Tenant representation is becoming an increasingly common phenomenon on the office markets of Central Europe, which is without a doubt a sign of a healthy, growing and more educated market. Their activity, however, often raises ethical questions as it’s still often unclear who pays for their services. Conflict of interest in tenant representation has been one of the key topics of two regional events: the Property Forum - RICS Prague Property Summit 2017 and the latest RICS Hungary Tea & Talk in Budapest.
The share of transactions with tenant representation has grown significantly on the office market in recent years, especially in the case of pre-leases and leases signed for larger floor spaces. Industry experts predict that the phenomenon will become even more widespread in the future which means that real estate professionals need to come up with a framework for ethical and transparent tenant representation as soon as possible.
Representatives of advisory firms, tenants and landlords all agree that leasing agents carry a huge responsibility and the key to improving ethics and transparency is education. Unfortunately many believe that even though the market is growing and expanding, advisory firms are not doing enough to educate their existing employees and train their new hires. Universities and professional bodies would be the natural partners for such training programmes, but a general lack of cooperation limits the possibilities.
Through their agents, advisory firms are responsible for the education of tenants as well. Most landlords prefer to sit down with tenants that have a grasp of how the market works and in order to ensure this they are ready to work together with advisory firms.
Landlords and tenants strongly believe that tenant representation can be really useful and add value to lease transactions, but it is important to note that it is not secondary who is representing the tenants. Generally speaking, tenant representation is completely different for those clients who get these services as a consequence of a regional or global corporate deal and for those who directly hire a firm to help them find the right office.
Property Forum - RICS Prague Property Summit 2017
Still, the biggest issue associated with tenant representation is not related to educations but rather to the fact that in most CEE countries there is no common policy in place on who should pay for the services of the agent.
If the tenant pays, they tend to focus too much on fees and less attention is given to the value added by the agent. Tenants thus often choose to be represented by the agent who charges the least instead of the agents who is willing to do the most for them.
If the landlord pays, that is without a doubt a conflict of interest and the question arises: who is actually looking out for what’s best for the tenant? Landlords admit that if they don’t feel that an agent is fighting strong enough for its client, they usually take advantage of the situation.
If the agent shows their client a building that they were assigned to lease that is, of course, a whole different level of conflict of interest.
These are really serious ethical issues that the market has failed to address to date. RICS has several materials that can provide a starting point to resolving these issues: the institution’s professional statement on Conflict of Interest or its Real Estate Agency and Brokerage Standards both should be on the radar of professionals involved in tenant representation.
RICS Hungary Tea & Talk
Many believe that a flat fee or a more standardised fee system, which is based on floor space instead of rent, could provide a solution. These practices are common overseas or in Western Europe and could easily be adapted to local markets.
A lot has been done in recent years to make Central European commercial property markets more transparent and ethical, but conflicts of interests are still often unavoidable. Experts agree that it is the responsibility of working professionals to ensure transparency and promote ethical behaviour.
UDH, one of Poland’s largest distributors of premium imported beers, has leased approximately 1,400 sq m of modern warehouse and office space at the Park Rysy Kraków distribution centre. The tenant, which has chosen to expand its operations in southern Poland, was once again represented by AXI IMMO.
Golden Star Estate has secured a long-term lease agreement with global technology solutions and consulting provider C&F for nearly 1,900 sqm of office space at the Konstruktorska Business Center. Following the transaction, the property, located in Warsaw’s Mokotów business district, is now almost fully leased. The Polish branch of C&F will officially relocate to the facility at the beginning of 2027.
Natland Group has committed to its long-term presence at Prague-based Rohan Business Center through a lease extension covering 2,004 sqm of office space, together with storage facilities and dedicated parking spaces, in a deal brokered by iO Partners.
New appointments
Indotek Group has announced the appointment of Diederik Bakker as Group Chief Investment Officer and Group Head of Asset Management. In his new role, the Dutch real estate investment professional will gradually assume responsibility for the company's ITAM (investment, transaction, and asset management) activities across 12 European countries, supporting the next phase of Indotek Group’s growth. His focus includes facilitating sound investment decisions across Europe and developing a group-level portfolio management strategy that combines local market knowledge with international asset management know-how.
Peakside Capital Advisors has appointed Bogi Gabrovic to advise the board and support its investment and acquisition activities in Poland. Gabrovic brings more than 25 years of CEE real estate experience to the role, having previously held senior executive positions at CTP, Golub & Company, and White Star Real Estate, where she managed transactions exceeding €2 billion.
Katarína Brydone, Jana Vlková and Vendula Maršová have been appointed as the first Equity Partners of Colliers’ Czech business. Brydone brings more than 20 years of experience in international real estate. Vlková has more than 25 years of experience in commercial real estate. Maršová, Partner and Head of Valuation and Advisory Services, brings more than 16 years of experience in real estate valuation and advisory.
FedEx has opened a new logistics centre in Košice, strengthening connections between eastern Slovakia and international markets. The facility, the company's second-largest location in Slovakia, spans nearly 1,000 sqm and features 18 loading ramps for pick-up and delivery, plus four flexible loading positions for both vans and long-haul vehicles.
EastGate 2026, taking place in Iași on 15-16 September, is a new international forum designed to connect investors, developers, financial institutions, public authorities and business leaders across Romania, the Republic of Moldova and Ukraine. Property Forum is delighted to announce the North-East Regional Development Agency (ADR Nord-Est) as an Institutional Partner of EastGate 2026.
Sky Office Center, an A-class office building in Warsaw's Mokotów Business District, has been sold by Hines to a private Polish investor. Avison Young's investment team acted as the seller's adviser throughout the transaction.
Property Forum is a leading event hub in the CEE real estate industry with over 10 years of experience. We organise conferences, business breakfasts and workshops focused on real estate, in London, Vienna, Warsaw, Budapest, Bucharest, Bratislava, Prague, Zagreb and Sofia, amongst other locations.
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