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The man behind the lucky 13th

As the Mayor of District XIII since 1994, József Tóth has had a lot to do with turning the Váci út corridor into Budapestʼs premier office district. We asked him to share his secrets for success.

József Tóth delivers a speech at the recent ʼtopping outʼ ceremony for the V17 office building on Váci út.

The 13th District has established itself as the “business center of Budapest”, attracting office development from international concerns like Atenor, Skanska, HB Reavis and CPI, as well as Hungarian developers such as Wing and Futureal. They have attracted tenants like GE and E-On, who have established international offices in the so-called Váci út business corrider. In addition to offices, residential retail and leisure complexes have been developed in the former industrial zone, ensuring that the area is also a “living environment”.

Part of the success of the district is due to its good transport infrastructure and its previous abundance of large, relatively cheap brownfield plots. But a lot of the reason for the development in District XIII is the active, pro-investment local government, which has been led by district mayor József Tóth, since 1994. His continued re-election, and the continued dominance of his district in office development, indicates that he is doing something well. We asked Tóth to talk about the success of District XIII and what makes it possible.

Could you outline the amount of office, retail and residential development that has been undertaken in the 13th District in recent years?

In recent years, District XIII has maintained its attractiveness and its economic potential. The local government has supported investment for the improvement of the image of the district and also the improvement of the districtʼs environment, with carefully planned urban development. As the result of large-scale urban development that started with the change of regime, District XIII has seen the construction of 18,000 apartments, more than any other district. This includes luxury apartments on the banks of the Danube. The local government also built 600 rental apartments from its own resources. This exceeds the number of apartments built by all the other local governments put together. We are especially proud of our pioneer investment in a passive house (using ultra-low energy technology) of 100 apartments for rent. This is unique in Budapest – and in the whole CEE region.

The district’s office construction serves as a flagship in the capital, as one-third of the office investment is made here. In the 2010-2014 period, some 200,000 sqm of retail and hospitality units were built. Váci út, with its modern buildings, is still the fastest changing main road in the capital. The category “A” offices here have all been designed by the most renowned Hungarian architects.

Some specific developments:

  • Capital Square, 32,650 sqm, (2009) on the corner of Váci út and Dráva út;
  • Gateway Office building near Árpád híd, 36,300 sqm;
  • Greenhouse in Kassák Lajos utca, 17,800 sqm (2012, December);
  • HB Reavis Váci út, Turbina utca corner, 18,480 sqm;
  • Atenor Office Builidngs at Váci út, Fiastyúk utca corner (first phase 17,420 sqm, 2013; second phase 20,145 sqm, summer 2015; third phase the end of the year, 24,923 sqm);
  • Vision Towers at Váci út, Dózsa György út corner, March 2015, 23,500 sqm;
  • Skanska’s newest office building is being built at Váci út, on the Süllő utca corner;
  • Last week there was a ceremony for the V17 office building at Váci út, on the Bulcsú utca corner;
  • As for residential buildings, there is the aforementioned 100-flat passive house, built solely from local government money, at the corner of Jász utca and Zsinór utca;
  • A notable private investment is the Nanette Harmony on Rozsnyai utca.

How do you promote the Váci út area to foreign and Hungarian developers and investors?

Before joining the European Union, we had the option to give tax rebates to investors. Even after the tax rebates ended, investors valued the reliability, predictability and investor-friendly attitude of the local government. The good reputation of past investments made the area interesting for new investors.

Where did the original idea come from to develop the area into a business district?

The local government carried out a thorough investigation of investment possibilities. Following an analysis by professionals, the local government developed long-term tasks in the middle of the ‘90s. Beyond residential and recreational development, the construction opportunities of commercial and service units were marked as an engine for growth. The district government set out its long-term goals, in a document that is valid for 25 years. In 2013, following thorough and detailed consultations with professionals and citizens, the district put together a development concept to last until 2033. The concept’s medium-term plans are carried out in four-year cycles.

How do you cooperate with developers in the design and planning process?

The Office of the Chief Architect is in touch with the developers, discussing development concepts and mid-term programs. The most significant investments are discussed by the District’s Planning Committee, which makes offers to investors. The committee is made up of top professionals.

Would you define Váci út as the major office business district of Budapest?

Váci út and its environment, is the major investment area in Budapest. The area has been a flagship for 20 years, preserving its competitiveness. An international conference on architecture and real estate development dealing with Váci út found that the area is not only competitive in Budapest but also on international levels.

 How important is public transport infrastructure to the success of Váci út?

Public transport plays a significant role, as transport is a key part of the infrastructure. Metro line 3 is essential to the competitiveness of the area, and this is evident because, outside the area of the metro, similar development cannot be observed. Therefore, transport has a significant but not singular role in the development of a certain area.

How much more office and residential development do you anticipate in the near future?

We are not expecting the investment boom we saw before 2008 to happen again. In the past 6-7 years, the development in the capital has been concentrated in this district, with almost 50% of the new office buildings being built here. We can see a growing demand for development by investors. Hopefully, District XIII will stay in the center position of such activities.

Beyond the investment mentioned earlier, we also expect significant development by HB Reavis at the southern area of the Árpád bridge, and there are some other investments being prepared.

Also in District XIII, around the Dagály bath, a swimming complex for the 2017 Aquatics World Championships is being built as a government investment of elevated significance.

The construction of Klapka Szolgáltatóház is going to be a significant investment for the local government and will change the area’s overall image, with the renewal of the area and the development of public spaces.

Local government investment in flat construction is being continued, through two blocks of flats of 21 and 48 units each. The investment uses the district’s own resources, without any loans. Preparations have already started.

Is the development of the Váci út area a model for other areas in Budapest or cities in Hungary?

Definitely, yes.