HIGH DEMAND FOR OFFICE SPACE

REAL ESTATE MARKET

PRECIOUS SQUARE METERS OF OFFICE SPACE

Although the construction of new business facilities in Belgrade, as well as the renovation of existing ones, is in full swing, the fact that every new office that appears in sight finds a renter before it is ready for use, clearly illustrates how insufficient supply is to meet demand in this sector

Tekst by: JOVANA NIKOLIĆ

ALEKSANDAR ILIĆ

Leasing Consultant, West Properties B

elgrade set one of its construction expansion records exactly one year ago, when it registered the millionth square meter of office space. This impressive figure should be increased by another 250,000 square meters, which is expected to be on offer by the end of 2022. The renovation of several old office buildings, such as the Belgrade Palace and BIGZ, as well as the construction of several new ones, such as Skyline Afi Tower, Green Secape, Bridge Plaza, and GTC X, should be completed by then. Even though it will not bring us to the level of Zagreb, Prague, Budapest, or Bucharest, which have up to two or three times more square meters of office space than Belgrade, the new square meters will certainly contribute to market stabilization. Aleksandar Ilić, Leasing Consultant at West Properties, analyzes for our magazine how the commercial space market is currently operating, given the high demand, and what new trends are emerging in this sector.

For some years, office space in Belgrade’s city center, as well as in new commercial facilities in New Belgrade, has been in high demand. As a result, investors have mostly focused on these two areas. Since there are not many opportunities to build new business facilities in the downtown, investors mostly buy old office buildings in the center and completely renovate them. As Ilić points out, offices in such restored buildings are extremely sought after and are frequently rented as soon as they are announced on the market, long before the refurbishment is done.

“Renovation of old office buildings involves a total restoration of the structure, including walls, carpentry, insulation, and the entire infrastructure, as well as a modern makeover, both exterior and interior, which makes these offices very appealing. At the same time, they fulfill all standards for the most modern new business facilities, including maximum energy efficien-

Due to the high demand for office space in the center of Belgrade, investors are increasingly focusing on old office buildings that are being renovated and redesigned cy, which is becoming an increasingly significant item for every tenant when concluding a contract,“ says Ilić.

In both new and renovated business facilities, tenants are increasingly offered fully equipped spaces, with complete office furniture, professional maintenance, security, and reception. Everything else is up to the renters’ preferences and wants, which they negotiate with the lessor. Specifically, with a leasing consultant who acts as a mediator until all lease terms and client requirements are negotiated.

“Renters frequently choose open space whenever they have the option, and then request the installation of partition walls, made of plaster or glass, to get the necessary number of offices and additional space for meetings, conferences, or even fitness for their staff. Clients’ requests are always fulfilled, even if they enter a space that had previously been set up for the needs of another renter who had left in the meantime,”explains Ilić.

When renting office space, tenants anticipate and have grown to expect that the structure of the workplaces will be as functional as possible. This includes, among other things, bringing all power outlets and mains cables to the location where the desks will be placed. This is usually done by either raising the floor and placing the installations beneath them, or lowering the ceilings and placing the installations up. Furthermore, all buildings have ventilation, and A-class buildings have heat pumps, making heating in such a place quite economical. Each office space must have a server room, which contains the ends of all cables and where the servers are inserted into the racks, with a separate cooling that must operate 24 hours a day. Every office building nowadays provides monthly maintenance for around three euros per square meter. Everything is included in this service charge except the Internet, which is an item that the client supplies according to his demands when he enters the space.

It’s interesting to note that, despite great demand and high-quality offices on offer, the cost of renting office space has remained constant for years. Ilić points out that the price is nearly the same for all offices in the city, regardless of location, at about 15 euros per square meter on average. Lease agreements are typically five-year contracts with the option to terminate them without penalty after three years, and frequently include a rent-free period of several months.

“The rental fee does not include parking spaces, which are the most difficult thing to

find when renting office space in the city center, because even the most modern, refurbished office building in the downtown area usually does not have an underground garage. Even if there are available parking spaces, they are very rationally allocated to tenants, depending on the area of the space they rent, and are always charged extra, even in new business facilities that have their own garages or parking spaces,“ says Ilić and adds that the prices of parking spaces range from 100 to 200 euros per month.

The two specific forms of office space that are in demand have recently emerged as a trend. One is coworking space, which was particularly popular at the start of the pandemic, when many companies were looking for a more flexible way to organize their employees’ work. Despite the fact that most companies have returned to their usual ways of doing business, coworking spaces have remained a popular option for those who require temporary office space while waiting to move into new facilities, as well as for startups.

“Coworking space is usually available in some extra rooms of office buildings that have been refurbished and equipped as offices that may be used by several people from different companies. The rent is practically paid per chair, which is quite profitable since, aside from the monthly fee, which is on average 200 euros, the renter uses everything else he has in the space – internet, reception, cafe, garden,” says Ilić.

Another trend that has influenced the creation of new interior solutions and the importance of design in modern office space is the increasing demand for, but also the expanding supply of, large office space for IT companies. As Ilić points out, IT and high-tech companies typically seek out entire buildings to refurbish for their needs. They value design and a complete ambiance with additional content in order to provide an inspirational and creative environment for their staff.

Open space is still the most sought-after office space, as it will be on offer in the renovated building of the Belgrade Palace

BASE TO OFFICE CONCEPT

Due to a decrease in the number of guests and the volume of business, certain Belgrade hotels have adapted to the new situation by renting out a part of their current capacity. At the right time, West Properties developed Base To Office, a new concept for renting office space at the Hyatt Hotel, where exceptionally exclusive offices can be rented in a stylish and well-maintained environment under very flexible terms. “The office space is available on the second floor of the hotel. These are 38-square-meter rooms that have been adapted into modern offices, with a conference hall and parking included in the monthly lease. The location is ideal because of the accessibility to the city center and the airport, and the lease is flexible in the sense that it can be agreed for as little as a month, which is ideal for all companies that need temporary, high-quality, and representative office space,” Ilić explained.