BBJʼs Real Estate Review 2014

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Q&A BUDAPEST CHIEF ARCHITECT

SÁNDOR FINTA

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Margit Palace, where modernity meets historic proportions. Reddish brick walls together with the most advanced materials and structures. The modern office building has the elegance of the 19th century’s architecture because it was built with the proportions and on the remains of an old streetcar storage. It is a real curiosity in the heart of Budapest which can fulfill the highest expectations as an office, and even as the starting point for shopping and leisure time. To rent an office please contact us now! www.margitpalace.com

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DEAR READER, Budapest is a city well known for its impressive real estate landscape, but is unfortunately also known for suffering heavily in the tough economic times of the recent past and the present.

Opinions differ about whether the worst is over and if things will consequently change for the better, now that perhaps everyone on the market is in a better mood then they were just a couple of years ago. In any case, we are finally seeing things being built, whether they be modern offices that live up to the environmental standards of the modern age, stores that are a spectacle to look at or state projects that make an already beautiful city an even better place to live in.

With the BBJ’s Real Estate Review, we did not want to delve into the numbers, and we didn’t want to deliver a comprehensive survey of the property market. Instead, we took a step back to soak in the view and compiled a snapshot of the market, what we are keeping our eyes on, based on admittedly subjective standards.

Patricia Fischer managing editor Budapest Business Journal

CONTENTS The emphasis is now on qualitative development – interview with Budapest chief architect Sándor Finta OFFICE Room to grow – office market overview Landmark building reborn Sky-blue cube on Váci út 10-11 Green House: Sustainability and efficiency Corvin Offices Rekindling demand for Budapest – interview with ConvergenCE managing director Alan A. Vincent Just around the corner Under new management – interview with CE Land Holding Asset Management managing director Csaba Széll Inspiration and exclusivity Not there just yet – interview with RE Project Development Kft managing director Rudolf Riedl In the green Reborn Reno awaits new tenants

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OFFICES IN THE PIPELINE Blueprints dusted off, finally – office market outlook Stylish and green Dynamic visions come true Corvin Corner Tower Budapest One Office Park

22 24-25 26-27 28-29 30 31

GREEN OFFICES The green renaissance of Eiffel Palace Gataway

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Váci Greens Népliget Center Squared away Millennium City Center – K&H Bank HQ Green on the inside, too

38 39 40-41 42-43 44-45

RETAIL Small retail in the zone Luxury shoes: only a step away Nespresso boutique: coffee culture thrives Shopping on a human scale 52-53

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HISTORIC ARCHITECTURE Várkert bazár 56-57 Design hotel in the city center Books get the looks Luxury at the highest level

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BLOSSOMING BUDAPEST Metro 4 Bálna Kossuth tér

64 66-67 68-69 70-71

MY OFFICE High-tech, friendly, colorful, cosy Things change – so does the way of work Less drab, more glamour What’s the buzz about Kaptár?

House of ideas Project index

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THE EMPHASIS IS NOW ON QUALITATIVE DEVELOPMENT INTERVIEW WITH SÁNDOR FINTA, CHIEF URBAN PLANNER OF BUDAPEST Budapest 2030, a new strategic urban development concept of the Hungarian capital city, was finalized last year. Since then, urban planning experts of the municipality have been working on its mid-range implementation plan which must be approved by the city council by the end of April 2014.

Brave new concepts, critics say – the only question is whether the municipality will have enough resources to realize them.

During the past eight years, four strategic urban development plans have been produced for Budapest. Isn’t that a bit too many?

The Budapest 2030 plan is special among these strategic plans as it is valid for 20 years, while the other three – including the one being approved by the city council right now – are only mid-term plans meant for about seven years. By the way, cities are obliged by law to prepare long-term strategic plans. This time, however, the pressure on Budapest is not only external. The economic crisis has profoundly changed the conditions of Budapest’s urban planning, so preparing a new long-term plan has become inevitable.

Earlier, there was an enormous expansion in the real estate business, driven largely by speculative investments all over Europe.

Hungary was no exception. There is still an large degree of vacancy in the residential, commercial and office segments of Budapest’s real estate industry. That implies that the earlier extensive development was not based on real demand.

The preparation of the current urban development concept was preceded by a regional demographic survey. That survey suggests that Budapest and Prague can both expect a 1% to 3% population growth fuelled by in-migration; 1% to 3% is not very much, but other cities in the region can anticipate even less demographic increase.

That means there is no point in planning for extensive growth. There is no need for

skyscrapers, for example. On the other hand, demographic analysis indicates that a large proportion of recent in-migrants are in fact returning former residents of Budapest who were disappointed by the suburban lifestyle.

Budapest’s expansion has to be based on the improvement of cheap infrastructure, services, and a broad selection of cultural opportunities.

Qualitative and not quantitative development is required because that is what in-migrants want and is the precondition for growth.

What have the surveys brought out as the special advantage of Budapest? Which qualities can strategic development be based on?

Budapest is a city that is relatively inexpensive but high quality in many respects. This is why it is often recommended to tourists by trip advisors, and this is why startups like coming here. The city’s built heritage provides an haute niveau setting for a new company. This is, however, a fragile combination of price and value. If Budapest becomes more expensive it will lose its competitive edge, since cities such as Paris are of course more elegant; and if it deteriorates in terms of its physical condition, its attractiveness will again decrease. All that said, many Central European cities started their growth arcs that way; think of Prague and West Berlin, for instance.

Strategic plans tend to be abstract.

Our readers, however, will be more interested in which parts of Budapest will be developed and how.

The mid-range implementation plan identifies seven special project areas where development will be concentrated. These seven areas will include the so-called Western Grund and the surrounding areas (from the back of Nyugati Station to the City Park); the Ludovika Academy and Orczy Park; the islands in the Danube, especially the Margaret Island which was transferred to the Budapest Central Municipality last year; the old Gas Factory and the Hajógyári Island; the axis between Keleti Railway Station and the downtown area (the environs of Baross Square, Rákóczi Avenue and Deák Square); the Kelenföld Railway Station area, complete with the terminal of the new Subway Line 4, and finally the economic zone around the Budapest Airport.

The city of Budapest will play mostly coordinative roles in the development of these project areas. Take, for example, the case of the brownfield zone behind Nyugati Railway Station. This area, formerly part of the railway station and now out of use, is currently managed by the Hungarian National Asset Management (MNV) company, and is located on the territory of the 6th district.

This brownfield patch lies near important sites such as the Museum of Fine Arts, the City Park, and the planned new Museum Quarter. It is thus desirable to develop it into a public park first to improve the sentiment of the area, and that will prepare the way for further use. The city of Budapest can, for example, play an important coordinative role in the conversion of such brownfield spots.

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impression, and the districts should design novel policies for their utilization. With the support of the city of Budapest, the Center for Contemporary Architecture (KÉK) runs the Rögtön Jövök (“Back in a Minute”) project, the purpose of which is to map out vacant stores and abandoned buildings of former public institutions – e. g. schools or hospital buidings – in the city.

A good example of reuse is Jurányi House, a former school building that stood vacant for years, and is now repurposed as a cultural establishment in which theatre groups, dancers or bands can rent spaces for rehearsal and performances. The city of Budapest supports Jurányi House in kind, financing the maintenance of the building; the management of Jurányi House only has to pay the utility bills. The enterprise is a huge success. There are several other empty school buildings in Budapest, and we would like to create a “Jurányi-type” network out of them.

Aside from the above, the city supports the grassroots varieties of the smart city: community gardens, participative planning of public parks, and all kinds of initiatives which are born of the synergy of community energies.

In the Budapest 2030 strategy, the Danube plays a prominent role as an axis. What can be expected in that respect?

Budapest has a very small development budget of its own. The city, however, is able to exert pressure on the Hungarian state in order to convey that state-financed developments should be positioned along the Danube. Such projects already exist: Bálna, The Palace of Arts (MÜPA), the recent renovation of Kossuth Square, and the Várkert bazaar project still in progress.

Among the plans, we should mention Margaret Island, which we would like to relieve of unnecessary buildings such as the Rowboat Club and the Tennis Academy, and add fully public facilities instead; for example, the jogging circle around the island will be renewed. The functions fallen from Margaret Island can then move to Hajógyári Sziget.

The city regards it as its task to call the attention of individual districts to the fact that the sentiment of the historic building

stock controlled or owned by the districts needs improvement: For instance, the multitude of vacant stores creates a bad

In 2021, Budapest will host the water sports world championship. For that occasion, a northern stretch of the Danube bank area will be developed, namely the zone north of the Dagály Swimming Pool. AZs

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OFFICE Life is finally returning to the Budapest office market, where for the first time in what seems to be an eternity, new projects are kicking off, new buildings are coming to the market. In the following, the Budapest Business Journal presents its favorite projects on the scene.

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ROOM TO GROW

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he past years haven’t been favorable for the commercial property industry. New projects were few and far between, the owners were more focused on finding tenants for the spaces they had on hand and the developers looked into other aspects of the industry, like asset management, since they had nothing else to do.

The market came to a screeching halt just as the overall economy did the same. Vacancy is basically unchanged for years now around 20% and the driving trend among companies has been streamlining, which means reducing headcount along with the needed space volumes.

It is a common perception that the market has reached rock bottom, which is hardly a nice place to be, but it also means that the only way to go from here is up . This is something that should become a very clear trend this year, perhaps even more so in 2015 when the Budapest office market finally has a chance to catch up to its regional peers and explore its full potential.

Living up to that potential is still in the making, despite the fact that

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all participants of the market agree: Budapest has what it takes to become a major economic power. It has an ideal location in central Europe that connects it to the main channels of business east-to-west and north-to-south. Its education system, especially in physical and formal sciences, is on par with the best the world can offer. It also has an established basis in several industries that could take off and become even bigger economic drivers.

From a real estate perspective, it should also be stated, that the city has a magnificent architecture, one that should in itself attract new investors and businesses and consequently prompt the creation of new offices that will contribute to the stock of buildings.

This may just be happening in 2014. Finally, there are inauguration ceremonies to go to, houses are being built and there is also interest from investors who are full of money to spend. There surely won’t be another “stampede” that was characteristic of the market before things fell apart in 2008, but the reality is that there is room to grow and the stabilizing economy could well create the will to grow as well.

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LANDMARK BUILDING REBORN he former headquarters of Pesti Hírlap across the corner from Nyugati railway station, once called the “three tower palace”, reopened its gates as a modern office building in early 2014. The original building of the press palace was erected in less than a year, allowing the first issue of Pesti Hírlap to be published here on June 29, 1894. During the 2013 redevelopment of the building, the façade regained its former character from the old days, based on the original drawings redesigned by artist and architect Kornél Baliga.

The internal structure and superstructure that comply with the highest 21st-century technical and sustainability standards were designed by Yblprize winning architect András Gelesz.

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The restoration process, orchestrated by general contractor DVM group, started in March 2013 and the former press palace, now named Eiffel Palace, was completed by the end of the same year. Eiffel Palace is the first office development in Central and Eastern Europe that was awarded with a double environmental certificate, having met the strict criteria of both the BREEAM and the LEED international green building rating systems.

Year of delivery: 2014 • General contractor: DVM group Developer: Horizon Development

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SKY-BLUE CUBE ON VÁCI ÚT

he office building at Váci út 182 in Budapest — also known as the Blue Cube — has undergone a significant interior renewal in 2013. The reception and inner garden received new designs.

A furnished sample office was set up to demonstrate the quality of standard fit-out in the office building.

The lift lobby was opened up to the reception giving the hallway a pleasant feeling, while also improving the office building’s internal traffic flow. The interior colors were shifted from the originally warmer to cooler shades, interrupted by the curved colored sofa line of the waiting area. The name of the building presents a decorative element on the main wall in scattered blue glass squares.

The inner garden was also renovated. Two zones were created: one area for informal negotiations, with a small water feature, bar-stools and counter; and another offering a lounge with sofa, armchairs and

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table which provides space to enjoy an afternoon coffee. New plants were placed in galvanized planters. The interior façade is painted white and yellow making the inner garden even lighter and friendlier, an effect emphasized by the bright colors of the furniture.

The designers even thought about the relaxation of employees by creating a pétanque court. This fresh-air exercise gives the opportunity to switch off from the electronic computer environment of offices.

Short bilingual game rules are posted on the wall. While waiting for their turn players can sit on benches along the pétanque court.

Blue Cube was named Office Building of the Year in 2013.

Year of delivery: 2002 • Year of renovation: 2013 Total area: 14,476 m2 • Asset manager: S IMMO Hungary

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GREEN HOUSE: SUSTAINABILITY AND EFFICIENCY

Year of completion: 2012 Total area: 17,800 m2 Developer: Skanska Property Hungary

The award-winning Green House is the greenest commercial development project of Skanska Property Hungary in Budapest. Hungary’s first LEED Platinum certified office building was handed over in December 2012. One year after its completion, the occupancy rate of the property reached 95%, which is an exceptional result on the Budapest office market.

Green House’s tenants benefit from an ideal combination of sustainability, creativity, work efficiency and cost-effectiveness in the building.

The development comprises about 17,800 sq m gross leasable area and is located in district 13 of Budapest, parallel to the Váci út office corridor. The project was carefully planned to create ideal workspaces. Cutting-edge environmental solutions and green technologies were applied in each

and every development phase to minimize the building’s environmental footprint, and reduce its energy use and CO2 emissions.

Green House awards: • CEE Green Building Award 2013: “LEED for Shell and Core” category • World Green Building Council, Leadership Awards Europe Region, 2013, Leadership in Building Design & Performance Nominee • Project of the Year 2013, portfolio.hu • FIABCI Hungary Prix d’Excellence Award, 3rd Prize • Office Building of 2013, iroda.hu Office of the Year competition • Green Office Project of 2013, iroda.hu Office of the Year competition

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CORVIN OFFICES utureal’s large-scale city rehabilitation project, the Corvin Promenade in the capital’s District 8, aims at the architectural, physical, social, economic and cultural revitalization of a large part of Józsefváros in the city center of Budapest on a 22-hectares area. Corvin Offices ONE is the first phase of Corvin Promenade offices. The A category office building provides simple and fast access from each point of the Promenade.

Corvin Garantiqa Tower is the second completed building at Corvin Promenade. It is more than a simple A category building. Over the high standard of the built-in materials and unique architectural solutions, it can easily fulfill the special needs and efficient seating for an insurance company like Garantiqa Creditguarantee.

Corvin Panorama Tower is the gate of Corvin Promenade with excellent panorama of Buda hills. Right after the handover of Garantiqa Tower, the developer completed Ringier Tower specially designed for Ringier Publishing company.

Corvin Crystal Tower is the last in the row in time, but the most cleared-out, and glittering spot of Corvin Promenade. The offices are situated on the top of Corvin Atrium, the glass-covered shopping street, and its central position supply an outstanding panorama to the promenade.

Corvin Crystal Tower is covered by glass, in a diamond shape. An extraordinary look is paired with mathematical accuracy.

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EXPERT OPINION

Rekindling demand for Budapest ConvergenCE Managing Director Alan A. Vincent thinks that the grueling times on the Budapest property market are slowly coming to an end with realistic outlooks for stability and catching up with the other main cities in Central and Eastern Europe.

ALAN A. VINCENT

M.R.I.C.S. MANAGING DIRECTOR

The biggest complaint from the property sector in the past years was the lack of financing. Is there willingness among the banks now to lend and is there demand?

We are starting to see willingness to finance on the part of the “good” banks, in other words those parts of banks which have been separated from their non-performing distressed loan departments. After five years of inactivity, banks are coming under increasing pressure internally to start performing normal banking services. However, the funds available are still limited, margins are high and leverage above 50% is unusual. Yes, there is demand.

Has Budapest reached the end of the road in terms of big developments or is there still a revival up ahead, even if doesn’t get close to the pre-2008 era?

I don’t expect to see a revival in big developments anywhere near the level of 1996-2006. That period will, in time, be compared to the late 1800s in terms of the growth and development of this city. What I expect from now on is a far more “normal” situation where new developments replace old in a typical cycle of obsolescence and redevelopment.

There has been little change in the overall vacancy rate on the Budapest office market. Have we reached consolidation or is there still a growth spurt ahead?

Latest figures from the Budapest Research Forum show vacancy at 18.4%, a decline of 2.6% compared to 2012. That is a significant change. I expect this will continue, as only 30,100 square meters of new space was delivered last year in comparison with new leases (excluding renewals) totaling over 180,000 square meters.

Assuming a similar level of activity and looking at the new development pipeline, I expect vacancy to be close to 15% by the end of 2015.

Many developers are hopeful more incoming SSCs will be the next big boost.

Is this a reality?

I think SSCs are already the big boost and I expect that this demand will continue for at least another couple of years. The combination of low office occupancy costs, low corporate tax rates and the weakness of the Hungarian forint, combined with the natural attractions of the City still make Budapest a great location for SSCs. Which segment of the commercial property market has the greatest potential for growth?

Right now there are two areas of interest: Distressed opportunities and prime investments.

The latter are increasingly of interest as prime yields in Budapest show a significant discount to Warsaw and Prague, for example.

Regarding distressed properties, sooner or later banks will add up the cost of holding their huge distressed portfolios for all this time.

Given that they have not been investing in, or managing these properties, they are not only costing money in terms of security, property taxes and so on, but they are also losing value all the time. It is really a zero-sum game to keep holding these properties, as whatever improvement in value may be realized in the future, it will be more than compensated for by the holding costs and increasing obsolescence for such a long period. So the question is not one of real estate fundamentals but rather when will banks balance sheets allow them to release more distressed property? Hopefully the recapitalization of banks over the last five years will soon reach a level where some more significant losses on disposal of these portfolios can be realized.

In terms of investments, sector insiders said Hungary was a “red flag” country in the crisis years. Has this changed?

The situation is definitely improving. From the cross-border investment interest we see, I expect to see transactions at the prime end of the investment market in offices and retail assets within the next six to nine months as well. Budapest looks

inexpensive compared to any other capitals in the region. Our macroeconomic statistics look good in the European context and a lot of the politically motivated negativity about Hungary has dissipated over the last two years. Given the limited supply of prime retail and office assets available, it will take a very small amount of cross-border international investment funds to move values for these assets significantly. The early investors will be the winners in this scenario.

Where is the retail segment heading now that shopping mall construction is a thing of the past and new projects are also barred through law?

I don’t think retail development is heading anywhere fast. Existing shopping centers and plazas already provide enough of that kind of product in my opinion. I think the government was right to limit further retail development, not only to protect smaller high street retailers but also to ensure that big new shopping centers do not completely destroy the traditional district food markets and retail property stock of the downtown in Budapest.

For existing owners of shopping centers, this means stable rents and values for some time to come.

What are the plans for ConvergenCE in the coming years?

We have weathered the recession by providing hands on asset and property management to our limited group of exclusive clients such as Europa Funds and JP Morgan. At the same time, our project management capability has been expanding with major advisory roles in relation to KPMG in Budapest and Europa Fund in Poznan. We also recently won the property management of the new KPMG headquarters. We plan to grow and expand these lines of business whilst maintaining the highest standards. I think the time is now right to buy and we are actively looking for realistically priced existing residential and commercial buildings and portfolios where we can add value with our local development, marketing and letting expertise.

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JUST AROUND THE CORNER

áci Corner Offices is the first development of HB Reavis in Hungary. It is located in the heart of Budapest’s fastest developing Váci Office Corridor and has leasable area of 21,068 sqm. The building has exellent accessibility by car, bicycle and public transportation as well. Metro Line 3 stops directly at the main entrance of the building, Tram 1 and several bus stops are in the close vicinity. Váci Corner Offices will be an A-class office building offering high-quality, efficient office space on eight levels and retail units on the ground floor. The development will provide tenants and visitors with a green, relaxing and friendly atmosphere and also a 1,700 sqm

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private office garden representing high ecological value. The building was designed to BREEAM Europe Commercial ´Excellent´ green classification and has achieved the highest score ever in this category in Hungary to reflect the developer’s commitment to sustainability, energy efficient technologies and to help to offer reduced maintenance costs for tenants.

Year of delivery: 2014 • Developer: HB Reavis Net leasable area: 21,068m2

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EXPERT OPINION

Under new management With development activity in the doldrums, the market attributes far greater value to asset management and the prospect of repositioning a challenged project that could still prosper, says Csaba Széll, managing director of CE Land Holding Asset Management.

CSABA SZÉLL

CE LAND HOLDING ASSET MANAGEMENT MANAGING DIRECTOR

You specialize in third party asset management. What does that mean and who are your services targeted at?

What we do is try to maximize the value of a building in a way that best reflects its stage in its life cycle and best responds to current market conditions. Normally, commercial real estate is built for 30 to 50 years, but if you look around Budapest, there are developments from the 90s that are already proving non-sustainable. Buildings are built for decades, but the city is also developing around them, which creates new market conditions that require a different approach.

We say we are third party because we are independent, this is our core business that doesn’t have to depend on other areas of our operation. Our services are targeted at owners of property portfolios that contain commercial or to a smaller extent, residential assets.

In this respect, what you do is basically crisis management?

I think crisis management is a negative tag. I think that this crisis has gone on for so long, we have to accept that this is the market now. The purpose of our services is to provide a flexible, well-defined and tailor-made solution, regardless of the state of the given market. One of the factors that distinguishes us is that we have channels to top tier private equity on a global scale, which we can secure off-market to assure funding if necessary. We are also flexible in

building our team, which we are constantly doing with the next task in sight. Essentially, we provide aid for real estate owners in a state of transition, whether it’s repositioning an asset or exiting altogether.

With macroeconomic recovery and new developments appearing, many people are talking about the end of the real state sector’s crisis. Is that the case?

After such a long, depressive state, we tend to take any small positive as a game changer, but I’m afraid that is wishful thinking for the time being. From a macroeconomic perspective, it would be logical that real estate is also getting on a growing track. Still, it takes three things for the property segment to thrive: equity, lending and entrepreneurial drive. The latter applies to all parties, not just the developers, but also the tenants that they are building for. In other countries, real estate is once more becoming a serious target for investments. In Hungary, there are only a few developments that all require high preleases, as such, I don’t really see the trend turning just yet.

Which segments of the market provide the most challenges?

The most dynamic changes are in retail and, in relation, logistics, where expectations are even more fluid then in the office segment.

The most sustainability is in tourism, given that Hungary remains a favored tourist destination. In any segment, achieving an asset’s maximum value is always a challenge, since there are many factors that need to be taken into account. These include the characteristics of the buildings, whether they can be adapted to changing circumstances, like new technological demands, as well as the owner’s overall strategy.

In this market, what are your plans for the near future?

We have a strong client base that gives us plenty of exciting challenges. We are currently looking at expanding our operation to a regional scale.

We are eyeing the West Balkan region with a base in Zagreb. Also, the volume of properties we manage increased significantly recently when we were commissioned to reposition the Duna Tower office building.

How intense is the competitive environment for asset managers?

There is healthy competition, I’d say it’s like in any other field of business. What I can see is that asset management has grown significantly in value and became a key segment for other participants of the property market, developers or agencies that had to drift away from their core business given the lack of activity. For us, asset management is the core business and we have no plans of changing that.

You mentioned the availability of financing as a key issue for the property sector. How do you see banks in Hungary that have a major portfolio of defaulted projects cleaning out their toxic assets so they can restart lending?

I think this is far more of a regulatory matter and it is unrealistic to just expect the banks to take action on their own. Private equity right now is a far bigger resource. When that money starts coming into real estate, the banks will follow suit. My expectations are that the banks will provide the market with plenty of real estate on the mid-term when they start bringing their assets on to the market. This won’t necessarily bring a drop in prices, since I’m also expecting other conditions on the market to change.

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INSPIRATION AND EXCLUSIVITY oth REsidence 1 and 2 office buildings are located in the center of Buda, an elegant neighborhood of the 2nd district Víziváros. The complex is only one block away from Margit körút and Fő utca, in the area bordered by quiet streets, is within short walking distance from the main transport junctions of Inner Buda, Széll Kálmán tér and Batthyány tér. Both office buildings are excellently accessible by car and public transport.

REsidence 1 offers a total of 13,300 sqm of rental area on nine levels: Two basement floors with parking spaces for 177 cars, the ground floor and six floors for office use.

REsidence 2, also an office building, features eight storeys with a total of 5,500 sqm rental area, two floors of which host the underground

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garage with 79 parking spaces. REsidence offices are also commited to sustainability by applying the principles of green architecture and innovative solutions. The state-of-the-art HVAC technology, the efficient and environment-friendly cooling and heating system, and the intelligent elevator system all contribute to the well-being of employees and ensure efficient operation.

After becoming a Business Superbrand in 2012, property developer RE project development Kft won two prizes at the awards ceremony of the “Office of the Year” and “Office Building of the Year” contests, held on January 31, 2013. Having won the preliminary public voting, REsidence Offices also finished at first place based on the tenants’ and the professional jury’s valuation.

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EXPERT OPINION

Not there just yet Hungary and the Budapest property market are on their way, but there is still more distance to travel in recovering investors’ lost trust and restoring demand through growing the economy, says Rudolf Riedl, managing director of RE project development Kft.

RUDOLF RIEDL

M.R.I.C.S. RE PROJECT DEVELOPMENT KFT MANAGING DIRECTOR

Financing has remained one of the key concerns for the commercial property sector. Is it easier to get money now for projects or is funding still tight?

It is true that it is difficult to get financing.

Banks built up a considerable share of non-performing loans and conditions were especially difficult for Austrian banks because of the Vienna central bank’s decision that disallowed issuing loans if they outweigh savings. This was often the case and the banks responded by cutting back on business. They thought no business was still better than bad business. Today, we have gotten closer to being able to do serious business, but we are still far from where we were before the crisis.

Do you see money reappearing on the real estate market?

There is right now so much money out there in private equity, a surplus that is almost on levels seen before the crisis, which is becoming a factor on the market step-by-step. It’s a bit different for banks, since they’ve restructured, they fired the bankers who were willing to get involved with risky products and they don’t have a successful strategy with their avoidance of risk. They’ll only get on board when the upward trend is already ongoing, and by then they’ll be too late.

Where is Hungary in terms of this trend?

Budapest is still on the wrong side, I’m

afraid. We have seen unorthodox economic policies that have shaken confidence and investors want more security. Right now, nobody knows whether there’ll be new taxes tomorrow and in general, there is no trust for the government. This is reflected in development as well, since a developer must consider whether the asset will be sellable on a market that raises so many concerns for investors.

Won’t the central bank’s funding campaign help?

This program could be a good thing, but it won’t do much to help in this case. It will only be released for good projects, and there are no good projects, no demand from the developers unless there is an improvement in the perception of risks.

There won’t be many new projects when everybody is wondering: who will buy them.

Where do you see demand for office space coming from?

As the crisis developed, companies responded by optimizing operations, reducing headcount and moving into office spaces that were smaller in size and consequently cheaper. As the economy recovers and business expands, these firms will have no choice but to hire new people and consequently move to bigger offices, a drive that will naturally stoke demand. There is of course potential in shared service centers, but those normally don’t represent the high-end category, since their operation requires different conditions. The actual recovery will have to come from the expansion of business.

The spectacular expansion on the retail market has stopped, or definitely slowed, in recent years. Has the market reached saturation?

When you look at the number of malls

and the space they offer, the market theoretically allows for more, but not in reality. Domestic consumption was drastically reduced because of the economic situation, which was also the cause of the country’s trade surplus.

The wealthier class still had options but others had to significantly scale back their spending and the malls had to adapt to that with the unit sizes getting smaller. Right now, we are seeing a rebound from the previous downsizing, but I’m not sure if the recovery is real or just seasonal. I don’t really see the construction of additional major malls, but there is still potential in smaller units such as strip malls.

Do you see a stronger recovery and a better set of conditions in the near future?

The Hungarian economy isn’t doing bad; there were steps that the government had to take in the past years and took them.

Still, Hungary is no island: It is part of the European Union and must operate in partnership, it needs to have trust. As such, I’m seeing 2015 as the year when there may be partly speculative office developments, to a certain degree, retail, there is a strong need for high quality apartments and the banks’ portfolio of assets is still there.

This year is mostly gone already, seeing that there are elections one after another.

We’ve already reached rock bottom and Hungary has huge potential -- I’m expecting the country to realize it.

What are Raiffeisen Evolution’s plans for the immediate future?

We have retail ventures that are in the planning phase, a small center and a strip mall and also a business park in development. Part of this we are financing ourselves, and the rest will receive financing once we have pre-leases. There is no funding available unless you have pre-leases.

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

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OFFICE

IN THE GREEN

ffice Garden II, built in 2010, is the second phase of the dynamically developing office parks, Office Garden.

It is characterized by elaborate planning and strongly environment-friendly features. The name Garden reflects to the fact that 35% of the site is greenery. The developer of the building, GRT Group devotes increased attention to the use of the most possible environment-friendly solutions both during the construction and upon the operation of the building.

Office Garden II has its own central energy panel and a fully

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independent electrical feed. The heat pump heating/cooling system also uses renewable energy, resulting in lower operating costs. The building’s prodigious window surface area and optimal cross-section design ensure that almost 100% of the office space is provided with natural lighting. The green surrounds and sculptured gardens of office park and its terraces make an inspiring environment for the people working here.

Office Garden II is a LEED-targeted building, certification is under process.

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REBORN RENO AWAITS NEW TENANTS pring opening offer at Reno Udvar on Váci út, just an arm’s length from downtown Budapest You will find the right size to fit your needs at Reno Udvar on Váci út. Warehouses from 10 square meters to 1,500 square meters available at significantly discounted prices.

Aside from this, low rent, favorable utility costs, configuration and renovation per your wishes, custom-tailored offices in a size that fits your needs. Choose the largest office corridor in Budapest five minutes away from downtown and rent a B+ category office at the price of the B- category. Sizes as per your needs: offices ranging from 140 square meters to 600 square meters Last, but not least, we have stores to rent from 200 square meters to 1,500 square meters available at significantly discounted prices.

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Open a store or start a business in the much frequented Reno Udvar and join RÉGIÓ toy store, Brendon children’s store, Cardo furniture store, Eleven Park Playhouse – the largest indoor playground in Hungary – and many others.

Our courtyard, accessible by public transportation or by passenger cars, offers plenty of parking spots and storage opportunities.

Easily accessible location, convenient loading, separate truck gate, and reception service.

Due to the close proximity of Megyeri bridge, motorways M2 and M0 as well as highways M3 and M5 are reachable quickly.

For further information about our offices, warehouses and stores, please send an inquiry to iroda@ari.hu or call us at (+36) 30 601-1000.

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OFFICES IN THE PIPELINE

OFFICES IN THE PIPELINE There are once more new offices being built in Budapest, which is an indication of several positive stories in the economy at once.

While collecting the projects isn’t a particularly difficult task just yet, it shows that there is reason for optimism.

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DUSTED OFF, FINALLY T hey say anything is better than nothing and that notion pretty much applies to the conditions on the office market nowadays. New developments were a major rarity in the past years, with financing drying up, tenant demand waning and general jitters all around.

It is probably too early to discuss the rebound just yet, but the signs are there to have a favorable outlook. Finally, there are projects underway, others that went from the drawing board to the bottom of a drawer are being dusted off, and there is also tenant activity that warrants developers getting active once more.

We are surely not looking at investment levels seen before the Lehman Brothers crisis, but maybe that isn’t such a bad thing. The abundance of money in those days only brought a barrage of bad projects that are to this day an eyesore in many parts of the city and remain a constant concern for the banks that still don’t quite know what to do with the buildings they own but never wanted in the first place.

But now, there is a lot of money floating around on the international

investment scene and market participants are very much looking at things they can spend it on. Hungary was referred to as a “red flag” country before because of precarious policymaking and the general muted growth potential of the economy. Now that this is starting to change, it’s bound to produce growth for businesses and they will be needing bigger offices to accommodate more people for the bigger workload.

It seems that the regions of the city that are traditionally strong in attracting new office developments, like the Váci corridor are still appealing development locations for investors and tenants alike, but there are also efforts to bring new office capacities to areas of Budapest that weren’t too thoroughly embedded in the business circulation before.

The best-case scenario is that growth continues, businesses expand, meaning there are customers to build for and the banks also get over their balance sheet worries and start financing these projects. There won’t be a surge, but a steady rhythm is already way more than anyone dared ask for just a few years ago.

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STYLISH AND GREEN odic Hungary’s project, the V48 office building is a new development conveniently located on the Lehel tér metro station, right at the entrance of Váci út, the most active office corridor in Budapest.

The U-shaped building fronts three streets, ensuring perfect visibility for corporate branding. On the Váci road, the facade

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is 46-meter long and features Art Deco elements with large openings at street level. It is perfectly suited for a headquarters or multiple rentals including some retail and amenities on the ground floor. V48 offers a large inner garden with several terraces. The West End City Center shopping mall is only at five minutes walking distance.

Area : 12,850 sqm • Developer: Codic Hungary • Architect(s): Zoom Design and TIBA Architects Studio Kft • Year of delivery: 2015

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DYNAMIC VISIONS COME TRUE

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utureal’s premium category office complex Vision Towers is located in Váci út corridor, one of the most popular business quarters of central Budapest. Delivery is due in the summer of 2014, with flagship tenant tax advisory firm KPMG that will take the entire North Tower of the office complex.

The 3H Studio designers envisioned a triangular, fan-shaped building for the plot providing excellent visibility from all directions and well emphasizing the dynamics of the busy intersection. The three towers have different heights and slightly different façades, various green building solutions and very ergonomic and effective floor layouts for offices, storage and parking places.

The A category office building represents state-of-the-art architectural features as well as 4-pipe A/C, raised floors, suspended ceilings, openable windows, ’Excellent’ qualification by the BREEAM system, high level of security and intelligent building automation systems.

The investors agreed with the local municipality to create a new urban space for the public on the plot and give a facelift of the pedestrian area around it. The new green park and additional commercial services (cafés, restaurants) will bring added value both to the investment and the local residents in the neighborhood.

Delivery date: summer of 2014 • Developer: Futureal

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he Corvin Corner Tower is the third office phase of the Corvin Promenade.

When planning the office building standing on the corner of Futó and Práter streets, the developer took into consideration the possibility of mixing quality and economical operation, which resulted in an economical, still A category building.

The Corvin Corner Tower provides easy and fast accessibility, the amenities offered by the Corvin Promenade (shopping, sports, entertainment, catering) are only a few steps away. The corner position provides excellent visibility, the clear shape of the building and the facade free from superfluous ornaments suggest decent elegance.

The Corvin Corner has been rated ‘very good’ with BREEAM Certification (Building Research Establishment Environment Assessment Method), considered to be the world’s foremost environmental assessment method and rating system for buildings.

It rigorously assesses various standards from energy efficiency to well-being of employees. The award guarantees value and quality in sophisticated, conscious environment.

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BUDAPEST ONE BUSINESS PARK

he 70,000 sqm office park in Őrmező is located at the “west gate of Budapest” where the largest multi-modal transportation junction of Hungary is under development. Visitors coming by train, or by car on the highways will get their first impression of the city of Budapest by looking at Budapest Gate Office Park with the Buda hills in their background.

The area has unique transportation facilities: Direct links to motorway M1 and M7, the future terminal station of metro line 4, direct connection

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with Kelenföld Railway Station with Vienna Intercity access, the terminal stations of 10 inner city buses and 2 tram lines.

With straight connection to the Etele City Center, the full range of services and shops will make everyday life more comfortable for tenants. Relaxation will be served by the extensive green areas surrounding the buildings, restaurants, cafés as well as additional retail and service units.

The offices are planned to be added with underground parking places for 1,420 cars.

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GREEN OFFICES

GREEN OFFICES When new offices are built nowadays, sustainability is always a key issue. Tenants demand “greenness”, lower energy use means lower costs and develpoing in this manner is altogether great for the environment. The Budapest Business Journal took a look around the city to find the top five green office buildings.

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SPONSORED BY:

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INSPIRED BY THE PAST, DEVELOPED FOR THE FUTURE Sustainable solutions in a historic setting: the green renaissance of Eiffel Palace

The corner plot on Bajcsy-Zsilinszky Road – previously home to the editorial office, publishing house and print house of Pesti Hírlap – is now the new gem of the Hungarian capital’s Central Business District. Exactly 120 years after the construction of its 1893 predecessor building, Eiffel Palace shines in its original beauty again, contributing to the rebirth of downtown Budapest.

When stepping in for the first time, it is immediately revealed that 19th-century charm and patina can gently be interlaced with contemporary elegance and minimalist design.

The Eiffel Palace office building is an exemplary project of prestige from various aspects. It is a flagship development where modern architecture and historic restoration organically meet, and integrate cutting-edge technological innovations to create a human-focused, energy efficient, sustainable and healthy work environment.

The real estate developer, Horizon Development, made it a top priority to authentically preserve the unique architectural and aesthetic details designed by 19th-century architects Flóris Korb and Kálmán Giergl, and fit them into the unity of the building. The original chiseled cast iron railings ran along the interior courtyard corridor. The wrought iron columns were decorated with spheres and wheel motifs; the unicorn theme from the family coat of arms appeared on the 2nd floor capitals.

The main stairway’s cast iron structure and railing (credited to Gustav Eiffel’s firm), as well as the Villeroy & Boch majolica ornamentation spanning under the parapet, added to the building’s architectural richness. These details were all restored to their one-time splendor and got reinstalled at their original spot by the general contractor, DVM group.

Eiffel Palace’s expected double environmental certificate (LEED Gold, BREEAM Very Good) is unparalleled in Central and Eastern Europe. Features that contribute to the excellent energy and water efficiency of the building – rewarded by both green building rating systems – include solar collectors and photovoltaic panels on the roof, the use of harvested

rainwater, built-in low flow aerators, occupancy and motion sensors, energy-saving LED light fixtures, pre-programmable elevators and the vegetation on multiple roof terraces. Bicycle storages with lockers and showers are situated in the 5-story underground garage, and electric and hybrid car chargers are also located here.

Still, the most visible green feature of the building is the vivid adornment of the atrium, a beautiful vertical garden. It complements the timeless harmony of the classic interior’s whites, beiges and bronzes with its fresh shades of green, and links the first floor with the ground floor.

The ground floor is a perfect meeting place with comfortable seating, soft carpets and direct access to Eiffel Bistro, the in-house restaurant and café. The common area also serves as exhibition space, where the developer pays tribute to the heritage of Pesti Hírlap and Zrínyi Nyomda with its presentation on the history of printing, and its display of original machinery.

When asked about components of the Eiffel Palace success story, Attila Kovács, Managing Partner of Horizon Development, pointed out: “From laying the foundation stone to the completion of our modern, 14.500 sqm fitted-out office building, only one year passed, which is a distinct architectural marvel, and a great result of the exceptional, coordinated professional performance of Horizon Development and DVM group.

Our ideally located, highly visible downtown development now houses prime offices on 8 floors, and accommodates 246 cars in the 5-story underground parking garage. The building was well received by our tenants, and reached a 65% occupancy level prior to completion in the form of a pre-lease. It is home to the offices of PwC Hungary, Kővári Tercsák Dentons, and the British Chamber of Commerce in Hungary. We have no doubt that Eiffel Palace will soon reach full occupancy, being an exemplary project of history, prestige, quality and sustainability.”

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GREEN OFFICES

GATEWAY he Gateway Office Park building complex comprises three towers. On top of the unique design, tenants can enjoy all services to satisfy their possible demands. The buildings are a special blend of modern technology and individual architecture built in one of the fastest-developing office districts of Budapest. It boasts excellent accessibility with the Árpád híd metro station just minutes away along with several other modes of public transportation. The towers also have 422 indoor parking spaces and the facility also comes with state-of-the-art security solutions.

The ground floor is dedicated to commercial and service space. The

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developer and operator Ablon offers potential tenants the option of giving full customization of their office space before moving in, making it an option for companies that only need smaller spaces as well as for bigger corporations that have bigger needs. Gateway has been awarded with a Building Research Establishment Environmental Assessment Methodology (BREEAM) Very Good in Use certificate for the features of the project that serve sustainability. Gateway Office Park still has available office and retail spaces.

Completed: 2008 • Office space: 35,800 sqm • Design: Citinvest

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VÁCI GREENS

ocated in the heart of one of Budapest’s most famous business districts, Váci Greens is an appealing office solution to local or international companies looking to minimize their costs while offering their employees a comfortable and friendly working environment. Váci Greens was constructed by the Belgian property group Atenor to remain sustainable at all levels. Special attention has been paid to ensure development and the buildings themselves are eco-friendly every step of the way. Building A was the first to receive the Excellent mark per the BREEAM Code for Sustainable Buildings. The five towers of the

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complex currently advertised have an aggregated leasable space of nearly 100,000 square meters. Excellent traffic connections offer employees fast and easy access to Váci Greens. Two major bus lines and a metro station link the location to the city center. It is easily accessible via car, walking, or bicycle. The building features advanced energy monitoring equipment with the goal of minimizing waste while saving tenants money. There are also backup genreators available should a power outage occur. Construction started in 2011, and the first tower was delivered in 2013, while the second tower is expected to be completed in Q2 2015.

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épliget Center is a modern three-phase office complex offering 26,000 square meters of gross leasable area. The project – completed in 2010 – outperforms in numerous green building certification criteria, and has been endorsed by the EU GreenBuilding Programme of the European Commission’s Directorate General for its outstanding energy efficiency performance and environmental-friendliness. In 2011, Népliget Center received the CIJ ESSA (Environmental, Social and Sustainability) Award.

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GREEN OFFICES

SQUARED AWAY iffel Square was voted the “Best Office Development of 2010” at the CiJ Awards, and received a FIABCI Prix d’Excellence Award. Providing 23,500 sqm of lettable area including offices, retail and restaurants, it is outstanding due to its 4,800 sqm public square, designed by Finta Studio and developed by ConvergenCE and DVM design. The A++ grade building has attracted a number of blue chip tenants due to its design, green credentials and excellent amenities. It is home to more than 2000 people in the heart of Budapest. Eiffel Square is asset and property managed by ConvergenCE to a very high standard.

This landmark building was designed to be excellent in every possible way, in keeping with

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its prime downtown location just off the Teréz körút and right next to the glorious facade of the West Railway Station, which is reflected in the 120-meter long glass façade of Eiffel Square.

From a disused parking lot and derelict land, the architects and developers created one of the most modern, attractive and well-managed public squares in Budapest.

Eiffel Square was also one of the first buildings in Budapest to obtain a BREEAM green certification in recognition of the approach and execution of the building and square design.

From the use of high-value natural materials to long-term sustainability and energy efficiency, the emphasis was put on quality, efficiency and environmental awareness.

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MILLENNIUM CITY CENTER - K&H BANK HQ

illennium City Center is located in the heart of Budapest, on the riverside of the Danube. The office buildings are quickly and easily accessible both by public transport and by car from any part of the city.

One of the outstanding office buildings of Millennium Towers was purchased and an other one is leased by KBC Bank and is home to its Hungarian subsidiary, K&H Bank. The building complex’s developer is TriGranit Development Corporation.

The property which is a seamless combination of building K and

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building H, provides the most modern technical features and a unique architectural solution was designed by internationally renowned Finta & Co Architect Studio.

Both buildings received gold LeeD® certification. All of the 38,000 sqm office space in the property is used for the bank’s headquarters. On the ground floor of the building H, riverfront retail promenade space is available.

Completed: 2011 • Space: 76,000 sqm • Design: Finta Studio

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GREEN ON THE INSIDE, TOO

ffice Line Kft, owned 100% by Hungarians, agreed on the inclusion of the headquarters building of K&H group in the elite club of greenest buildings. The €100 million investment is located in the area of Millennium City Center by the River Danube.

Office Line carried out the most significant office furniture acquisition project of the last 20 years. The 40,000 square-meter office area includes furniture of the German Reiss and Interstuhl brands. These pieces of furniture are the least burdensome for the environment and meet the most stringent sustainability criteria. In the system of LEED (Leadership in Energy and Environmental Design, gradually increasing in the last decade) the “environmental-friendliness” of these pieces of furniture is also very important criterion. LEED investigates serious factors like geothermal energy use, built-in material transport distance and natural ventilation, and green roof aeration.

The chairs, tables, desks, cabinets and dividers transported from Germany and Italy by Office line meet the most rigorous requirements

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in material and process of production and manufacturing. Through LEED-evaluation, the furniture contributed to the aimed achieving of golden-grade with 4 points.

The green building movement was started at the turn of the millennium by the US Green Building Council in the United States of America. The movement supports minimal environmental impact, cost-efficiency and design. The new K&H headquarters built by TriGranit group is on the international frontline with both its interior and exterior design. Office Line, the winner of the strict tender of two years, adjusted the implementation to the blueprints of Finta Studio following the most modern trends when furnishing the complex nurturing 2500 workplaces, satisfying the requirements of a healthy and “livable” workplace environment. The luxurious offices of workers and senior managers located in the sumptuous mansard contain 3,500 cabinets, 2,500 desks and 5,000 chairs on seven levels, furnished in four weeks by the load of 100 trucks. The unrivaled panoramic top floor is outfitted with a staff restaurant.

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R E TA I L

RETAIL Much has changed in the way people shop, which is naturally orienting retail in new directions.

Whether it’s high-end or the nearby strip mall, the economic recovery is giving hopes all around for better times on the retail market.

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R E TA I L

SMALL RETAIL IN THE ZONE he past years have been overall unfavorable for retail property development and also brought what appears to be a key change in how people prefer to do their shopping.

The economic crisis strongly depleted families’ disposable income which was also reflected in retail volumes and the response of sellers, which was anything between store closure to downscaling and reducing the space they used in the retail facilities.

The times were challenging for the shopping centers.

The established players normally did well for themselves, others had to reinvent, while yet others had to admit defeat in the face of market tendencies.

The lay of the land is also changed in that it is legally no longer allowed or at least strongly restricted to build new shopping malls, on the one hand because of the cited environmental concerns and also to support small retail that took a major blow with the arrival of shopping centers.

Outcries against the move, saying it’s going to hurt the already troubled construction industry, quickly died down for the simple reason that there may not be any need to build new malls anyway. Apparently, people have gotten tired of shopping in big-box retail.

As a result, the new trend is to build small and build more, be a convenience rather than a destination.

New units are popping up everywhere and despite the setback seen on the high street, luxury retailers are very much active in the Andrássy area.

Hungarians are hopeful that the economic recovery that started last year will not only continue but also strengthen, creating more jobs, allowing debts to be paid off and leaving more money with households to spend on the needs they neglected in the stringent years of the recent past.

When that happens, the retailers will also be asking for more room to sell, which the malls will be overjoyed to provide.

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LUXURY SHOES: ONLY A STEP AWAY

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ustrian quality shoe brand HÖGL opened its new store in Hungary on Andrássy út with the assistance of CBRE. This latest unit, located on Budapest’s prominent luxury high street, is HÖGL’s largest store in the region.

Austrian footwear brand HÖGL is already well known in Hungary with stores in the capital at Arena Plaza and Allee Center. The new flagship store, located across the street from the recently opened Il Bacio di Stile luxury department store, opened in February 2014 and is the

brand’s largest store including home country Austria and showcases their newest store concept.

The internationally successful Austrian quality footwear brand combines a feel for current trends with maximum wearing comfort and provides fashionable, high-quality footwear and accessoires for women at affordable prices. Having developed from a traditional Austrian family enterprise, HÖGL has now become one of the leading manufacturers of premium quality shoes worldwide.

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R E TA I L

NESPRESSO BOUTIQUE: COFFEE CULTURE THRIVES

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ood news for coffee lovers that Nespresso opened its second boutique in Hungary. The boutique, just as the one on Andrássy út, offers customers a multi-sensorial space where they can discover the entire Nespresso product range whilst enhancing their own coffee expertise. The design of the 118 square meter shop is very modern, open and sophisticated with rosewood panels and porcelain floor tiles.

The boutique is divided into different parts by their function: there is a very spectacular capsule wall for coffee sales, a machine corner demonstrating

the whole machine range and a Club desk where new customers can register for the Nespresso Club. All customers are welcome for a cup of coffee in the Bar where they have a chance to experience the quality of Nespresso portioned coffee, with coffee specialists on hand to guide tastings. The boutique offers a recycling corner where the used capsules are collected as well.

Year of opening: 2014 • Shop area: 118 m2

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R E TA I L

SHOPPING ON A HUMAN SCALE

por Vilmos tér in Budapest’s District 12 has been a center of retail trade for many decades. The Hegyvidék Center revitalizes this traditional function in a form that meets the most exacting demands, and is environmentally friendly.

The many special features of Hungary’s first “green” shopping center include the fact that it is the first place in the country where electric vehicles can be charged while their owners are shopping, while the centre makes use of rainwater and even recycles – after purification – its tap water. The building is topped with an almost 1,000 sqm green roof, which plays a role both in air purification and in the building’s heat management. Bicycle storage facility serves to promote environmentally friendly transport.

When designing the building, the objective was to create a familyoriented shopping center on a human scale. The interior, which

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combines a homely atmosphere with classy elegance, has straightforward layout and is easy to get around. A special interior feature is the contemporary artistic creation, the world’s largest lenticular artwork, running vertically for almost the full height of the building: a picture that shows different colors and dimensions to observers from every angle.

The information system has a unique feature: the face recognition system at the info desk is capable of automatically recommending items from the product ranges of the shops, based on the customer’s age and gender.

The center was the only new-build commercial property development carried out in 2012.

Yaer of completion: 2012 • Total area: 6,500 m2 • Developer: WING Zrt

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H I S TO R I C A RC H I T E C T U R E

HISTORIC ARCHITECTURE Like any city, Budapest is proud and protective of its heritage reflected through its architecture.

Sometimes it’s difficult to justify preserving such structures that have lost their function with the passing of history. At yet other times, they are magnificently repurposed to exist both as homage to the past and as a vital element of the present.

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VÁRKERT BAZÁR

fter many years in dilapidation, the long-awaited reconstruction of the Várkert Bazár was completed in 2014. The structure was built after a decision to consolidate the area close to the Lánchíd in 1872. According to the plan they started the consolidation from the river Danube towards the Castle Hill by creating Várkert Bazár. The construction took place between 1875 and 1883.

It was heavily damaged during World War II and only partially reconstructed since then. Várkert Bazár had to be completely closed down in 1984. Since then the building has been waiting for a better fate.

During the reconstruction works of the first phase that took 1,5 years

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about 800 people worked daily. Altogether 16,497 cubic meters of clink was carried out of the construction site while 12,348 cubic meters of soil was moved. During the work, 24,,124 cubic meters of concrete, 3,330 tons of concrete steel and 498 tons of steel structure were built into the group of buildings. 675 tons of plasterwork covered the walls, 1,300 square meters of visible bricks decorate the restored façade, while 993 square meters of grey and yellow bricks were used to prepare brick wrapper. The construction work was helped by six cranes.

Reopened: 2014 • Design: Miklós Ybl

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DESIGN HOTEL IN THE CITY CENTER

he coolest four-star superior design hotel, Continental Hotel Budapest, is located in Budapest’s downtown offering 272 rooms – standard, executive, deluxe, suites – reflected by art deco features, perfect harmony and fine elegance combining a modern world of colours and forms. The hotel welcomes guests, providing business and tailor-made services with wellequipped conference rooms, Wellness and Fitness center, Massage, ARAZ Restaurant with terrace, Gallery Café & Corporate Lounge, underground private parking garage, two courtyards and Roof garden.

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BOOKS GET THE LOOKS T

he Paris Department Store on Andrássy út was opened on March 1, 1911, and it was the first building in Budapest that was built specifically to function as a department store. The building is under monument protection for its innovative ferroconcrete structure, and for its ceremonial hall whose walls are adorned with neoRenaissance frescos by Károly Lotz and Árpád Feszty. During the Second World War, the department store suffered serious damage. It was used as a warehouse for a while, then the department store opened its doors again under the name Hall of Fashion in 1964.

The department store was closed again in 2000. ORCO Property Group

bought the building in 2005, and the alterations and reconstructionswere designed by the TIBA Architect Studio with focus on the new aspects arising from the functionality changes the building underwent.

Flagship tenant Alexandra Bookstore won the Year’s Metropolitan Bookshop prize in 2011. The bookstore is leasing 1,800 sqm of space on two floors in the painstakingly renovated secessionist building. Its elegant multimedia shop is accessible not only from Andrássy út but also from Paulay Ede utca behind the building.

Operating as part of the Alexandra Bookstore, the historical Lotz-terem houses a Book Café and Wine Bar.

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LUXURY AT THE HIGHEST LEVEL L

uxury department store il Bacio di Stile opened its doors in September 2013 in a fully restored and modernized World Heritage listed building at Andrássy út 19. The store occupies nearly 5,000 sqm on more than five storeys and carries fortythree world-class fashion labels, most of which are available in Hungary

for the first time. Blending the delicate ornaments of the 19th-century NeoRenaissance palace with state-of-the art interior features, the multi-brand store evokes an elegant atmosphere with a private-home feel. The exclusive atmosphere is enhanced by the department store’s own contemporary art collection, the pieces of which are showcased throughout the building.

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B L O S S O M I N G BU DA P E S T

BLOSSOMING BUDAPEST Sometimes even those who aren’t the least bit interested in politics can ďŹ nd joy in the arrival of an election year as is the case with 2014. One after another, new developments are being opened to the public, giving even lifelong Budapest residents the opportunity to get reacquainted with the city and awe at its beauty.

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METRO 4 udapest residents still have trouble believing it, but the embattled metro 4 project has finally been completed and was handed over at the end of March. The M4 has introduced a number of technical innovations, such as the internal shaping of spaces, the ventilation and the passenger information display, full accessibility on the entire line, and automatic train control and monitoring.

The architectural design of the M4 had a clear intent of enabling sunlight to reach down to the platform areas wherever it was technically possible. Another element of the architectural concept was not to line the large load-bearing structures of the stations, and so they were made with aesthetic fair-faced concrete with no stone or metal coverage. The side walls at most stations have artistic facings and

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sculptured artwork on them, which also assist passengers in easily identifying stations.

The Szent Gellért tér and Fővám tér stations of Budapest’s new metro line won the main prize of the architectural website Architizer.com in the Bus & Train Stations category.

The metro project is more than a decade in the making after financing and various other issues hindered progress for several years and through several government cycles. It marks the realization of a transport concept that was first created in the 1970s to establish a metro link between the southwest and northeast parts of the capital.

Completed: 2014 • Length: 7.7 kilometers, 10 stations

Photos: Dรกvid Nyitrai / BKK

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BÁLNA he Bálna building, formerly known as CET for Central European Time is a beleaguered effort that has become famous for all the long reasons, but after many disputes and lawsuits is finally open for business.

Bálna was designed to create a transition between old and new, with a modern construct added to the storage building that was originally built in 1881. Its layout is also eponymic, since Bálna and CET both mean “whale” in Hungarian and the structure of the facility is meant to resemble an aquatic mammal.

In terms of its use, Bálna functions as a combination of a cultural and retail center, with

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a range of art galleries, regular performances and various artisan products that are otherwise difficult to find. It is also an extension of the Vásárcsarnok, which is internationally renowned as one of the best marketplaces.

Visitors can enjoy a wide range of services and recreational options or pop up to the lookout point not visible from down below to soak in the sight of the surrounding city.

The facility was designed by Kas Oosterhuis, who is known for creating designs that incorporate not only functionality, but also serve as statues or monuments within the cityscape.

Opened: 2013 • Leasable space: 11,772 sqm

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Photos: kareszzz / Flickr

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KOSSUTH TÉR he square surrounding Parliament has undergone a major makeover, its function and appeal fundamentally changed to better accommodate pedestrians, and provide tourists with a sight much prettier than a big parking lot.

The facelift on Kosuth tér marks the realization of a design concept as old as the original construction of the house of parliament, the nearby government buildings and the area connecting them.

The project completed in 2014 did away with the parking spaces surrounding the building by creating an underground parking lot, completely locked out car traffic and converted the newly available space into a pedestrian area.

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The project also included the construction of a new visitor center, since the 400,000 to 450,000 tourists coming each year didn’t have any place to wait until their groups were allowed entrance other than outside, regardless of the weather.

The project led by head architect Zoltán Tima also aimed to establish a stronger connection between the square and the Danube, since the two were firmly separated in the past despite their proximity to one another.

As a novelty in protocol, visitors can now watch each day as the national banner is raised at the center of the square.

Completed: 2014 • Contractor: KÉSz Zrt

Photos: János László / Civertan Grafikai Stúdió

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MY OFFICE

MY OFFICE There’s no change in the fact that people normally work in offices. But there is plenty of change in what an office looks like and how it can function.

Here are the BBJ’s picks for the offices that most of us would be happy to work in, either because we like a café environment, or simply because they are so cool.

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HIGH-TECH, FRIENDLY, COLORFUL, COSY

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ocated in Budapest’s District 3, NNG’s headquarters is one of the city’s most colorful and friendliest offices. While preparing the building’s new plans, NNG colleagues had the chance to share their ideas on its design and structure, resulting in a concept that is truly everybody’s. The new head office’s ambience is determined by round shapes, arched corridors, colorful decoration, cosy and ergonomic workstations and lots of natural light across the whole building. Relaxation spots are found on each floor helping programmers feel inspired, chat or just relax.

Overlooking the sunny internal garden, the spacious canteen is an area for colleagues of different departments to meet during the day and lunch together or have a snack from one of the vending machines in the high-class massage chairs. Employees can also take a break in NNG’s game room and play foosball, darts or on an old-school arcade machine built as a team building activity. Furthermore, the indoor car park also holds room for bicycles and a service station helping cyclists do smaller repairs. With all this detail to quality, design and comfort, it is no surprise that NNG won the “Office of the Year 2012” award.

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THINGS CHANGE – SO DOES THE WAY OF WORK or many years, ‘work’ has been a place you go to. You commute there in the morning and return home for the evening. Today’s ‘work’ has evolved from a place into a diverse set of processes undertaken wherever and whenever, a change that has major implications for everybody.

The need for personal workplaces will reduce, while there will be an increase in the need for a variety of flexible, functional and stimulating environments to support various different activities. This is something that will have a great impact on our working environments.

During the course of a normal working day, we carry out a number of different tasks. Various activities take place, such

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as individual work or meetings, answering emails, customer visits, department meetings or making phone calls. Through the activity-based working environment, we replace personal workplaces with a number of flexible, functional and stimulating environments which are customized to these activities. Activities that often differ depending on the workplace, department or individuals.

In Kinnarps’ version of the activity-based working environment, they offer a holistic approach where they have taken into account both the working environment, leadership/ organisation, and the virtual environment.

They call it Next Office™ - Activity Based Working, and one can try it in Kinnarps’s recently renewed conference center.

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LESS DRAB, MORE GLAMOUR

he office of Ustream is located in downtown Budapest in a sparkling area of the city, which is part of the UNESCO World Heritage. The home of the new office is a historical and architectural gem, the Paris Department Store (formerly known as Fashion Hall). The building was opened in 1911 as Hungary’s first modern department store.

Ustream’s new office has 1,750 sqm of rental space, which includes the two top floors, and a special architectural Crystal Dome with a free-to-access rooftop terrace. The office has an open space environment to encourage collaboration, while lots of colorful “breakout spaces” and “brainstorming pods” allow workers to concentrate when it is necessary.

Next to the free (Ustream labeled) beer and Túró Rudi (famous Hungarian candy) machine there are a foosball and table tennis offering leisure activities on site, so that employees can stay creative and feel at home.

Photos: Europa Design

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WHAT’S THE BUZZ ABOUT KAPTÁR?

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APTÁR (literally translates as ‘hive’) has been created for people excited about novelty, those looking for a spacious, bright office in the heart of the city center. One can find everything they would expect from an office: printer, scanner, projector, fast wifi, meeting rooms, flipchart, whiteboard, etc.

Many people value their freedom and independence, while we all enjoy being in a community as well. KAPTÁR offers several opportunities to make for making new contacts, whether on a professional or even cultural basis, because functionally makes it more than just an office—it’s also a meeting point.That’s the novelty of this place: it’s a perfect mixture

of “working from home” and a café, where, as a member of the community, you make the rules. Its organic nature makes KAPTÁR unique. The ability to surround people the way they expect is not what makes a good coworking office. It is rather its ability to make one become a part of it without noticing. The interior is attractive and practical at the same time, but the soul of the place is the community of people who work here. It’s not just a great place to work; one can also proudly invite their associates in for meetings or conferences.

People who choose this unique workplace are definitely one step ahead of the game.

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HOUSE OF IDEAS he Prezi office is located in the heart of Budapest, which makes it easily reachable whatever your favored mode of transportation.

The space is filled with inspiring meeting rooms, colorful walls, and decadent staircases. The new conference hall, Prezi House of Ideas (HI), was created to produce and promote locally important and globally relevant meetings, conferences, and talks. The mission is to spread great ideas from science and art through to design and technology.

Prezi’s new bistro is a great place for both food and thought. The engineering hall at the top of the building is a single vast open

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space where plants function as dividers between desks. Two big towers make up the centerpiece of the hall where software developers, designers, and UX researchers work in harmony thanks to artificial grass and a plethora of bean bags.

The walls have intentionally been left unpainted, evoking a sense of creativity and daring to change your environment. If you’re tired of hard work you can go down to the music room to start a spontaneous jam session.

The unusual architectural solutions and unique decoration mean that anyone visiting will likely forget that this is in fact a workplace.

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PROJECT INDEX Alexandra bookstore Bálna Blue Cube Budapest One Corvin Corner Corvin Offices Deák Palota Eiffel Palace Eiffel Square Europa Design Gateway Green House Hegyvidék HÖGL Il Bacio de Stile K&H HQ Kaptár Kinnarps Kossuth tér Margit Palace

60 68-69 10-11 31 30 14 61 8-9; 34-35 40-41 75 36-37 12-13 52-53 49 62-63 44-45 78 76 70-71 B/2

Metro4 Millennium City Center - K&H Bank HQ Népliget Center Nespresso Boutique NNG Nordic Light Office Garden II Opel Office Line Prezi Reno udvar REsidence I-II Ustream V48 Váci Corner Offices Váci Greens Várkert Bazaar Vision Towers

66-67 42-43 39 50-51 74 B/3 20 25 B/4 79 21 18 77 26-27 16 38 56-57 28-29

Pages marked with Italic numbers are paid content.

REAL ESTATE REVIEW 2014 A BUDAPEST BUSINESS JOURNAL PUBLICATION

Budapest Business Journal Managing Editor: Patricia Fischer • Editors: Patricia Fischer, Gergő Rácz • Proofreader: David Landry • Contributors: Petra Horváth, András Zsámboki • Sales: Bernadette Oláh • Layout: Norbert Balázs • Publisher: Absolut Media Zrt • CEO: Balázs Román Media representation: Absolut Media Zrt • Address: Madách Trade Center • 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor Telephone: +36 (1) 398-0344 • Fax: +36 (1) 398-0345,

Nordic Light Excellent business location, energy and cost efficient solutions.

26,200 sq m quality space to accommodate your office and retail requirements.

96-98 Váci Road, 1133 Budapest, Hungary Contact: leasing@skanska.hu, +36 1 382 9100 www.skanska.hu

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