direct investment (FDI) in Poland in- Population North-South routes gives great communications creased to 13,567 billion EUR (according to the 38 507 000 opportunities with other European countries. One National Bank of Poland), year 2012 has brought Country area of the most important advantages is that among weaker investment performance, finishing at group of 7 neighbours of Poland is present Ger- the level of 2.66 billion EUR. According to the la- 312 679 sq km many- the major economic and political power of test NBP calculations, FDI inflow in the first term Administrative divisions Europe. Access to the Baltic Sea is an additional so- of this year has reached 3.57 billion USD, already 16 voivodeship urce of transport for goods and people. Central lo- exceeding the result from whole 2012. Poland 314 districts cation offers foreign entrepreneurs opportunities is perceived as one of the most attractive loca- 2479 municipalities to create logistic centres in Poland and shorten tions for the new investment projects in Central - shipping time for eastern markets. Eastern Europe and it is expected that year 2013 Unemployment rate will bring many new projects. 13,2% Gross Domestic Product Registered unemployed Gross domestic product (GDP) of Poland has in- BPO/SSC 2 109 100 creased in 2012 by approx.1.9 % - according to Currently, Poland is leading country in Central CSO estimation from April 2013. The data show and Eastern Europe in respect of the number Average gross a clear slowdown in growth when compared to of people working in BPO/SSC sector. In Poland salary in the the previous year, in which GDP grew by 4.5 %. this sector will continue to grow rapidly through enterprise sector Despite the decline, CSO and Eurostat data in- a number of foreign investments. Predicted in- 3781,04 PLN dicates that in 2012, Poland was ranked on fifth crease in employment will result not only from Source: CSO place among 27 EU countries after the Baltic co- expansion of already existing companies but untries and Slovakia. In 2013, Polish GDP growth also from new projects, as many investors per- may decrease to 1.1 %, however, next year it may ceive Poland as perfect place to open business increase again to 2.2 % – foresees the European in. Outsourcing sector in Poland has entered a Commission (EC) in the latest spring forecast. phase of maturity and is stable and verified place for business. Investors looking for a perfect lo- Unemployment rate cations for their companies are more often cho- The average annual unemployment rate incre- osing other cities outside Warsaw and Radom ased continuously from 2008 to February 2013. with its location, lower costs and highly qualified Growth rate was particularly high at the turn of specialists is a great place for companies from 2012 and 2013. However, from February 2013 BPO / SSC sector. there was recorded a downward trend and in June it has reached level of 13.2% which is a very positive economical signal.

Unemployment rate (%) FDI inflow (bln EUR)

Source: CSO Source: PalilZ 18% 16% 17,2 15,7 14% 13,6 12% 10% 10,3 10,2 10,1 10,5 9,2 8% 8,3 6,4 6% 4,4 4,1 4% 2% 0%

Tomasz Siwak RADOM The Chairman of Radom Airport

Undoubtedly, the impul- se to open the Radom airport was that Poland jo- ined the European Union, Schengen area and that there is the ability for passengers and goods to move without problems on the area of the whole Europe. In this context, the most important was to create new opportunities of development for more than 200 000 inhabitants of 14th in terms of population and area city in Poland. Observation of the expe- riences of our western neighbours shows that the Radom airport does not Source: Airport „RADOM” S.A. need to generate huge revenues to be benefi- Location cial for the region. Having Radom is the second largest city after Warsaw, Krakow. After reconstruction, thousands of pas- such object is valuable both in terms of population and area, in the Ma- sengers each day traveling this route to the for the region, because it zowieckie voivodeship. Excellent central location capital will be able to move there in just 55 mi- significantly increases its provides good access to the entire country. City nutes. PKP S.A. is planning modernization of not attractiveness for invest- is distant only 100 km from the capital, 200 km only the railroads, but also the entire railway in- ments. This is one of the from Krakow and 625 km from Berlin. frastructure for secure traveling on line betwe- main functions of the air- en Radom and Warsaw. This means that 92-km port in Radom. Transport section of railway line No. 8 connecting Warsaw Many analyses show that Radom is situated at the intersection of Polish and Krakow will be rebuilt. the access to air servi- main north-south and east-west roads: Radom passenger Airport planned to be ope- ces is one of three main • Route no. E77, DK7 (Gdansk - Krakow), ned by the end of this year will increase the factors influencing the • Route no. E371, DK9 (Radom - Rzeszow), attractiveness of the city. Location is just 5 km location of new invest- • Route no. DK12 (Lodz - Lublin). from the city centre at the crossroads of inter- ments. This facility will be Access to the capital itself is very comfortable national routes providing easy access from the positively impacting not thanks to the expressway S7. Radom western neighbouring cities. Scheduled air connections only the area of Radom, and southern ring roads, currently under con- will be available in mid of 2014. To the biggest but also southern part of struction are the largest road city investments international airport - Warsaw-Okecie is only Mazowieckie voivodeship in recent years. Western runs on a north-south 100 km / 1 hour drive. and Swietokrzyskie voivo- direction, in the districts of Radom and Szydlo- Radom has well-developed public transport ne- deship. It will stimulate wiec and by municipalities Jedlinsk, Zakrzew, twork. Numerous bus lines provide easy access the inflow of new inve- Wolanow, Kowala i Oronsko. Southern runs on to every part of the city. This communication stments and expansion east-west direction in the southern part of Ra- network is growing rapidly to meet the needs of of existing businesses. dom and the north-western part of the muni- residents and this year the most important inve- Not without significance cipality Kowala. stment was the creation of access road with bus is the fact that in the im- There is also planned a modernization of railway lines to the Radom airport, to make convenient pact area of the airport route connection from Radom to Warsaw and access for everyone. is population of over 5.5 million people. 4 Copyright 2013 Walter Herz. All rights reserved.

Radom - statistics (03.2013) Population City, as the second largest in the Mazowieckie voivodeship, has approximately 220 thousand Population inhabitants, and in the entire voivodeship more 219 263 than 5.3 million. The working age population is Mazowieckie voivodeship 63.8% of the total in Radom. population The unemployment rate in Radom, at the end of June 2013, was at a high level of 22.7%. In the 5 303 937 records of the District Labour Office were 21 268 City area registered people, 9973 women, who accoun- 11 180 ha ted for 47% of all unemployed. Indicators point Population density very similar situation of women and men on the local market. 1961 p/ sq km Unemployment rate (06.2013) Education and labour market Radom is the second largest educational centre Source: Radom Town Council 22,7% in the Masovia region with 14 higher education Average gross salary in the schools and nearly 14 thousand students. ment in self-education and skills improve- enterprise sector (without A great legacy of the days when Radom was an ment. Such developed educational infrastruc- companies up to 9 employees) important industrial centre, is well organized ture of the city allows to prepare well qualified 3411,51 PLN number of vocational high schools in the city. future employees. Currently, there are as many as 10 complexes People with higher education, of vocational schools and the Centre of Con- as a % of adult population Radom investment potential tinuing Education. Students can choose to Many investments in road infrastructure, expan- 15,68 % educate in branches such as: construction, ding of Tarnobrzeg Special Economic Zone Number of higher education mechanical, clothing, leather, electronic, elec- offering extensive conveniences for investors, school / of graduates in 2012 trical, economic, automotive, service, food well-qualified human resources, constantly im- and hotel business. In the whole Mazowieckie 14/ 4346 proving the level of technical education and voivodeship Bohaterow Westerplatte Techni- wide range of labour market are just few exam- Working age cal College ZSE in Radom ranks first place in ples of why to choose this city as a place to start population (%) in 2012 Poland in the technicians ranking from 2013. or expand business. 63,8 % In addition, in the national high schools ran- For the city very important are constant impro- Source: CSO king, in 2013 on 19th place is Jan Kochanow- vements not only in roads modernizations or ski High School in Radom, in which 100% of better communication with the major cities of students passed maturity exams this year. the country, but also for example in environ- More and more popular become language mental protection or entertainment and physi- schools which demonstrate great engage- cal culture.

Associations assembling and Students as % of population

supporting Radom’s entrepreneurs: Source: CSO 6,4% • Business Centre Club Radom Lodge 5,5% • Chamber of Commerce of Radom • Chamber of Craft and Small Business 3,4% 3,1% • Polish Merchants Association 2,4% • Association of Radom Centre for Entrepreneurship 1,4% 0,8% • Radom Center for Innovation and Technology • Tarnobrzeg Special Economic Zone Source: Radom Town Council University Technical High school Vocational Elementary Post-secondary Secondary-school Copyright 2013 Walter Herz. All rights reserved. 5

List of most important investment projects Main investment sectors that are already carried out or in the short time will be started: • Waste Management Machinery and equipment • Upgrading the water and sewage system manufacture • Modernization of the railway line no. 8 Metal forming • Radom Airport Food production • Southern ring road of Radom Shoe industry • Western ring road of Radom • City Centre Revitalization Constructional • Reconstruction of sanitary system on Brzu- Textile industry stowska street IT Source: Radom Town Council • Retrofitting of the School of Food & Hotel Source: Walter Herz Research Trade • Retrofitting of public utility buildings, inclu- among them are the Ministry of Finance Data ding Powszechny Theatre, Regional Specialist Processing Centre, Europe Calling, Iron Moun- Hospital In Radom, Primary school No. 3 and tain, Millward Brown SMG KRC and Telbridge. Examples of Investors No. 24, High school No. VII and Junior high In the city there are also well-known real es- school No. 3 in Radom tate developers like AIG / Lincoln and Capital • Enlargement and renovation of School of Fine Park Group. Imperial Tabacco Arts on Grzecznarowskiego 13 street in Radom (tobacco company ) • Comprehensive revitalization of historic Investment conveniences Medicofarma urban parks: The Old Garden and Tadeusz Ko- The city makes sure that areas designed for in- sciuszko Forest in Radom vestment purposes are covered with current zo- (pharmaceutical manufacturer) ning plan and are prepared for investments. RADWAG List of recently completed investment projects: New investors can rely on many convenien- (leading manufacturer ) • Ministry of Finance Data Processing Centre ces, such as: ITM Poland • Construction of Music School Complex in • allowances and preferences issuing from the Radom public support regulations used in Poland. (tobacco machinery) Support can reach up to 50% of the invest- Zbyszko Company The average level of earnings is almost 50% ment value for small and medium companies (refreshments manufacturer) lower than in the neighbouring Warsaw, so and 30% for large ones, the city begins to attract many companies • property tax exemption, period dependent Trend Glass who want to reduce costs. Radom has alre- on number of created jobs, can amount from (glass factory ) ady seven companies from BPO / SSC sector, 1 to 5 years. Source: Radom Town Council

Source: Marian Strudziński

Factors that attract Asking office rents investors to Radom: (EUR/sq m/per month) 25 • Low labour costs Source: Walter Herz Research • Low land purchase costs 20 • Well-qualified human resources • Proximity to Warsaw 15 • Low office rent costs

Source: Radom Town Council 10

Lodz Warsaw Krakow Poznan Radom Wroclaw Katowice Trojmiasto

Dariusz Domanski REAL ESTATE MARKET IN RADOM Development Manager at AIG/Lincoln Polska Sp. z o.o

Radom Office Park in total will deliver approximately 10,000 sq m of new, A Class office space over two buildings as a part of Centrum Sloneczne –multifunctional project of AIG/Lincoln which in- cludes Galeria Sloneczna shopping mall, Aquapark Radom, Osiedle Slonecz- ne residential project and Park Sloneczny. The complex has been designed to meet the expectations of entrepreneurs, mainly from the BPO / SSC industry. The building imple- ments the latest architec- Fot: Radom Office Park Source: AIG/Lincoln Polska Sp. z o.o. tural solutions, ensuring functional and effective Office market use of the office space, -in Supply of modern office space in Radom rapi- Average value of rents in Radom are stable and ternal common areas and dly grows due to the increasing interest in this oscillate between 8,00-11,00 EUR / sq m per external green space. The market of the international companies willing to month. 1,700 sq m floor plate of open their headquarters in the city while trying Completion of the second phase of Radom Offi- each floor offers tenants to reduce operational labour costs at the same ce Park, will provide another 5 000 sq m of high flexible office space- ar time maintaining close proximity to the busi- quality office space. In addition, planned recon- rangement possibilities. ness centre of the country - Warsaw. struction of NOT building and the building on Specifications class pro- In 2013, was delivered first phase of major AIG / Szklana Street will make the market even more vides solutions specific to Lincoln project - Radom Office Park A providing attractive for companies from BPO / SSC sector. the modern office. approximately 5 000 sq m of modern office spa- Radom is seen as a satellite town for Warsaw and ce. This is the first this type of project in the city, more visible becomes interest of the internatio- so far dominated by B + / B office space located nal investors who are looking for modern office in the city centre in tenement houses. Currently space outside capital. at the end of the first half of 2013, the total office space amounted to 15 000 sq m.

Henryk Dudek President of the Polish Merchants Association in Radom

New supply of modern retail space and the pre- sence of the international brands in Radom has not reduced the interest in regional brands. Inhabitants still like to visit the local sales markets. Such mar- ketplaces complete the retail market offer of the city, where you can buy Fot: Galeria Feniks Source: Walter Herz Research almost everything. Ho- wever there is noticeable Retail market change in buying habits. Supply of modern retail space in Radom is about planning new projects of mini retail parks and More and more people, 150 000 sq m, while the supply of supermarkets discount stores. in addition to food and around 20 000 sq m. Retail market is very well clothes, willingly spend developed and on every 1 000 inhabitants, the- Currently, the city has two shopping centres with their afternoons and re are nearly 600 sq m of retail space. The city entertainment facilities (Galeria Sloneczna and weekends in shopping is characterized with high level of saturation in Galeria Rosa), three large shopping centres (M1, malls. They seek a variety comparison to the larger agglomerations like Atrium Gama and CH Echo) and several smaller of entertainment, which Krakow, Lodz or even Warsaw with density indi- ones with a supermarket as the anchor and few is noticeable in the types cator approx. 500 sq m per 1 000 inhabitants. boutiques. Location of the centres is very diverse of the latest available cen- Despite high saturation level, developers are still and there is no noticeable trend. tres focusing full range of services available under one roof. Structure of tenants in % * 38% - Clothing and shoes 22% - Services 1% 6% 5% 8% - Restaurant 6% 7% - Electronics and home 7% 38% 7% - Health and beauty 7% 6% - Entertainment 6% - Jawellery 8% 22% 5% - Groceries Source: Walter Herz Research 1% - Others *shopping centres above 3 000 sq m

Largest shopping centres Source: Walter Herz Research Name Opening date Address Retail space Main tenants Galeria 2011 Chrobrego 1 42 000 sq m MarcPol, Multikino, H&M, Zara, C&A, TK Maxx, New Yorker, Słoneczna Reserved, Sephora, Douglas, CCC M1 1998 Grzecznarowskiego 28 38 978 sq m Real, Praktiker, Media Markt, H&M, Deichmann, Reserved, CCC Atrium Gama 2001 Mireckiego 14 15 000 sq m OBI, Biedronka CCC, Rossmann, Takko Fashion, Pepco, Prymus CH ECHO 2000 Żółkiewskiego 4 10 000 sq m Real, Euro RTV AGD, Deichmann, CCC, Nomi, Bank Milenium Copyright 2013 Walter Herz. All rights reserved. 9

Fot: TG Park Source: TG Sp. z o.o.

Warehouse market Radom and neighbouring districts are and production space in the region of Radom developing in terms of available modern is almost 20 000 sq m mostly built in the BTS warehouse space. Currently large logistics park system. On the market there is not much with six warehouses planned to be built by TG available space for rent. The main reason is Sp. z o.o. in BTS system will provide up to 30 000 the fact that in the current market conditions, sq m of modern warehouse space. developers are not willing to take risk and they Region’s economy is driven by Tarnobrzeg Special keep building according to the earlier signed Economic Zone in which a lot of investments leases (BTS). were located, mainly from the engineering industry. Average rental rates vary between 9-15 PLN/ Currently, the total stock of modern warehouse sq m per month.

Source: Radom Town Council

Effective warehouse rents Existing warehouses and (EUR/sq m/per month) production plants in Radom e.g.: Source: Walter Herz Research € 5,00 € 4,50 • Almech s.c. € 4,00 • DHL Express Poland Sp. z o.o. € 3,50 • Dürr Poland Sp. z o.o. € 3,00 • Fabryka Broni „Łucznik”- Radom Sp. z o.o. € 1,50 • Imperial Tobacco Polska S.A. € 2,00 • ITM Poland Sp. z o.o. € 1,50 € 1,00 • Jasik A.S € 0,50 • Jadar Sp. z o. o. € • Techmatik S.A. • Trend Glass Sp. z o.o. Torun Radom Warsaw Poznan Cracow Wroclaw Gdansk Szczecin • Zbyszko Company Sp. z o.o. Upper Silesia 10 Copyright 2013 Walter Herz. All rights reserved.

Source: MOSiR Radom RADOM. STRENGTH IN PRECISION

he message coded in words „Radom server rooms, schools for engineers and tech- - Strength in precision” successfully nicians. This range of events resulted in Radom reflects the new image of the city. as a city famous for its precision technologies. Commitment in creating of econo- Looking at the facts, one can safely say that to- Tmically strong Radom, reflected at every le- day’s Radom presents everything what the city vel of society. Craftsmen, tanners, factories always has - precision. The precision of projects, producing weapons and telephones in the skills, plans aiming creating a strong city, an im- Central Industrial Region focused in their portant centre in Mazovia, in Poland and around work on technical excellence. The foundation the world. created years ago exists today, research institute, Radom Town Council

Radom’s investors Fot: Kelles-Krauza Office Building Source: Investor’s materials Investor’s Source: Source: Radom Town Council Town Radom Source: Council Town Radom Source:

Why did they choose Radom as place for theirs headquarters?

Adam Zurawski Lukasz Bernady Dariusz Chlastawa Director of Aplisens S.A. Vice-president of TG Sp. Chairman of Energetyczne (production sector) z o.o. (logistic sector) Centrum S.A. (BPO/SSC sector) Construction of a new Radom is my home town, factory for pressure me- which in the period of We are now one of the asuring devices, in which the transformation expe- largest independent sup- at the beginning will find rienced big economic pliers of electricity in Po- employment more than problems. Currently, due land. 9 out of 10 people 100 people is a very im- to the excellent location, who changed the energy portant event in the hi- continuously improving supplier, has chosen Ener- story of our company, it infrastructure and well getyczne Centrum SA. We is the largest investment educated employees be- run our business in Radom decision for Aplisens SA. comes more and more since 2011. Here is our he- We choosed Radom be- attractive for investors. To adquarter and we employ cause it has always been meet the expectations of 243 people. We value the a city of precision engine- entrepreneurs interested cooperation with the local ering, with a great chance in modern warehouse government who sup- of being successful. and production spaces ports local entrepreneurs. - TG warehouse project Employment in the region was created, located in is rising and our company the southern part of the is growing rapidly, howe- city in Tarnobrzeg Special ver in the entire country Economic Zone. Agre- economic slowdown is still ements signed with new noticeable and many cities interested tenants proof are struggling with finan- constant economic po- cial problems. Our offer of tential of Radom. cheaper electricity is very popular among individual customers as well as businesses investors operating in the region. Walter Herz Ogrodowa 37 00-873 Warsaw Tel.: (22) 11 200 11 [email protected] www.walterherz.com