If you have looked to move offices recently, you cannot help but have noticed that rental costs are rising in Budapest. In part, this is driven by record low vacancy rates, a hangover from the financial crisis when many building projects were put on hold. A much more vibrant economy has seen developers return to the market and even the launch of speculative buildings. But, for now, it remains a landlords’ market.
Those low vacancy rates do not alone explain the rising costs, however; as ever, the full picture is a little more complicated than that. As you can read in our Special Report in this issue, tenants’ demands are also becoming more complex. They need greater space flexibility, more relaxed environments. The labor crisis that blights not just Hungary, but the whole region, coupled with the growing numbers of younger Gen-Zs and millennials in the workforce, mean employers are having to make their work spaces more inviting to attract and retain workers. And not just more attractive and technically savvy, but also more environmentally conscious. Those are office design elements that come at a cost premium.
But there is still one element to add to the equation of what is driving up rents, and it is perhaps the most obvious one of all: rising costs. Ironically, given that the labor shortage is one of the factors contributing to employers having to work harder to please employees, that same workforce shortage also affects the construction trade, and means it now costs more to build an office, or, indeed, any building.
Taken together, these factors shows how complex and interrelated the whole issue of who you employ, and the environment in which you employ them, has become. Perhaps that should not come as a surprise: ever since we got past the days of sweat shops and slavery and child labor, payroll and premises have been near the top of any list of business expenses. They have always been interdependent; the connections might well be more complex, or our understanding have grown deeper, but the effect is the same. We need talents, and we need a workspace in which they can thrive, that is healthy and efficient and, yes, occasionally fun. And that all comes at a cost.