‘No conflict, no compromise, no hidden agenda’

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In a market where tenant representation in negotiations with landlords tends to be handled by divisions of the same agencies that also represent those landlords, one company stands out: VLK Cresa.

Valter Kalaus, managing partner, VLK Cresa

“To the best of our knowledge, there is no other firm on the Hungarian market that only does tenant representation,” says managing partner Valter Kalaus. “What is unique is we are client-focused, not deal-focused.” 

But what makes tenant representation so important Kalaus has dedicated much of his career to it in the first place. “Our customers are typical end users; most tenants are not real estate professionals, they only deal with such matters every three-to-five years, when their lease comes up for expiry. Landlords and developers are usually highly skilled real estate professionals, and that is not a good negotiating standpoint from the tenant side.” And that is where VLK Cresa comes in.

“Commercial real estate lacks transparency. Tenants do not understand that the market is landlord driven.” With many companies representing tenants one day and the landlords the next, albeit through different teams, there is the obvious potential for conflicts of interest, for “strong compromises and hidden agendas”, says Kalaus. “With us there is no conflict, no compromise, no hidden agenda.”

Supply of quality commercial and especially office space is greatly limited in Budapest, with very few new developments in the past few years. That finally looks like changing in the next couple of years, but between then and now rents are likely to keep rising, with fewer incentives, such as rent-free months, offered.

“Typically clients look 9-12 months ahead when it comes to lease renewals. We are now advising that they look up to 24 months ahead, because new supply will go quickly. It is certainly a landlords’ market today, and I do not see that changing in the next 12 months.”

Kalaus, a Hungarian native, began his career in corporate real estate back in 1996 in Chicago at Equis, and returned to this country in 2001 to open the CEE regional office for the corporate services firm. “I introduced the concept of tenant representation to the Hungarian market,” he says. Equis was eventually bought by UGL, which set its focus on the U.S. market and closed its European operations. Kalaus saw a continued need on the market, and so opened VLK, his own company, in 2008. “It was not a legal successor, but it was a continuation of the philosophy of independent tenant representation of Equis.”

And then, in 2015, VLK joined the U.S.-headquartered Cresa network, meaning it could marry local experience to an international chain, allowing it to tap into a wealth of professional resources, expertise and support. “Cresa has 71 offices globally, 55 in the United States, and 11 in Europe, of which one is here in Budapest. From here we manage the Hungarian market, but also those of Czech Republic, Slovakia, Romania and Austria.”

The approach the company takes is somewhat unusual, the managing partner says. Whereas most agencies look first at the space requirements, Kalaus says that rarely even comes up at the first meeting with VLK Cresa. “Before starting to think about square meters, we try to understand the business and its needs. Once we understand that, we will have a better idea of what is driving the space requirements.”

It is an approach that seemingly works well. Turnover in 2015 was HUF 110 million, and this year looks to be on track to beat that. “It is always difficult to be certain, because 40% of our revenue comes in the last three months. October, November and December will be very important months for us.” That said, Kalaus says the philosophy of being client-focused rather than deal-focused means there will be no pressure to close the final deals by December 31, if a better deal can be secured for the tenant in January.

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