If we look back at the period of around 20 years ago, we can confirm that many aspects of the office real estate market have changed dramatically. In our contemporary world, where people’s daily habits are changing quickly, office space needs are increasing, new technologies are being installed, new building materials are being used and new construction methods are being applied, while awareness of energy efficiency has raised to a greater extent. We all have different approaches today when it comes to planning and building our assets. How did we get here and what comes next?
How did it start?
Back in the early 2000s, a modern office market was practically non-existent in Serbia. The first modern office developments and refurbishments happened in 2005/2006, offering the market the very first modern office buildings to accommodate multinational companies seeking the same standard of office space that they enjoy in every other developed country. Back then, an office building only needed to exist and to fulfil basic needs: good location, available parking, internet connection, possibility to compartmentalise space into smaller offices etc. Compared to that time, expectations have today skyrocketed.
As new projects appeared on the market and the volume increased dramatically, office developers started providing their tenants with more in order to entice the biggest companies to join their portfolio. With new technologies applied, the market started becoming very competitive.
And that was just the start
Micro-location development advanced in such a way that tenants can take advantage of the benefits of a good restaurant, hairdresser, fitness centre, great public transport connections, a significant number of parking places, creches and nurseries, and other amenities on the spot… This prompted tenants to seek more options prior to signing a lease agreement.
Once these milestones had been reached, the next chapter brought energy efficiency and green building construction requirements in connection with relevant standards such as BREEAM, LEED, EDGE and similar. From construction materials all the way to energy and savings on water and energy consumption, everything was utilised in a way that minimised costs for the tenants as much as possible.
Where are we now?
Coming to 2023, we now face a major imbalance between office space supply and demand. The vacancy rate is between three and four per cent, which is considered fairly low. For the purposes of comparison, that percentage reaches as high as 10 to 15 per cent in some developed markets, such as those of Bulgaria or Poland.
Belgrade is a city of 1.7 million inhabitants with as much as a million square metres of office space. These numbers are not positively balanced. Zagreb, for example, has total office space of 1.2 million square metres, yet its population is half that of Belgrade’s. Likewise, Budapest has 4.3 million square metres of office space despite having a population similar to Belgrade. Economic instability, both regionally and worldwide, has set the groundwork for increasing construction prices, while also making bank financing uncompetitive. Investors are therefore abstaining from building new projects… At least for now.
What comes next?
New developments will include mixed used projects that will contain offices, residential units, hotels and retail segments, positioned at new locations or within old factories or abandoned buildings to be completely renovated. That’s one segment. The second segment is so-called boutique office buildings that are situated mostly in central city areas. This is already a major trend in the city. The third segment, which may develop in the distant future, is the construction of Class B office space on the outskirts of the central business zone. These are facilities that cost less to construct and are cheaper to rent, and such space would be interesting to companies like R&D hubs, call centres, back offices of large international businesses, banks etc.
In order for this to happen to the necessary extent, it is first necessary to develop the required infrastructure – not only roads, highways, or streets, but also metro connections, light rail transport between municipalities in Belgrade and also more efficient intercity train infrastructure. These new areas also needs to be urbanised in order to provide employees with the ability to complete all their personal and professional tasks on a daily basis.
What makes today’s office portfolio of MPC Properties so appealing?
We build modern Class A office properties while respecting the latest construction trends, in line with BREEAM or LEED energy certifications (depending on the project), maximising the layout potential for our tenants and minimising the costs.
Our office buildings have perfect landmark locations in both New Belgrade area and the city centre, providing our tenants with easy connections to all parts of the city. We carefully select our retail tenants within the office space portfolio, in order to provide the best possible choice of restaurants, fitness centres, creches/nurseries, cafes and other amenities that are important to business users. Aside from this, we invest a lot in building the community of MPC tenants with a number of activities and promotions.
We listen to our tenants carefully and will invest further in new activities to make them feel more comfortable and ensure their business day runs as smooth as possible.
Having said all this, we are proud to have an occupancy rate of 99% and that our portfolio includes one of the biggest office brands.