Even the somewhat outdated lower class offices can become appealing to tenants by reducing operating costs.
One of the main disadvantages of the B-class on the office market is that although they operate at lower rental levels, they are often expensive to maintain and the deficiencies stemming from the age of the buildings frequently causes annoyances for tenants.
Hungarian property group Appeninn Holding now released a statement saying that through upgrades performed at its office buildings it was able to reduce operating costs by 18%. “Reducing the operating costs that our tenants have to pay keeps us competitive when it comes to prices,” said Gábor Székely, chairman of the company’s board of directors.
Although there are fixed costs when it comes to operating offices such as utility fees or taxes, significant savings could be achieved through renegotiating contracts, having providers submit competing bids or upgrades that could be recouped on the mid-term, he said.
Székely also noted that investing in tweaks that reduce energy consumption is money well spent. He highlighted a project at one of Appeninn’s offices where an investment of HUF 11 million was able to reduce monthly energy bills of HUF 1 million by 30%.