New reality, new challenges, and experience of big players

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Panel discussion

In the past year, we have faced numerous changes, which influenced peoples’ everyday life as well as the performance of many companies. There were many challenges, new opportunities and at the same time many obstacles which represent the new reality.

In time of Corona, there has been an important shift in the direction of digitization even though all these companies have already engaged in digitization before the crisis. Buildings have seen several changes in the field of protective measures as landlords’ priority is prevention of spread of COVID. Some of these solutions (e.g. hands disinfection, temperature measurement) will probably remain also in the future.

Regarding tenants and maintenance of quality long-term relationships, all participants confirmed that they have already in the first wave invested strong effort to prevent lease cancellations. They have been interested to keep at least most quality tenants on a long term. Therefore, they have adopted certain measures to support tenants such as rent determents as well as temporary rent level reductions. As for the tenant side, there is an increase in insecurity and consequently shortened lease periods. The strongest impact was felt by smaller retail tenants. Large tenants have more easily adapted to the new reality and partly redirected their sales to internet sales. As for the tenants of office premises the panelists have not seen any major changes so far.

In general, there are less transactions on the market whereas the pressure on prices is felt primarily with the rents of retail premises and far less with offices and residential units. Some companies will even surpass their sales plans this year. Mr. Lazar from DUTB mentioned that their sales will have record numbers this year.

Panelists said that their companies do not plan any larger investments in the near future. They will invest primarily in optimization of the current portfolio and buildings to provide for better quality and safety. They also all agree that work for home will increase also long term, but they do not expect any substantial changes on the market in respect to the size of leased premises. What will change will be the conditions of work in buildings and structure and reorganization of space. They expect substantial developments in the field of digitization and implementation of Proptech solutions. Panelists agreed that those who came better prepared for digitization and have already started with implementations have had a much better kick start in the new reality. Specifically, they stressed the importance of quality and up-to-date real estate data and real-time reporting and analytics where digital solutions need to be flexible and user-friendly.

Key panel take outs:

  1. A longer crisis on the real estate market due to COVID is not expected and the market should recover quite fast.
  2. Real estate market is quite resilient and stable and no major disruptions are expected.
  3. Buildings will need adaptations and spaces reorganized according to new safety and work requirements where digitization will be important.
  4. There is no major change in the size of leased premises expected however there will be change in the structure and use of spaces.
  5. Corporate real estate management (CREM) will gain higher importance to support the core business of companies where the highest value add will derive from digitization.

Moderator: Klemen Fajmut, Imagine d.o.o.

Jovica Jakovac, NLB d.d.

Artur Olaj, Pošta Slovenije d.o.o.

Andrej Lazar, DUTB d.d.

Luka Prebil, BTC d.d.

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