Market Talk: Showcasing the Positive Examples of Sustainable Policies
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The term “Green Business” suggests that successful actors in the various commercial real estate sectors are adapting their business practices to meet market pressures concerning sustainable practices and space, meeting international carbon-emission reduction regulations, and acting under the EU Taxonomy. Market players and analysts see the need for improved benchmarking, accountability and transparency throughout the market process.
While there are many successful real estate business practices, I believe we have to admit that the only way forward is more sustainable development and asset management strategies. There is a general understanding that commercial properties still produce a large chunk of total carbon emissions. But, with regulatory forces and shifts in the mindset of industry professionals, there is a common aim to decrease our footprint as much as possible; after all, we all live on the same planet that we dearly love and wish to protect.
We have been developing Breeam “Excellent” certified office buildings from the start, and in our experience, with the technologies we are using, we can decrease operational costs significantly. It would be difficult to estimate the percentage savings, but where we can help our tenants save is mostly in the electricity bill for heating and cooling through heat pumps, lighting through energy efficient LED fixtures with motion sensors, water consumption through the utilization of rainwater and groundwater and much more
Máté Galambos
Director of leasing,
Atenor Hungary
There is no commercial success without implementing certain ESG practices in the commercial real estate business. All new office building developments, and now logistics buildings too, hold green building certifications, as tenants are conscious of it. These are supplemented by Well or Access4you certifications addressing the social impact. The majority of potential buyers and tenants are interested in the developers’ own ESG commitments as well, in addition to the building.
The percentage savings for developers and tenants depends on what the baseline is and what the policy includes. ESG strategies usually target somewhere around 5% reduction year-on-year or a specific reduction target by a particular year. The goal of the majority of companies is carbon-neutral operation by 2050; however, several organizations, such as ourselves, have the aim to be carbon-neutral by 2030. Another example, the EU Taxonomy-aligned target for building renovation, is for a 30% reduction in primary energy demand.
Norbert Szircsák
Head of ESG strategic advisory services,
Colliers Hungary
ESG is increasingly determining market success driven by the requirements of tenants (who already have ESG liabilities of their own or will do so sooner or later), investors and banks, but also employees. The answer to these new and complex aspects can only be implementing new business operations, long-term strategies, and a fresh corporate culture. Besides the market demand, the requirement to meet the EU Climate Neutrality goals by 2050 and other regulatory obligations push businesses to take immediate ESG action. Those that have already started to act definitely enjoy an advantage. A company’s success is not judged exclusively by financial criteria anymore. Evaluation of ESG performance will be taken into account to the same extent in the very near future.
I would not actually use the phrase “green business;” I would use “responsible business” instead. In this context, it is not enough that the real estate owner or property or facility management tries to run their properties in an environmentally conscious manner; all stakeholders should take responsibility. CPI Hungary has been introducing green lease agreements since last year. These mean we intend to cooperate with our tenants (and indirectly with our and their suppliers) to reduce the negative environmental impacts of our properties.
Henrietta Budai
Sustainability manager
CPI Hungary
The benefits for developers and tenants of adopting sustainable policies can be calculated and showcased relatively easily and transparently. However, as sustainability has such a broad and holistic approach, there are some benefits and savings that can only be calculated and measured in a more general manner. For example, a well-insulated and managed building, which runs using renewable energy produced on-site, will have a significant percentage of operational cost savings compared to buildings that are poorly managed, have poor insulation and use natural gas.
Benefits on the emission side can also be measured, especially if carbon emissions are monetarized. Savings on carbon emissions (including embodied carbon) are also a hot topic. Again, low carbon design and operation can easily be demonstrated if this is monetarized.
The overall benefits for the health and well-being of the people, and for the planet and future generations, are more difficult to count with concrete percentages; however, investors and banks are indirectly also considering these (positive) effects with their green investments, funds, incentives, etc. Therefore, the positive impact of sustainable policies can be showcased very broadly, and many facets of savings can be presented.
Zsombor Barta
Founding partner,
Greenbors Consulting
Human health is material to an organization’s bottom line, and the application of Well criteria at scale makes that connection clear. By applying Well at scale, organizations can measure and improve their health performance across multiple locations. Using our robust set of Well features and our proven process, organizations can map, measure and quantify their health and well-being efforts. With this data, they can measure their impact on people while also comparing their progress internally and against industry peers.
Most people spend about 90% of their time indoors, so all buildings have a meaningful influence on our daily lives. Architects and interior designers have a huge impact on how we behave in the spaces, how we get around, how we feel, and how we decide.
Regina Kurucz
Architect and head of the Well Working Group,
Hungarian Green Building Council
Currently, the total available office space on the market is approximately 450,000 sqm, but, in my opinion, only half of that can be considered “modern” space. A very small percentage of the stock of office space would fulfill the sustainability requirements of the large corporates.
New developments are significantly more likely to fulfill the sustainability needs and, therefore, the submarkets where most new developments take place are the “usual suspects”: the Váci Corridor, South Buda and South Pest. But there can be examples in other submarkets as well.
Valter Kalaus
Managing partner,
Newmark VLK Hungary
This article was first published in the Budapest Business Journal print issue of September 8, 2023.
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