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Interior Design Central to a Successful Office Project

Office Market

Issues related to interiors are increasingly integrated into the concept, design and project management of office developments in reaction to tenant and staff demands and, increasingly, stringent environmental regulations, market players tell the Budapest Business Journal.

Typical myhive space offered by Immofinanz in its offices.

Indeed, as developers strive to deliver ever more highly specified and sustainable office complexes, interior and exterior design has essentially become part of the same process.

Sustainability accreditation from an independent, third-party sustainability organization such as the U.K.-based BREEAM, the U.S.-based LEED or, increasingly, WELL, is now the norm for development at the higher end of the Hungarian office market.

This bundles together issues including the office environment, the provision of amenities and the well-being and retention of staff and productivity.

As people return to the workplace, office owners will need to take the needs of employees in the post-virus environment into consideration.

In addition to pricing and location as the two dominant decision-making factors, there is an increasing need for “human elements” to serve the comfort and wellbeing of employees, meaning the design of a building is naturally tenant focused.

“The design process has already taken into consideration the requirements of accreditation and thus we have already incorporated many features such as bicycle racks, shower facilities, rain water collection system and disabled accessibility into the plans,” comments Mátyás Gereben, country manager for Hungary at CPI Property Group.

“The interesting part was to incorporate sustainable methodologies during the construction, such as special waste management and building materials, or establishing sustainable working conditions for the construction workers,” Gereben explains.

As an example of the provision of amenities seen now, the BREEAM “Excellent” accredited Telekom headquarters by Wing, designed by TIBA Architects Studio, provides around 5,000 work places and includes a 300-person conference center, 700 sqm fitness center and sauna with a panoramic view of the city, roof top running track, two restaurants, two cafes and a launderette.

Dominant Trend

Budapest has around 1.5 million sqm of sustainability accredited office space, according to Colliers International, representing 40% of total space. More than that, of the 570,00 sqm of space under construction now, almost all is accredited.

According to the Hungarian Green Building Council (HuGBC), around 10 projects are in the process of assessment for WELL precertification or certification, a reflection of the importance of interior design and property management.

The wellness of workforce and longer staff retention has become a central concern for building owners; this involves the provision of a healthy and esthetically appealing working atmosphere, according to Zsombor Barta, president of HuGBC.

WELL accreditation can have a more direct impact on tenants’ life and daily activities. A healthier atmosphere in the building, more natural light and fresh air in the office space can have a significant effect on staff well-being and productivity.

Employees increasingly also prefer an eco-friendly environment and eco-friendly materials used within the space, according to Valter Kalaus, managing partner of VLK-Cresa Ltd, experts on tenant representation.

“The big question is how much extra building owners are willing to pay for them. There is no question, it is slightly more expensive; however, it might be more efficient to operate the building in the long-run. Furthermore, in a WELL certified building, tenants tend to be happier and more productive, therefore less likely to move out at the end of the lease term. The retention of tenants can make a big difference in addition to having a healthy environment,” Kalaus says.

Office tenants have become significantly more educated and demanding over the few past years.

“The office (space) has become a major HR-tool to retain and attract talents, so the requirements have changed drastically. The key is flexibility and high quality to foster creativity, team-work and productivity in the office,” the managing partner says.

“The interior design and the atmosphere have to reflect clearly what the company is all about. Again, flexibility is key and having multifunctional areas where your people can work effectively. We have to acknowledge that different companies and different people work in different ways and the created environment has to cater towards different needs within the organization. This is a difficult task, especially when you take into consideration the differences among different generations and their needs in your office,” he adds.

A Different Future?

Analysts see the necessity for changes in, for example, spacing and lay out as a consequence of the current health crisis.

“In the current situation, almost every company has been forced to reorganize or re-plan their business. While a significant portion of office workers are now working from home, many companies are looking to the flex office market to provide temporary quiet accommodation in individual or small team offices in a bid to maintain employee productivity,” says Hubert Abt, CEO of New Work, one of the major providers of serviced office space in Hungary and Central Europe.

“We have also seen a number of major occupiers turn to the flex office market to support their business continuity plans,” he adds.

Against this background of a growing complexity of demands from tenants, and by extension staff, total fit-out (including soft and additional costs) are rising.

Hard fit-out cost elements are generally split 80-20% between developer and tenant, according to CBRE. On top of this, the remaining cost elements (such as furniture) are covered by the tenant.

“When a tenant selects an office building, most of the time the exterior design of the building is a given; an average tenant in a typical situation cannot change that. Either you like or not; either it fits your company image or not,” points out Kalaus.

“On the other hand, the interior design of an office space can easily be changed, it can be custom-made and fitted-out to exactly how that company wants to reflect its image, functionality, etc. We see significantly more office lease transactions being done with the involvement of an interior designer,” he concludes.

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