Moving IT firms Electrify the Budapest office market
August 31, 2016
Before the global economic crisis the financial sector dominated the Budapest office market, banks leased the greatest number of new offices, impressive new headquarters were built for them. By now the situation has changed: the biggest players are from the ICT (information and communication technology) sector in Budapest, leading companies are building new headquarters, and the globally influential Hungarian companies are moving into larger and larger offices.
The changing of roles since the outbreak of the financial crisis is clearly visible in the Budapest office market, during which the fast developing ICT-sector firms replaced the gradually smaller and smaller financial sector that once represented the greatest leasing demand. The ICT sector steadily increased its share of net leases in the Budapest office market between 2012 and 2015, in addition the record leases of the 2015 year were mostly due to the tens of thousands of square meters of new headquarter-developments of Hungary's leading ICT companies such as Telekom, Ericsson and Nokia. The information and communication companies are looking for mostly the modern (though not necessarily newly built) A-class buildings with good technical capabilities. For them the creation of a high quality work environment is typically more important than cost-minimization.
While the larger companies have office buildings built for them, the smaller, but also cutting-edge and constantly developing (one reason is the growing number of employees) ICT companies increasingly prefer to move into larger and larger offices.
According to Zsolt Kákosy - MRICS, MBA, Head of Asset Services at CBRE entrusted with the operation of Andrássy Palace - "easy access is also critical for the technology companies. One example of this is the high-prestige downtown headquarters: LogMeIn, a Hungarian start-up turned into a world-renowned company, and emblematic tenant of the CBRE operated and 100% leased Andrássy Palace, is leasing an increasing larger space in the office building, paralleling its successful market expansion. In this industry, finding and retaining the right workforce is becoming increasingly difficult because of the strong international competition in the market. An important tool of attracting and keeping top specialists is to ensure a professionally designed and operated office environment."
Judit Varga - MRICS, Head of Advisory & Transaction Services, Offices - added that for in the case of ICT companies the most popular office locations are in central and non-central Pest, South Buda and the Váci út. South Buda, and Lágymányos in particular is, for example, one of the most popular for technology companies. A perfect example is Science Park. standing on the Buda side of the Petofi Bridge, which will soon provide a leasing opportunity for smaller companies, for whom there has been almost no available vacant space. The situation is similar in the case of City Gate "outgrown" by Nokia, because it is rare to find vacant office space in completely renovated buildings in Inner Ferencváros.
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