Author Archive for Vass Emőke – Page 7

Weerts Group To Start New Warehouse Park Development Near Budapest

By Vass Emőke
Wednesday, July 29th, 2020

Belgian developer purchased a 30-hectares plot from Erste Real Estate, assisted by Newmark VLK Hungary

The logistics sector of Hungary is booming despite the pandemic, foreign investors continue to be optimistic about the market outlook. The latest evidence of the positive sentiment is the major real estate deal made recently between the Belgian Weerts Group and Erste Real Estate with the assistance of Newmark VLK Hungary property consultant. The Belgian developer purchased a 30-hectares land near Ecser, adjacent to the M0 motorway where it is to develop a 120,000 sqm warehouse park.

VLK Cresa Ecser telekeladás

Budapest, Liège, 28 July 2020 – Erste Real Estate Ltd., the property management arm of Erste Bank Hungary has signed a purchase agreement with Weerts Group to sell 30.6 hectares out of its 116-hectares land plot near Ecser.

The Liège-based Weerts Group is a family-owned company active in 3 sectors: contract logistics, real estate, and motorsport. Its contract logistics business is geographically located in Belgium and serves large clients including Audi, Mondelez and BoshSiemensHausgeräte. The company’s real estate activities (which include industrial, office and residential) occur in Belgium, Luxemburg, Germany, Hungary, and Romania.  Fans of motorsports are familiar with the group as it owns WRT which has gained a worldwide reputation as one the leading GT customer racing outfits.

Weerts autó Weerts autó

Weerts Group is currently building ca. 250,000 sqm on various locations in Belgium, Germany, and Hungary, and have secured a pipeline for another circa 300,000 sqm.  The company’s first investment in this area in Hungary is a 46,000 sqm big box project in Nagytarcsa, for which construction is ongoing and which will be delivered in Q1 2021.  The acquisition of the Ecser-plot, where Weerts Gropus plans the development of a 120,000 sqm logistics warehouse park, is part of our strategy to continue and accelerate our growth in this area. Its development projects in Hungary are the largest logistics investment of the company outside Belgium.

„The Ecser investment is a testimony to our group’s long-term commitment to Hungary. Since the beginning of our presence in the country, we have been impressed with the quality of the infrastructure, and the pro-business approach taken by the various public authorities. We strongly believe that the East-Budapest region, with its proximity to the airport, great road infrastructure and availability of skilled labor is the best development area for this type of property in Hungary”, says Pascal Weerts, CEO of Weerts Group.

„This is already our second major deal in Ecser. In April, we sold an 57-acre plot where Jysk retail chain is developing its new local logistics center. We are proud to cooperate with two esteemed multinational companies and support their expansion in Hungary”, commented dr. Andre Gégény, CEO of Erste Real Estate.

„We are witnessing a continuous interest for our Ecser-property, where we still own a 88-hectares plot. We hope to find buyers soon given the excellent location of the plot and the current outstanding performance of the Hungarian logistics sector”, added Melitta Molnár, regional asset manager at Erste Real Estate.

„The Hungarian logistics property market is booming despite the pandemic, and the recent surge in e-commerce is expected to create further demand for warehouse developments. Our optimism is justified by such logistics developments as Weert Group’s in Ecser as the logistics sector provides the blood circulation for the economy. The Erste-Weerts deal signals the optimism of logistics developers. Investors expect that the pandemic will cause a temporary downturn and the economy will bounce back fast”, says Péter Takács, Newmark VLK Hungary partner.

Categories : Industrial logistics, Press

Office subleases becoming more popular – Pandemic effect

By Vass Emőke
Wednesday, July 15th, 2020

Corporations leasing larger office spaces are re-evaluating the use of their property, and they are allowing other companies to occupy 15-20% of their unused floor areas. Subleasing might be attractive to companies looking for a well-equipped office space in a good location, combined with cheaper rent – states Newmark VLK Hungary, the tenant-only advisory firm in their July study.

Besides the popularity of „home office”, the Corona virus pandemic forced company managers to re-evaluate the size of the office space they need on long-term. They are also considering what portion of their office space could be sublet – even temporarily – without making for employees more difficult to return to work or resulting an increase in costs.

The study highlights that many smaller companies have intended to take advantage of this situation, and they want to sublease smaller office spaces – typically 300-400 square metres. Furthermore, many of them have already leased office space in this way. These companies mainly try to sublease space from corporations who rent several thousand square metres, because such corporations want to utilize fast the suddenly „unnecessary” space, and consequently, reduce their expenses.

The main tenant considerations

“It is not typical for large corporations to give back office space to the landlord. The option to sublease is not massively popular yet, but it is definitely a fresh phenomenon. Ten years ago, during the last depression, this phenomenon did not exist, so there is no reference point to go back to. At the same time this is a rational decision from the tenant, because it helps the corporation to reduce their costs by leasing an unused space.” – says Valter Kalaus, managing director of Newmark VLK Hungary.

According to the advisor, it is worth subleasing a part of the office space for corporations who just signed a five-year lease contract. They are not advised to do so if it’s only a half or one year left on the lease contract. Besides it is less likely to find a suitable occupier for a relatively short period of time.

The managing director warns however that the main tenant needs to get the landlord’s consent. As the landlord might consider the potential occupier (subleasing company) undesirable in the building for non-compete reasons, if there is a similar direct occupier in the given office building. Obviously the main tenant has to take all necessary steps to ensure that the sub-tenant fully adheres to all regulations of the building and the leased office space, because he bears material and legal responsibilities. 

The sub-tenants benefit

Companies looking for small office spaces (typically 100-150 m2) cannot really find options to lease in a modern, category „A” office building, in a good location, let alone on lower rent than the official rent. (There are some examples of such transactions, and there are currently similar offers on the market, but these are not very common.) These new office buildings are not designed for this purpose, as the smallest leasable office space is usually minimum 200-250 m2. To break up a smaller area from a larger office space is either physically impossible or is financially not reasonable for the landlord. Lucky is if they manage to find a whole floor (approximately 400-500 m2) from a main tenant who rents several floors in a small- or medium-sized office building – adds the author of the study.

“In spite of all the compromises, there are numerous advantages to be a sub-tenant compared to be a direct tenant in an office building. They can usually choose from properties where they could move in immediately, the office space needs only a few modifications, is already furnished, and has all the necessary cabling installed. And do not forget that the rent could be even 10-20% less as well. A further advantage might be the option to lease for a relatively shorter period, which can be 1-2 or 3 years, as opposed to the typically 5-year long lease contract; depending on the time remaining from the main lease contract. This nearly as flexible as the so called ’serviced office”– confirms Valter Kalaus.

In this context, the study states that serviced offices work for start-up companies or teams which have assembled for a certain project; these are not intended as long-term workplaces. Their advantage is the excellent location; work can be started almost immediately in a completely equipped office environment with reliable back-up support. It is a suitable option for example for start-up companies since they can lease additional space quickly if needed, or it is possible to lease a meeting room only for one occasion.

When is it worth to choose a serviced office?

“Approximately one year is the time limit from which it is worth looking to find a permanent office. Comparing the price of the serviced office with the classic office rents is not recommended, as the two are totally different models. The former may seem more expensive, since they provide full comfort (furniture, back office, IT devices, reception, usage-based fees, flexible time, etc.) but less commitments from the tenant. There is no separate service charge, one-time entry fee, purchase of furniture, IT installations, etc. On the other hand, they provide full flexibility, and actually, this is what needs to be paid”- added Valter Kalaus.

In case of the serviced offices, tenants can choose from: the classic cell office arrangement, which is more favourable now due to the stricter health measures. In this case tenants may control the use of these small offices by allowing to enter that space only to those who are engaged with the project. The other option where there is a co-working area where the community areas are similar to hotel lounges, with the criteria to have separate workstations.

“As the result of the pandemic, these co-working offices face difficulties temporally because there are not to many people who prefer to work in a place where one might get infected, working together in one space with strangers who might be potential virus carriers” – says the managing director of Newmark VLK Hungary.

Findings of this study are supported by the recently issued second quarter market data of the Budapest Real Estate Consultants Conciliation Forum (BRF). According to these, office market demand has significantly fallen in the second quarter, and the number of transactions also shows a remarkable decrease. Vacancy rate has increased to 7.3%, which represents an increase of 1 percentage point on a yearly basis.

Categories : Office, Press

How can office tenants turn in their favor this crisis period

By Vass Emőke
Tuesday, May 5th, 2020

COVID-19 pandemic: 

In case they have a flexible approach to their real estate strategy, and they are open to new solutions, we can help them come up with the right tactics when negotiating with the landlords – summarized the office, retail and logistic tenants’ current opportunities Newmark VLK Hungary, in their May study.

Main observations and predictions:

– Currently 15 to 20 percent of office tenants are asking for rent reduction

– In certain cases, office lease term might be reduced from five to three years

– Tenants with relatively large office space (ex. 2.000 m2) might sublease part of their premise

– Office space size might even increase due to new health safety measures

– The very workplace (eg. table and close surrounding) will enjoy more focus compared to social and entertainment areas

Employees working from home because of the coronavirus resulted in emptying bigger part of the office buildings and partly the shopping centers, and only the grocery stores remained open with opening time restrictions. This wave of forced closures led to serious liquidity problems and retailers in great numbers turned to landlords and to the state for help – recalled Newmark VLK Hungary real estate advisor in their May assessment study.

Kalaus Valter VLK Cresa ügyvezető igazgató

“The study outlined however, that corporations using office space cannot use this reference base as most properties have been open since the beginning of the pandemic. On the contrary, retailers (restaurants, coffee shops, fitness centers and others) in the office building are justified to ask for ease of leasing terms as their business model is based on guests coming mainly from the building itself. With much of the office tenants at home, these retail units remained empty. But even so, office tenants can find options to get out from this distressed situation” – confirmed Valter Kalaus, managing director at Newmark VLK Hungary.

He expects that negotiations not necessarily will turn tougher, instead a more adaptive attitude will be needed. “Even before the pandemic our aim always was to get to a compromise solution, this is unchanged. As tenant only representatives we always try to get the best possible deal for our clients, without turning the negotiation process into a battlefield. Landlords and tenants have one thing in common: to provide business continuity, and to achieve this even more flexibility is a must. Tenants are under a lot of pressure to reevaluate their current and future office space need. They will also need relevant and proper information on the current market trends, discount possibilities etc. These kinds of information’s can only be provided by independent real estate experts. Tenants should focus on their own business and are not expected to have deep knowledge on the real estate issues to make valid and safe decision.” – said the executive.

Two examples to show how tenants can navigate:

First case: Three years to end a five-year lease contract

Renegotiation would be very difficult, as in the remaining time even more difficulties may occur in the tenant’s business, and this will result in more modifications. Immediate, or short-term termination can cause more financial and legal troubles, and in the meantime another cheaper space will be needed. The later will require lots of time, money and energy to find.

Valter Kalaus has not yet experienced enormous amount of office tenants asking for financial help from landlords. As he phrased it: only aproximately 15 to 20 percent of the tenants have approached the landlords. Delayed rent payment can help tenants’ cashflow but is not decisive. Instead rethinking how office space is being used can be expedient. Another solution is to give back certain part of the space and stay for a discounted package – outlined the authors of the study.

“To sublease a smaller part of the office can be also a way out, which means cost reduction to the tenants. I believe this will be a common approach actually in the coming months especially for organizations renting a couple of thousand square meters. Tenants who need smaller areas like this option as this is more cost-effective solution compared to commit to be the main tenant. Thus, they will need to accept that the landlord (main tenant) will not spend on the office fit-out but will hand over the space as it is.” – outlined the situation Valter Kalaus.

Second case: One year to end a five-year lease contract

The situation somewhat easier as the tenant is more prepared to move or renegotiate the lease. To stay is justified, if the current landlord offers another five-year contract with substantial discount. Note that this is actually a 1+5 years contract.
To move is the right choice if no further discount is provided by the actual landlord and other buildings offer lower rent, or higher fit-out contribution for a more modern, better located space.

In either case the tenant will benefit the most if the contract terms remain as flexible as possible. For example, from the common five-year lease contract reduce the lease term to three years. Experts at Newmark VLK Hungary are confident that in the next couple of years we will see this in many cases.
Obviously, the whole work strategy will need to be reconsidered, including setting up the right balance between working from home and in the office. They believe that over the past years too much focus fell on social areas with spending a lot of money on these spaces compared to actual working areas which should be of prime concern in the future.

In reference to this Valter Kalaus said: “It’s possible that working from home will free 5 to 10 percent or even 15 percent of the office, but due to new health safety measures we might end up needing more kitchens or bigger working areas, to keep the right social distance. Modern ventilation solutions will be also reevaluated, and paravanes and closed offices structures might come back, to break up the one big open office space. At the end of the day we might see that in some cases tenants will end up needing more office space, then before the pandemic. With those challenging decisions it will be crucial to have an external real estate professional help.”

Categories : Office

Erste Ingatlan Kft sells land for a major warehouse development near Budapest

By Vass Emőke
Thursday, April 16th, 2020

Jysk bought their land from Erste Ingatlan Kft, to build a distribution centre in Ecser

Erste Ingatlan Kft, a subsidiary of Erste Bank Hungary, has signed an agreement to sell 57 hectares of a 170-hectare plot in Ecser, next to Budapest, to an international furniture and home retail chain company that intends to build a 100,000 square-meter high-bay regional distribution center on the plot.

Erste Jysk telek adásvétel VLK Cresa
“The successful closing of the transaction is a result of a nearly 1-year long negotiation process. We are very pleased that our landsite, which has exceptional parameters, was chosen by the buyer for this unique investment. To support the investment, we have launched infrastructural developments in the area, with the hope to help the further sales process.” – said dr. Andrea Gégény who is the managing director of Erste Ingatlan Kft.

“The land sale was preceded by a series of long negotiations, with the investor choosing our plot from several other potential locations. Erste Ingatlan Kft owns additional development land in the Ecser area that is also for sale.” – added Melitta Molnár, Asset Manager at Erste Ingatlan Kft.

Kalaus Valter Takács Péter VLK Cresa

“Within a short period of time, this is the second land sale of a similar magnitude concluded with the help of Cresa Hungary. The nearly 100,000 square-meter Pepco logistics and distribution centre in Gyál has recently been handed over and the building is already in test operation, while Jysk plans to build an even larger regional logistics centre on the 57-hectare land site now sold by Erste. Based on the comparison of the conditions of the two very similar transactions, we can say that land prices in the catchment area of Budapest have not decreased drastically, which can provide a sign of slight optimism even in these difficult times.”- said Valter Kalaus, Managing Director of Newmark VLK Hungary.

“The transaction is a positive story for us as well, which proves that in case of advanced negotiations, we can close a sale process even in these unfavorable market conditions.” – said Péter Takács, Partner at Newmark VLK Hungary.

To read more information on the development please click on the link below.

https://hipa.hu/jysk-to-establish-a-regional-centre-in-hungary

Categories : Capital Markets, Industrial logistics

New office restaurant chain launches in Budapest

By Vass Emőke
Wednesday, January 29th, 2020

The new office restaurant network that will revolutionize office dining is helped by Newmark VLK Hungary

Béla Szini, one of the owners of Pomodoro, started building a new premium office restaurant chain under the trademark “Kantin”, together with Attila Hegyi, owner of Albatros Catering and Pastel restaurant.

Their first restaurant, also called “KANTIN”, located in Advance Tower on Váci út, is already open. The establishment over performed expectations, and thus the owners have decided to announce opening up a second “KANTIN” in 2020, which will be followed by three further units.

The restauranteurs were and are helped by Newmark VLK Hungary, the tenant-only commercial real estate company in selecting their future locations.

Newmark VLK Hungary confirms that the office market is ahead of significant changes.

The economic growth of recent years has increased the demand for higher quality offices, meaning that developers have begun incorporating a variety of premium services into their office complexes.

In the last year alone, well-known franchises have opened about a dozen cafés inside office buildings in Budapest. The next stage of changes will be marked by the appearance of premium restaurants.

While the main criterium for office building restaurants used to be cheapness, the appearance of generation Y and Z employees has created an opening for the new, premium segment restaurants on the market, according to Valter Kalaus, managing director at Newmark VLK Hungary.

The “KANTIN” brand restaurants will aim at challenging other office restaurants with higher quality dishes and better design, instead of lower prices. The owners use ingredients that fit the reputation of their former, well-established brands, and aim to serve not only those looking for a quick business lunch but people simply looking for a delicious meal as well.

The menu features dishes such as Greek chicken burger with feta and tzatziki, sous-vide pullet breast with tomato sauce and arugula mashed potatoes, and desserts like gluten-free cottage cheese cage and poppy seed cake with sour cherries. The restaurants will offer wok dishes, vegetarian meals, as well as international and Hungarian specialties. The establishments will have a café section as well.

Kantin Advance VLK Cresa Kantin Advance VLK Cresa

“Employees are increasingly looking for premium quality and attractive design,” says Béla Szini. “Beside business aspects, we also aim at launching a quality revolution in office catering. We make no compromises when it comes to ingredients used for the dishes, as we use only the best.”

György Losonci, Newmark VLK Hungary retail expert, says “Two teams with twenty years of experience in hospitality have come together. This and their market knowledge helps them in building a new restaurant chain. The first restaurant was the test, the success of which indicated their business plan, so they are already working on preparing the second restaurant.”

The Budapest modern office stock increased in the last 3 years with 20 percent, that is above 3.6 million square meters. The Newmark VLK Hungary expert believes that the market growth will not stop but increase, based on the development pipeline where yearly another 150.000 – 200.000 square meter new office area is expected to be delivered in the next three years. So, the new supply will increase with another approximately 600.000 square meters, which is a 15% increase compared to the total stock. Concerning these new projects, developers and property managers will have to take consider the new employment market conditions, and their changed requirements. – confirms Valter Kalaus.

 

Categories : Retail
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