Ostrava project saved

One of Ostrava's highly anticipated office developments is finally moving forward with the help of a new investor.

Construction work on the Nová Karolina office project, which is part of a larger urban renewal undertaking in the steelmaking heart of the country, will resume in September, a decision that was made after investor GEMO Olomouc came to the aid of developers Passerinvest Group and Multi Development with the capital needed to move the project forward.

GEMO Olomouc, which will also be the general contractor for construction, laid down 200 million Kč ($11.9 million) to get the cranes moving again, acquiring a 40 percent stake in the office project in the process, according to Hana Gottwaldová, a spokeswoman for Passerinvest Group.

"The crisis has frozen the office market in Ostrava and other places," said Radim Passer, chairman of the board of Passerinvest Group, explaining that plan A for financing the building was a major pre-lease from Finnish-based software development company Tieto, a deal that could have ensured bank financing had it not fallen through at the last minute.

"With the entry of the new strategic partner and the allocation of more of our own capital, it will be possible to complete the project without having to wait for another Tieto, which might not turn up," he said.

In the end, Tieto signed on to lease 15,000 square meters in CTP Invest's IQ Tower (soon to be renamed Tieto Tower) in one of the biggest deals the city has recently seen, according to Ondřej Vlk, a research analyst with Jones Lang LaSalle Prague.

"The office market in Ostrava is generally in a premature stage," he said. "No particular business district has been established yet, and the properties are scattered across the city."

Vlk said the small size and youth of the Ostrava office market have made it attractive thus far to mostly domestic occupiers, but he added that these factors also cause the market to be more volatile.

"The office stock is only approximately 150,000 square meters, and such a small market is very sensitive to every new completion," Vlk said.

The six-story Nová Karolina office building was designed by Vít Máslo and David R. Chisholm from CMC architects and comprises a monolithic building with an inner courtyard. When completed in the spring of 2013, the building will offer 24,600 square meters of office space, along with a 280-car parking garage and 3,700 square meters of retail space on the ground floor.

Emily Thompson can be reached at
ethompson@praguepost.com