“Green building certification systems can be improved by planning and integrating with urban policies, involving stakeholders, and emphasizing climate resilience, ” comments Zsombor Barta, ambassador to the Hungarian Green Building Council (HuGBC).

Priorities for construction include prioritizing sustainable materials, waste reduction, and workforce training, encouraging green leases, performance monitoring, and tenant education, ensuring healthy interior environments, flexible designs, and sustainable furnishings, he says.

For property and facility management, the list includes optimizing operations, implementing preventive maintenance, evaluating performance, and training staff, Barta adds. 

Breeam is the most popular third-party office sector accreditation option, followed by Leed and increasingly Well and Access4You when it comes to well-being and health, interiors, office management and design issues.

Reflecting the growing concern with ESG-related issues, more building owners are striving to improve existing assets by opting for Breeam and Leed In-Use accreditations.

According to Colliers, some 48% of speculative and owner-occupied office stock in Hungary was certified by Leed, Breeam or the German-based DGNB, representing 2.1 million sqm of stock as of the first half of the year: accreditation is the standard practice for most new buildings, as they have significantly lower vacancy rates and higher rents than non-certified developments.        

Skanska, a prolific office developer in Hungary and the CEE region, has developed an offer to tenants consisting of services that aim to support them in creating sustainable workplaces.

“Our perspective extends beyond the lease document itself; we see a green lease as a comprehensive framework guiding the sustainable use and management of the building,” says Veronika Themerson, center of excellence director for environment at Skanska CEE.

Primary Focus

“We adopt a broad approach to lease agreements, with a primary focus on the ESG solutions incorporated in our buildings; for example, demand-controlled ventilation, smart BMS [building management system], heat pumps and sustainable use of the building. These solutions are detailed in the building standard specification and fit-out works specification attached to our lease agreements, ensuring that our practices remain aligned with the highest sustainability and efficiency standards,” Themerson explains.

A relatively new concept, there is no definitive definition of what constitutes a green lease.

“A green lease, first and foremost, represents the mutual interest between the landlord and the tenant in pursuing sustainability and energy efficiency. Such agreements may include specific KPIs and detailed measures to reduce resource consumption, such as energy, water, and waste,” comments Norbert Szircsák, the head of ESG Strategic Advisory Services for Colliers International, based in Budapest.

“Tracking consumption at the tenant level is vital, especially with the rise of ESG reporting. An advanced green lease might also include clauses that allow for cost recovery related to energy efficiency upgrades that benefit the tenant,” he says.

“I do not believe that incorporating ESG factors into a development, especially if planned early, significantly increases the project budget. In fact, many of these measures have a quick payback, both in terms of reduced energy bills and increased occupant satisfaction,” Szircsák adds.

CPI Hungary says its primary goal with green leases is to jointly reduce the environmental impact of both the building and the leased premises, which includes improving overall environmental performance.

“To achieve this, we, as the landlord, along with our occupiers, must collaborate by aligning our interests in implementing and maintaining sustainable practices. This collaboration should extend through the planning, execution, and evaluation phases of the green lease initiatives,” the company tells the Budapest Business Journal.

Educational Tool

“The green lease serves as both an educational tool and a solid foundation for our occupiers to develop their own ESG goals related to their leased premises. It also encourages them to motivate their employees and partners towards more sustainable behavior and company culture. In terms of content, we focus on key elements with the greatest environmental impact, such as energy performance, water and waste management, fit-out construction, cleaning, alternative transportation, and the working environment,” CPI adds.

Breeam and Leed deal more with the structure of the building. With regard to office interior issues, 180,000 sqm of office buildings are Well Core Certified in Budapest.

“The Hungarian National Bank has enrolled its headquarters in Szabadság tér for Well Certification and celebrated Precertification in April during the visit of the International Well Building Institute to Budapest,” says Regina Kurucz, a sustainability consultant and Well assessor.

“We expect people to become more conscious about the connection between the built environment and their personal health. By the end of the year, we expect 220,000 sqm of office buildings to be Well Core Certified,” she adds.

As ESG considerations can no longer be avoided in real estate development projects, it makes sense to plan for them from the start and take into account the efficient operation of a project at the design stage, comments Zsolt Kákosy, head of property management at Icon Real Estate Management.

“This will ensure that not only the property but also its future tenants can operate according to ESG criteria. The role of PM and FM in the ESG market environment is essentially to bring buildings up to ESG standards, contributing to increasing the value of the property for the market, the owner, and the tenants,” Kákosy says.

ESG elements and processes are now intrinsic in the higher levels of the industrial market. Developers and park operators are delivering more highly specified Breeam and Leed accredited complexes. ESG-compliant buildings are seen as commanding higher rents and returns on investment and are necessary to meet tenant specifications.

In the Budapest area, 45% of the speculative industrial stock (42 buildings) is sustainability certified, according to Colliers. Almost all are Breeam certified, with 78% at the “Excellent” or “Outstanding” level. CTP, HelloParks and Prologis lead the way in terms of the development of accredited stock.

“While green certification previously focused on offices, they have now gained significant emphasis in the industrial and logistics [sectors] as well. There are also an increasing number of certifications for other types of properties, such as hotels, with one example being Melea: The Health Concept in Sárvár,” comments Colliers’ Szircsak.

This article was first published in the Budapest Business Journal print issue of September 6, 2024.