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Nokia’s Skypark reflects the city’s changing designs
Tour operators would pay for the kind of panoramic vista of Budapest that Moric Toth has from his desk on the seventh floor of the Nokia Skypark office.
Mr Toth joined Nokia’s HR team soon after the Finnish IT company moved its Budapest operations, comprising more than 2,000 staff, into its gleaming new home of 25,000 square metres last January.
He was “amused and amazed” when he first saw the size and novel design of his new workplace. “I never thought there were so many working here. The building is big, very modern, and the working environment is top-notch,” he says. “It adds a lot to the good working experience.”
Along with health-food restaurants and a breakout space for Nokia’s software engineers to bounce ideas off one another, the building includes in-house doctors and psychologists, a nursery, massage parlour, sauna, showers and a spacious, well-equipped gym and aerobics facility. All this comes with an adjacent shopping centre, which is part of the same award-winning Corvin Promenade urban redevelopment.
Nokia Skypark exemplifies the renaissance of the Budapest office market following the financial crisis. The completion of the then substantial building programme led to a glut of space, vacancy rates above 25 per cent and a trickle of new developments in 2010-2014. The policies of the conservative populist Fidesz government, led by prime minister Viktor Orban, which took power in 2010, contributed to an uncertain business environment.
But with the global economic revival, along with a steady flow of new entrants and expansion of existing operations in Hungary, space has become tighter and the developers have gone back to work.
“The vacancy rate of [the most prestigious] office space in Budapest is now 8 per cent, a record low. We have a pipeline of five buildings totalling 37,000 sq m this year, with 16 buildings and a record 325,000 sq m expected in 2018,” says Kata Mazsaroff, head of occupier services in Hungary for Colliers, the property consultancy. “Budapest is definitely back on the map.”
As Nokia Skypark illustrates, the property upturn is not merely about quantity. In Budapest, where development is driven by outsourcing, the revival comes with an additional focus on the quality and suitability of office space. Tenants, agencies and developers are working closely on office design in order to attract and retain staff.
The recovery and the low vacancy rate has led to an increase in rents, with headline rates now at €13.50 per sq m, compared with €11.50 per sq m (including added incentives) in 2010. In response, investment has picked up, with office transactions worth about €940m in 2016, more than double the value in 2015, says Bence Vecsey, Budapest-based head of investment services at Colliers.
“Hungary’s attractiveness was reinforced by the upgrade to its sovereign debt rating by all three major credit rating agencies,” Mr Vecsey says, although the market was dominated by Hungarian open-ended real estate funds, which made 38 per cent of total purchases.
Despite prime yields falling to 6.5 per cent, most analysts expect the market to strengthen. The year got off to a good start, with Futureal, the developer of Nokia Skypark, initiating the sale of the building to OTP Real Estate Fund for an undisclosed price. Gabor Futo, founding owner of Futureal, called it a “milestone” deal.
It is not all straightforward, however. In a recent analysis, property consultancy CBRE warned that a shortage of construction workers — the adviser calculated numbers were 16 per cent down on 2007 — constituted the “single most important barrier” to completing planned developments, and had contributed to a 15-20 per cent rise in building costs last year through increased wages.