Due to the continuously tightening regulations concerning energy requirements, the focus has shifted to ESG compatibility in recent years, encouraging market participants to concentrate on renovating their office buildings. In this regard, the decrease in total construction demand has resulted in stabilizing prices, which has a clear positive impact on fit-out costs and development expenses. The pressure is felt among owners, and those who can meet the tenants’ high energy efficiency expectations will be the ones best able to compete.

In terms of investment, the most sought-after assets, besides the industrial properties, are still new office buildings developed in good locations that prioritize sustainability and energy efficiency. ESG-compliant office buildings typically exhibit lower vacancy rates and higher rental fees than the market average, ensuring stable cash flow. Therefore, they and other ESG-compliant assets can ensure profitable operations in the long term, making them a clear priority in investment decisions.

Kata Mazsaroff, managing director, Colliers Hungary.

 

One crucial element in the office design and amenities is enabling tenants to have as much flexibility in their work as possible. This entails providing common areas equipped with comfortable amenities for short-term working sessions. The furnishing and IT infrastructure of these spaces should facilitate easy connectivity, while the layout should support concentrated work.

Moreover, office buildings should prioritize low energy consumption and minimize environmental encumbrances. They should also offer physical and mental recreation, infrastructure, and on-site convenience services.

Until now, prime office locations were typically in city centers or near metro stations. However, now there is a growing demand for a mid-way office solution, meaning offices are located closer to residential areas rather than solely in the city centers. This shift allows outer districts to serve as smaller “hubs” for larger companies, enabling employees to work not only at the headquarters or from home but also “in-between” locations, wherever they happen to be along their commute.

Attila Madler, chief asset management director, CPI Hungary.

 

Since COVID-19, the meaning and use of the office environment have changed dramatically. Post-pandemic, the office desk, the cabinet, and even the quality of the environmentally-friendly office chair are no longer the crucial KPIs. Instead, it is the quality and quantity of the community spaces, the additional services of the office building, such as shops and private services, and the visual and non-visual health-related environment and services.

Managing all of the above is so complex that no single player in this ecosystem could solve it alone. The number one message to the readers is to urge that strategic cooperation between the parties is a must. Those who fall behind will be left out.

Solid ESG regulations already offer a wide range of options for becoming an ESG-compliant enterprise. Since the need for such competence is so new, most companies cannot compile a proper compilation of their ESG goals.

Gábor Décsi, CEO, Dome Group.

 

A newly developed class “A” office will have spacious lobbies, multiple concierge-like services and co-working areas, futuristic and/or a state-of-the-art modern façade, and greenery. The concept is that service-wise and structurally, it needs to have a superior hotel-like feeling. Offices, at times, tend to become groups of meeting room areas for collective work.

In terms of office work, tendencies vary from company to company. If we were to draw an average from what we experience in the market, we believe the current most common set-up is three times a week in the office, with Mondays and Fridays as home office. However, it is important to state that most companies are trying to lure – in a positive sense – their employees back to the office as they do not find the current working process efficient.

Fabrizio Mazzá, commercial director, HB Reavis Hungary.

 

Through modernization and technical improvements, property owners can make a big difference in the efficient operation of their properties. To achieve this, close cooperation between PM and FM areas, as well as with the property owners, is essential.

The regulatory guidelines for sustainability are already known, but the detailed rules and the implementation regulations have not yet been developed. Compliance with ESG principles requires investment on the ownership side. An essential role of property management is to align tenant and owner expectations.

Although the objectives are the same, different needs may arise in relation to EU taxonomy regulation or, for example, the ESG financing issues and ownership expectations of an overseas company.

International certifications can provide guidance in this harmonization, but compliance with them also implies new obligations.

Zsolt Kákosy MBA MRICS, Senior Director, Head of Property Management, ICON Real Estate Management.

 

ESG compliance is very subjective regarding new real estate developments and existing buildings. The primary directives are coming from environment-conscious certificates that we all know very well by now, but expressions such as EU Taxonomy, Greenwashing, and GAR (Green Asset Ratio) are the new ones we need to understand.

For new constructions, the directives are relatively clear in the technical and social aspects of the regulations. For existing buildings, engineering, procurement, and construction (EPC), thermal image measurement, mass air flow measurements, life cycle assessment (LCA), and climate risk analysis are some of the steps that, in some cases, are not easy to fulfill for a 10-plus-year-old building. Overall, green certifications (mainly Leed and Breeam) are a big help, although not enough.

In addition to ESG considerations, a tenant focus on employee well-being is another pivotal factor, given its significance in enticing individuals back to office spaces. Obtaining a Well certificate could serve as an initial step in providing this assurance to employees.

Petra Holy, head of office agency, Knight Frank Hungary.

This article was first published in the Budapest Business Journal print issue of May 17, 2024.