We can see many trends of real estate developers in recent decades, regarding the way in which the architectural heritage of Bucharest is capitalized. The press reported numerous cases of architectural "victims", houses and mansions with interwar scent that were allowed to degrade and then were effectively razed to make way for modern constructions, sometimes unrelated to the rest of the buildings in the central area.
However, there are also developers who understood the value of this heritage and decided to take into account the history of the city and the aesthetics of the center of Bucharest in the past, even if this calculation meant, from a financial point of view, a considerable effort. One such developer is Hagag. We talked to Mr Yitzhak Hagag, Chairman and Board Controller of the Hagag Group, trying to find out what the challenges and motivations of such a project were.
Firstly, Mr Hagag, please share with us how the decision to develop such an office project came about. H Victoriei 109 is your first project in this segment in Romania, Hagag Development Europe being known so far as a developer on the premium residential market in Bucharest. What was the condition of the building at the time of purchase and what were the reasons for you decided to integrate it and revalue its potential in your new office project?
Since 2015, when we had our first contact with the Romanian market and started prospecting activities, our attention was directed to emblematic buildings, with their own personality, and of course, land located in premium areas or in continuous development in the capital. The building on Calea Victoriei 109 attracted us not only for its development potential, the facilities of the area and the elegant exterior of the building, but also for the charming story of the boulevard, and the decision to include in our local portfolio this property and restore it to the commercial circuit came somewhat naturally, completing the company's investment and expansion plans.
H Victoriei 109 was, indeed, a project that challenged us from all points of view. At the time of purchase, the building had a "dusty" appearance, a poor strength structure, and the facades and interior of the building were in an advanced state of degradation. Moreover, the partition of the interior spaces was a classic, old-fashioned one, and the electrical infrastructure, the sanitary one, as well as the air conditioning were far from serving a modern office building.
What was the total investment and at what is the stage of the project now?
In addition to the purchase value of the building for the consolidated and modernization works of the building, we invested 10 million euros. In August we completed and received the works and we are ready to assist the tenants in the relocation operations.
How difficult was the challenge of converting a building from another century and adapting it to the conditions of a high-end office space in 2020?
The fact that our local portfolio includes a valuable part of the past, present and future of Bucharest is, for us, a great honor, but also a huge responsibility. The reconversion of an old building is a large-scale action, as exciting as it is difficult, and especially if we talk about H Victoriei 109. Bringing to life a building designed and built more than 70 years ago was a complex process that it started with the demolition of all interior partitions and the obtaining of open spaces that could be partitioned according to current needs, and the entire electrical, sanitary and air conditioning infrastructure were renewed to the highest expectations of the tenants.
We really wanted to preserve the interwar aspect of the building and, at the same time, to maximize its potential, and in order to do these things we aligned design knowledge, engineering and international expertise in real estate developments and urban regeneration projects with the teams of specialists with whom we collaborated for the development of the project. Our joint efforts have brought to life a versatile and surprising concept: H Victoriei 109 - an ambitious project, which offers over 5,600 square meters of state-of-the-art office and retail space, remarkable, centrally located, close to the Romanian Academy and Stirbey Palace.
How important is, for an office building, to be "green"? How did you think of these technical specifications for H Victoriei 109?
Over time, globally, office buildings have played an important role in modern society and beyond. In the last 10-20 years, significant progress has been made in their development and sustainability, and in their wider adoption.
Progress has been made, for example, by BREEAM-type certifications, but also by an organizational culture based on reducing the carbon footprint of large companies. We wanted to develop a sustainable project, with a minimal impact on the environment, whose value should increase over time and which, at the same time, would support the circular economy. We have taken these aspects into account since the design phase and we have gone through all the necessary steps to obtain the EXCELLENT BREEAM IN USE certification. It was a process that we have followed closely because, although the architectural design and technology of building construction have evolved tremendously, the fundamental functions of office buildings have not changed and people continue to spend at the office over 9 hours a day, which means about 40% of their time. Therefore, it is extremely important that an office building can provide added value to those who populate it through the facilities it offers, the air quality that contributes significantly to improving health conditions, as well as operational performance and, implicitly, through the cost component which automatically becomes lower.
What are the main features of the building and office space that you offer for rent?
Complementary to the EXCELLENT BREEAM IN USE certification that confirms the quality of the project, H Victoriei 109 offers not only thermal and energy efficiency and a low degree of noise pollution, but also premium finishes, two individual entrances with independent lobby areas and access from Calea Victoriei, respectively Calea Griviței, three state-of-the-art elevators, two interior stairs, Class A air conditioning systems, LED lighting, floating floor, generous windows and large areas that abound in natural light, own generator, cooling systems for technical rooms, security systems and surveillance, but also a charging point for electric cars. Each level is equipped with a stand-alone HVAC system and is equipped with a technical space - designed to accommodate mini data centers and the possibility to install, at the request of tenants, two kitchenettes with a dining area.
What is the profile of the tenants that fit H Victoriei 109's office project?
H Victoriei 109 is addressed to internationally renowned companies, law firms, but also to premium brands that target a commercial space with a central location.
How has the recent pandemic affected your plans? Are there any changes in strategy regarding the rental, construction or reconfiguration of the spaces? How do you ensure the safety conditions for those who will work in the spaces in H Victoriei 109?
Our goal is to ensure a safe environment and optimal working conditions for companies to relocate to the building. In this regard, we have worked closely with experts and consultants with international experience and implemented all safety and prevention measures provided by the World Health Organization and recommended by the competent authorities, taking into account, of course, the requests and needs of tenants.
H Victoriei 109 has paved the way for your company to develop office space. Do you already have a new project planned in this market?
At the end of last year, we added a new property located in the University area, right at kilometer 0 of the capital, to our local portfolio. This is the company's second office project - H Tudor Arghezi 21, which I can tell you is already fully leased.