According to one of CEE’s most active developers, tenants in recent years have become more open to innovative and sustainable solutions when it comes to renting retail or office spaces. Tibor Tatár, CEO of Futureal talked to Property Forum about the company’s current projects and changing tenant expectations. Tibor Tatár will be joining a panel on the Hungarian property market at our upcoming CEE Property Forum 2019 in Vienna.
With the first phase of Budapest ONE nearing completion, how’s the leasing process going?
The development of Budapest ONE is progressing according to plan. The unique ribbon office building has already got a complete facade, and it is expected to be handed over in the second half of 2019. The leasing process is going very well, I cannot disclose the tenants at this point but for the first phase, the occupancy rate has already exceeded 50% percent by September and will be nearing 100% by the end of the year. Due to the huge demand, we have decided to start the development of the second and third phase together right after the completion of the first one.
Have you noticed any significant changes in tenant needs in the past 2-3 years?
Unique and outstanding design is a must but location is also becoming more important than ever for tenants. This trend makes areas close to metro stations, especially those with an employee-focused service environment, highly valuable. As a result of the lack of workforce, companies nowadays can use attractive offices as a direct recruitment tool. Disruptive technologies have already reshaped customer expectations. That’s the reason why tenants are much more open to innovative and sustainable solutions when it comes to renting retail or office spaces. Costumers want a level of comfort that they already enjoy in the digital ecosystem. Smart solutions have become part of our business in the field of operation, maintenance, sustainability and comfort as well as services. Trends are also going in the direction of sustainable solutions. Prefabrication and modularization is a growing tendency that requires creativity in order to achieve the right balance between increasing cost and quicker implementation.
It seems that corporate tenants realized that the €2-3/sqm/moth extra rent for a superior accommodation represents a negligible 1-1.5% increase in total HR cost, but an attractive office premise is a great tool for recruitment and for retaining the best workforce.
What amnesties and services will be available at Budapest ONE that can help create a better user experience?
Its ribbon design was created by simulations to reach the most ideal shape regarding the direction of sunshine, the potential of solar energy and convection. For example, it is not necessary to switch on the lighting of the building on a cloudy day. Fountains and uniquely designed green areas will convert the 5,000 sqm open area inside the office park into a popular meeting place. The entrances of the complex are adjusted to the nearby arterial roads.
Beside BREEAM certification the office complex obtained the international WELL Building Platinum Precertification among the firsts in Hungary. WELL focuses on the beneficial impacts on employees’ health and well-being, examines the buildings’ impact on the human body, health and well-being. WELL Building Standard together with LEED and BREEAM certifications can form a complex system that leads to creating buildings that meet the highest sustainability requirements.
Budapest ONE will be equipped with energy-saving, intelligent central building management system. A meditation room, a green roof garden, bicycle storage with shower, rooftop running track will also be available, and employees will have the opportunity to charge their electric cars and to collect waste selectively. Restaurants, cafés, ATMs, a post office, a grocery shop, hairdressers and a cleaner will all be located on the ground level of Budapest ONE.
Futureal is the first developer to build a new shopping centre in Budapest for several years. How does the current development process differ from your last retail projects?
Etele Plaza, Buda’s largest shopping and entertainment centre will bring the new generation of shopping centre designs to Budapest. It is going to be the most modern shopping centre in Hungary. We paid particular attention to the requirements of sustainability and innovation while planning and designing the building and Budapest’s first smart mall will be welcoming visitors with a customer experience never seen before. The three-floor centre will feature 180 stores. As well as fashion stores, it will also accommodate a large supermarket, multiplex cinema and a range of entertainment facilities with nearly 1,300 parking lots.
The exterior design of the shopping centre will be dominated by the largest curtainwall structure of Hungary above the main entrance and the retracted metal boxes that jump out from the facades. In the internal area, along with the soft tracing, a nearly 200 square meter interactive LED display interface will bring the latest generation of the shopping centre design to Hungary.
Etele Plaza is estimated to attract around 50,000 customers every day from the capital, the suburbs and the further towns that are easily accessible from the transport hub. At the country’s largest multimodal transport hub in the immediate vicinity of Etele square there is an intercity train station, a suburban train station, a metro line, three tram lines, and more than eighty inner and outer city bus lines. The immediate catchment area of the new centre is one of the most densely populated areas of Budapest, where some 235,000 people live. Residents of this district represent 125% of the nation’s average purchasing power with a relatively low retail supply.
How will Etele Plaza differ from other Budapest shopping centres? How are you reacting to changing consumer habits?
The visibility, the location, the major fashion anchors, the leisure components, the next generation of shopping centre design, the digital solutions together create an exclusive customer experience. Etele Plaza will have to meet the expectation of the next generation of customers called generation Z. We have to put together a range of brands and services that is able to offer a unique and amazing customer experience for all generations. We believe that online and offline shopping will have to live together in the future. We are also certain that collections of fashion brands cannot be fully digitalized. Even in the US, the very cheap, very price competitive products have the strongest presence online, while the mid-range and high fashion retail market is not shrinking but expanding, therefore we are not afraid of this trend. We paid special attention to anchor fashion tenants, all of whom are going to be present with their largest concept store presenting their full assortment.
How will the two projects be connected? What are your further development plans for the Kelenföld area?
The projects are already connected by a 200-meter long and 20-meter wide pedestrian tunnel which provides direct access to metro line 4.The regeneration of this area called Kelenföld is one of Europe’s largest public transport brownfield investments, the scope of which includes the Etele Plaza, transport developments and the creation of the Budapest ONE. The new centre of this area will develop in the district over the next few years, as both state and private investment are implemented. There is also the possibility for constructing landmark buildings in line with the new, important role of the location. Etele Plaza and Budapest ONE, the two flagship projects of Futureal Group will provide the commercial and business force for the blooming of this new city centre.
How’s your working relationship with the local municipality and the area’s residents? How are you working together to create a new city centre?
Since the beginning, Futureal Group has been working closely with the local government to create a cutting-edge business park and a shopping and entertainment centre that meet all requirements of the residents and the local municipality. During the planning phase, the company also surveyed the residents’ and the consumers’ needs and expectations in order to exceed the highest expectations.
Negotiations are underway for a comprehensive city development project in District 11 called South Buda Urban Regeneration Project, with planned state and private developments resulting in the creation of a new city centre in Buda built on one of Europe’s largest intermodal junctions. The area involved in the project totals 750,000 sqm. The developments will be realized through the cooperation between the state, the municipality, and private enterprises. The project aims at creating a lively, modern environment, with more green areas, well-organized parks, and fast and convenient commuting opportunities among other aspects. The state entities involved in infrastructural projects are the capital, the local municipality, the Priority Government Investments Center (KKBK), state railways MÁV, and the Center for Budapest Transport (BKK).
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