Many deals for financing commercial real estate development put together during the late economic boom were grounded on an overly optimistic economic outlook, said Maciej Tuszyński, Executive Director of Westdeutsche ImmobilienBank AG, at a meeting with the AmCham Real Estate Committee in November. As a result, since the economy took a dive these projects are on the brink of profitability for the financing banks. Perhaps this should be a lesson to learn that financing of investment projects should be leveraged more conservatively, so a safety valve is left for less favorable economic circumstances. Getting financing today is different story. Banks do not want to lower their interest rates below a certain level and are very cautious with picking projects to finance. Like it or not, investors that need financial resources have to accept today’s conditions. During the boom, long-term financing was more in demand, but today clients prefer shorter contracts. According to Maciej Tuszyński, banks do see benefits in such an approach: it is good for banks because the cost of the loan is in relation to the period of time for which the loan is granted. Secondly, with such short-term financing, there is no risk that tenants’ contracts will have to be rolled over during the financing period. He added that in Poland the average lease term is relatively short, and every time a project was financed the investor had to negotiate new leases with tenants. Many clients believe that the economy will pick up within two years. If that happens, the market may see pressure on rents, as office vacancy rates are relatively low. On the other hand, the market is not going to pick up until tenants start looking for more space to expand. He noted that many tenants have a tendency to put off such decisions until shortly before the lease expires. Then they are in a hurry to sign another contract and do not have time to look around at what is available on the market and what the current rents are.