Significant Increase in Green Office Stock

Office Market

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The Budapest office market is estimated to have seen an increase of nearly 180,000 sqm of green office space for 2021. There has been a significant rise in new build stock, with almost all new office buildings green certified; this represents 44% of all modern office space at 1,750,000 sqm, according to Colliers.

Both the number of new green buildings and the “greening” of existing buildings have continued to grow dynamically. In particular, the industrial market is experiencing a real boom for green logistics and manufacturing sites, according to Colliers.

“As for the WELL certification, focusing on human health, while we have only seen pre-certifications in the past, two buildings attained final WELL certification last year. Besides these, six buildings have attained pre-certification and several ongoing projects are registered,” the real estate consultancy said.

Companies are using hybrid-working models in the post-coronavirus era, involving a combination of traditional office attendance and home office working. Sustainability accreditation and the provision of amenities in response to developing tenant and staff demands are said to be central for the commercial success of office projects and the availability of an exit strategy with a sale to investors.

“A couple of years ago, an easily accessible, high-quality building with some services was easy to lease. Tenant expectations have certainly changed during the last two years, and now they include flexibility (both in layout and contractual terms), compliance with values and priorities of ESG (Environmental, Social, and Corporate Governance), and the preference for workplace consultancy, as well as integrated design and build services,” comments Máté Bihari, leasing and sales director at Horizon Development.

Great Expectations

“With clear ESG expectations guiding their search for the ideal office space, tenants place great emphasis on sustainability these days. Creating sustainable buildings is critical for us as a developer. Beyond targeting the LEED ‘Gold’ and WELL environmental ratings, we also plan to obtain the Access4You certificate to ensure that people with special needs can also make use of the complete offering of our latest development, ParkSide Offices,” Bihari explains.

“We work in a strict regulatory framework that defines how we select locations, conceptualize our projects, develop and operate our buildings, and manage acquisition and divestment processes,” he adds.

The growing social responsibility of developers and owners is demonstrated by the fact that more buildings are being awarded the Access4you certificate, which is of Hungarian origin but registered as a European trademark. Access4you certifies the accessibility of facilities for different user groups with special needs, Colliers adds.

“It is important to note that ESG is not a certification (although there are companies that issue such ratings) and not a mandatory regulation (for now), but rather a set of sustainability guidelines on how a company should operate in the three areas,” notes Norbert Szircsák, director of green building certification services at Colliers Hungary.

“ESG reporting has no fixed format, and the importance of each topic depends largely on the activities of the company concerned. The measurability of ESG aspects is, therefore, not yet truly standardized. This is why green certifications such as LEED and BREEAM have been developed in the past to measure the sustainability of buildings, and can also serve well in ESG reporting for real estate,” Szircsák concludes.

This article was first published in the Budapest Business Journal print issue of February 25, 2022.

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