Sustainability Development now the Regional Norm

Office Market

Accreditation from a third-party sustainability organization such as BREEAM or LEED is now the norm for new developments in the Central European office markets and increasingly in other market sectors such as logistics.

Visionary by Skanska, purchased by CA Immo.

With more importance placed on office interiors, as they have become an integrated part of the design process and property management, a growing number of developers are also now seeking WELL accreditation.

Regional and established national developers such as Skanska, Atenor, GTC, HB Reavis and CPI have common sustainable development policies across Central Europe and Western Europe. Further, Hungarian developers such as Wing, Horizon Development and Futureal have sustainability accreditation policies throughout their portfolios.

According to United Nations estimates, real estate accounts for about 40% of the world’s energy consumption and a third of all carbon emissions.

“Because of this, achieving double digit reductions in building-related greenhouse gas emissions and building-related energy consumption can have a significant impact on environmental sustainability,” says JLL, the American professional services and investment management company that specializes in real estate.

Conforming to Market Demand

Developers therefore need to build in accordance with sustainability requirements in order to conform to a market where tenants require “green” offices and, further down the line, in order to sell a project, as many investors have sustainability accreditation as a pre-requisite. On top of that, of course, there are also legal requirements for environmental impact that they have to stick to

“In Hungary, we see that all new constructed class ‘A’ office buildings are now ‘automatically’ certified against one or even more of the international green building schemes. Existing building renovations are now also seeking certification, as it has become an important tool for repositioning on the market,” commented Zsombor Barta, vice-president of the Hungarian Green Building Council, or HuGBC. (For an in-depth interview with Barta, see page 14.)

Hungary now has a total of some 90 BREEAM accredited office buildings, 48 LEED accredited and three WELL pre-certified projects according to HuGBC. This compares to 147 BREEAM and 55 LEED office buildings in Czech Republic, and 556 BREEAM, 146 LEED and five WELL pre-certified offices in Poland, the largest CEE office market.

The number of sustainability accredited office buildings will continue to grow with substantial pipeline across the region. Cushman & Wakefield estimate that 168,000 sqm of office space is scheduled to be delivered in the remainder of the year. JLL has traced 320,000 sqm of office space under construction in Czech Republic with scheduled completion of between this year and 2020.

According to Laurentiu Lazar, managing director of Colliers International Romania, close to 50% of the existing stock of quality office buildings in Romania have LEED or BREEAM accreditation, and almost all new buildings seek accreditations. The county has a total of 142 BREEAM accredited offices centers and 39 LEED. The first WELL accreditations are also in the process.

Bucharest is expected to have 2.4 million sqm of office space by the end of the year. In the latest delivery Globalworth has completed phase two of Globalworth Campus, a project that will consist of three BREEAM accredited office towers in a business park environment. Phase three of the project is due to be completed later this year. The largest pipeline project in Romania is the LEED Gold accredited 37,000 sqm Orhideea Towers by CA Immo.

Noteworthy Transaction

A noteworthy recent investment transaction is the acquisition of Skanska’s Campus 6.1 office center in Bucharest by CA Immo, this will deliver 82,000 sqm of LEED “Gold” accredited space in four phases. This is the second office transaction between the two companies after the Visionary deal in Prague; that project is expected to receive LEED “Platinum” and WELL “Core & Shell” certifications.

Speaking about its Campus 6 project, Skanska said: “Located at the intersection of two main boulevards, the property benefits from great visibility and exposure, and is well-served by public transportation. The metro station is just across the street with bus and tram lines within 50 meters of the complex. Shared e-car facilities are available for tenants, as well as a city bike docking station, which is located in front of the building. Bicycle facilities within the building include lockers and showers.”

Although green accreditation is not a pre-condition for an acquisition for all investors, it certainly helps and any quality product now tends to have BREEAM or LEED certificates.

The established CEE developer, GTC, for example, has a policy of developing LEED “Gold” office projects throughout its portfolio and therefore has accredited projects throughout the region.

GTC Hungary has just delivered its new Budapest office development, the 21,500 sqm GTC White House. In Belgrade, GTC has commenced construction of the Green Heart office complex. The project will include the reconstruction of an existing building in addition to new developments that will in total deliver five buildings totaling 46,000 sqm. Thus, common sustainability standards applied across the region are improving the standard and sustainability of stock.

“The recently developed class ‘A’ office building stock in the CEE region can be considered to be the same quality as in Western Europe. However, older office stock, especially that which was not constructed and developed in the so-called class ‘A’ category, can be of lower quality. Developers, investors and owners of such buildings are now more and more concentrating on the redevelopment and refurbishment of these buildings. This is already conducted to a much higher level and quality and can therefore help to reposition the building and to fulfill higher quality standards as well,” concludes Barta.

GTC White House
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