IMMOFINANZ has firm grip on local SSC market

Office Market

Country Manager Operations HU, Viktor Nagy (pictured) and Leasing Manager and Marketing Coordinator, Gergely Koó of IMMOFINANZ spoke about Budapest’s shifting SSC market and how the firm has managed to catch and hold on to its valuable clients.

The Group’s properties in Hungary represent nearly 8% of the company’s total portfolio. IMMOFINANZ has a relatively large chunk of the local SSC market and has managed to retain their SSC clients at Haller Gardens by continuing to address their needs in an evolving marketplace.

Following the financial crisis, the local property market experienced a bit of a slump. How has the SSC market helped improve this situation?

Gergely Koó: Based on the SSCs in our portfolio we can see which direction the market is going. We have two buildings in our portfolio which exceed 30,000 sqm and which, based on floor plate, can be used by SSCs. This includes Atrium Park and Haller Gardens, which is by now the only building in our portfolio that accommodates SSCs. We have one multinational tenant that has been in the building since its handover in 2009, occupying a space of 13,000 sqm and we have a new entrant on the Hungarian market that’s been in the building for two years.

What sort of trends are you seeing in Hungary?

GK: Some SSC’s entered the Hungarian market in the last two to three years and while everyone is optimistic about the real estate market as a whole, those that arrived here during the financial crisis had access to huge floor plates and could negotiate very favorable rental conditions and options for expansion. Now with vacancies down significantly and few new developments in the pipeline, SSCs that are looking to expand can hardly find a contiguous space above 5,000 sqm in the city right now.

VN: We are encouraging our tenants to make long-term commitments, which end up being to their advantage. Last year was our most successful in the past few years. We have increased the occupancy of our portfolio by more than 10% which is quite significant. Our growth pattern continues in 2016 and within the last few months, IMMOFINANZ has signed several lease agreements. This underlines the quality, flexibility and security that we offer our new and existing tenants, as a major real estate company. It’s noticeable that tenants are looking for sustainable solutions that optimize costs and energy consumption, and we are increasingly able to meet these expectations. We can see signs of recovery on the market and we are very positive about the future.

What are some of the key factors multinationals look for when setting up an SSC in Hungary?

GK: The large floor plate at our Haller Gardens property, upwards of 3,000 sqm, is a real incentive. Equally important is that the building shall be well equipped with effective HVAC systems, that allow for denser seating, more fresh air supply thus a comfortable working environment. We also have greater internal height than average which alleviates the feeling of overcrowding in open plan offices. Good public transport is also a must as is the security of operations. At Haller we have two independent power feeds to the building, which supply two separate transformers that ensure continuous operation for the tenants.

Viktor Nagy: One of our clients currently holds the title for the largest SSC in Europe. They understand that the cost of operating such a large leased property is significant, so rather than grow that space, they are trying to better utilize what they already have. Having shared desks that allow colleagues to work from home a day or two per week definitely helps make better use of the space.

Why are SSC coming to Hungary instead of going further east?

VN: It’s not necessarily just the cheapness of labor. It’s more the ratio of a workforce’s level of education to the cost of labor and in this regard Hungary is still quite competitive. In order to keep employees, however, SSCs need to provide good working conditions and plenty of incentives.

GK: Company’s coming here need to consider the cost of employing an educated work force, the political or economic risks in a given country and the location – Hungary is quite a hub. The fact that SSCs receive a huge tax subsidy in the first few years to motivate them to come here and employ Hungarians also helps matters.

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