- It's hard to know from the news exactly what's happening in Budapest office market. How do you see the situation? What are the main trends?
- The vacancy in the Budapest real estate market continues to grow, reached 13,5% in Q4 2023. However, a closer look behind the data reveals that the market is responding healthily to the events of recent years: there is a growing demand for properties in the inner districts, easily accessible, sustainable and of high quality. The demand in the past year increased by 19% compared to 2022 and new lease agreements reached a proportion of 52% from the total take-up of Q4 2023. For sure, it is a tenant driven market.
- From a tenant's point of view, what is the most important aspect of renting office space? ESG? Energy efficiency? Flexibility?
- It is evident that tenants show strong preference to green, energy efficient buildings providing wide range of services. Employer branding forces tenants to create an office space that reflects the corporate culture, commitment and integration of the employees that requires Landlord to provide office „fit for purpose” meaning that each tenant area shall be individual however shall in all cases let tenants to implement their remote work strategy.
- How did you manage to overcome the problem of durability in the Liberty mixed-use complex, and what new features did Liberty bring to the market?
- All sub-markets have a development process, the South-Pest market is now experiencing this moment of development. WING has already started the implementation of the Könyves Kálmán körút and the Népliget junction office as a destination with the construction of the Telekom Headquarters and will complete it with the creation of the Liberty multi-functional building. The Liberty is WING's flagship mixed-use real estate development, combining A+ office space with a 3-4 star hotel and retail units to serve the convenience and functional needs of users. It also offers a unique solution for office tenants who value excellent accessibility by public and private transport, large floor areas, high quality office space and a wide range of services, which in this building are complemented by hotel facilities.
- What do you mean by being unique?
- Liberty reflects the latest property market trends surely. Our goal was to create a new office hub that does not require tenants to go downtown to their offices, because this location is easily accessible by car or public transportation. The Liberty building also offer convenience services for employees, it provides all the services needed for the comfort and functionality of its users: restaurant, café, indoor garden with outdoor workstations, rooftop sport field, relaxation garden, car wash, parcel boxes. We also decided for the convenience factor to combine the hotel and office in the case of Liberty, because these two functions reinforce each other: the hotel, with its ground-floor TRIBE table restaurant and conference rooms, as well as its rooftop skybar, provides an excellent opportunity for relaxation for those working in the office, the office building has a rooftop running track and a large underground garage, it serves the convenience of hotel users. In addition, the entire building’s fulfills the Hungarian regulation (TNM) about buildings with almost zero energy requirements.
- Let's come back to ESG: how does its prominence affect tenant expectations?
- As I mentioned, the ESG compliance of the future buildings are key for international tenants, most of them are not allowed to lease any space in the office building following a certain date which are unable to satisfy the green/zero carbon initiatives of the companies. We also try to design our buildings with this focus, a good example of which is the Liget Center Vitrum building, which will only use electricity and also fulfills the almost zero energy requirements. Liget Center Vitrum will be an exclusive, A+ quality boutique-office building with full glass facade in the heart of Városliget, the most prominent part of Budapest. Furthermore, the building is designed with flexible, customisable (BTS) solutions and state-of-the-art acoustic design. It will provide a GLA of 2200 sq m on 6 floors, with a general floor size of 360 s qm and is scheduled to be handed over in H2 2024.
- What can we expect in the coming year, what trends, tendencies and events are you preparing for?
- The Budapest market didn’t reach its bottom point, we expect the vacancy to grow as there are still tenants who could not reduce their leased area in accordance to their „remote work”, optimized size. This will still affect the market, but the recovery is there: for example in the past two years, all our new tenants negotiated an expansion right to their lease agreements because their main intention is also to grow. Furthermore, in recent years, multinational and domestic tenants have increasingly demanded that buildings be constructed and operated in an ESG-compliant manner. In line with this, WING has been BREEAM and/or LEED certified for all its newly developed office buildings since 2017, while it has set its own minimum requirements to be BREEAM Good and/or LEED Silver certified.
- Do you agree that there are more difficulties with older buildings, especially in the outer districts?
- They will face great pressure to carry out significant renovations and modernizations in order to attract new tenants and to keep existing tenants. Nevertheless, older buildings are still valuable, because converting an existing building for a new purpose has a smaller carbon footprint than when erecting a new building. For WING, it is also important to create value by adapting a brownfield site, even with a historical past, to new functions according to the needs of today, while preserving the historical and even artistic values of the building. HOP Technology Office Park is also based on this concept, where, as landlords, we have recognized the usefulness of existing buildings and we are concentrating on sustainably renovating our buildings which match a certain type of tenant requirement who are looking for such properties. From the outset, this development has focused on building reconstruction and utilizing the original function of the plot, in parallel with our efforts to avoid demolition. Under its new name, the HOP Technology Office Park welcomes the innovative companies that produce high added value and employ high qualified people, thanks to its flexible, complex, campus-like design that provides opportunity for implementing new construction to be integrated to the existing building structures. Our aim is to create a sustainable development concept that is adapted to the market, creating a high-quality, modern, and urban technology office park. In concrete terms, a number of test labs, fine mechanical and electronics manufacturing activities, micrologistics services and IT R&D activities have already been set up in the park, together with, of course, rented office space.
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