Bojan Jevremovic, Leasing Director, Office Portfolio, MPC Properties – Investment in Quality Always Pays Off

We build exclusively A-class premium office buildings, choose energy efficient project and those that communicate the best with the environment

The real estate market flourished in 2021, companies finally started gradually bringing back their employees to their work places following the outbreak of the pandemic in 2020, and office buildings have a great occupancy rate at the moment. It is time to build, and our company is planning an investment in the central business district of the capital of Serbia – Bojan Jevremovic, Leasing Director – Office Portfolio at MPC Properties, says in his interview for eKapija, summing up the key trends and hinting at the further development of the real estate market in Belgrade in the short and medium terms.

– We have followed, in detail, all the events related to the Covid-19 pandemic and its impact on the business, analyzed trends, but also very readily responded to all the challenges that occurred during the pandemic. In 2021, our portfolio has fully stabilized, and, compared to 2020, we have also achieved great successes.

eKapija: Considering the circumstances caused by the pandemic, how were the years 2020 and 2021 for you?

– This and last year were very successful for MPC, for several reasons. In the second half of 2020, we opened three new projects in our market, two office buildings, USCE Tower Two and Navigator Business Center 2, as well as the new shopping destination BEO Shopping Center, which, with its offer, considerably enriched the part of the city which previously hadn’t had one such modern shopping destination. This year, we also initiated the finishing works on the office facility TLD Belgrade (in the famous “Tri lista duvana” location), which will be completed in the first quarter of the next year. It is an office building, which will offer A-class office space in the very heart of the city on over 8,300 square meters, where one such project was needed. This year, we also acquired Delta City, one of the most visited shopping centers, not just in Belgrade, but in the entire country, whereby we additionally strengthened the MPC retail portfolio, which now consists of as many as six shopping centers in the capital of Serbia (USCE, BEO, Mercator Centar, Immo Centar, Delta City, Immo 2).

eKapija: What are your impressions so far regarding the realization of the “Tri lista duvana” project? Is there a sufficient number of companies interested in high-quality office space in Belgrade center, considering the limitations that are often mentioned as a handicap in that city zone, such as the lack of parking space?

– The interest in this project has been at a high level ever since the moment we officially announced the news that the project was to be realized and when we started the first negotiations. There are several reasons for it. First, there is the lack of office space in the city center, which is not only the case when it comes to Belgrade, but is also a trend in other major cities in the world. Furthermore, what makes this location attractive are also all the other accompanying features that contribute to its quality, such as cafes, restaurants, a grandiose lobby, additional conference halls, green oases for rest, and certainly also the additional parking spaces within the building itself. We are proud that we have very interesting tenants within the TLD Belgrade project, which we will talk about more in the upcoming period, and the official opening of the building is planned for the first quarter of 2022.



eKapija: At the same time, do you believe in the further development of the central business district in New Belgrade?

– New Belgrade is a location that is very interesting to investors, and there are multiple reasons. Primarily thanks to the possibility of the purchase of large plots of land and the realization of important projects, because large companies look for an office space that can follow their development. Second, the accessibility of the location itself and an easy communication with it are also important. When it comes to New Belgrade, the boulevards are wide, the possibility of parking is at its maximum, the highway is close, as is the airport, which is very important for foreign citizens. Certainly, a large number of modern hotels is something that also speaks in favor of having business centers in this part of the city.

The fact is that there are not a lot of parcels or free areas in the central business district anymore, but there are still attractive ones and those that, to us, as a company which invests in real estate development, are interesting. The space for the development of the office market definitely exists and will go in two directions: filling the central business district with high A-class buildings and the further development of buildings of A-class and high B-class on the outskirts of the central business zone. The companies which are in our portfolio and which have the need to expand want to expand precisely in close proximity to our operating office facilities, so our next investment will be in one such location.

eKapija: Does that mean that you are in the process of looking for a location for the investment?

– MPC Properties is a leader in real estate development in the country, but also wider, in the region, and we are always in the process of looking for new locations for our projects, and we analyze the market itself on a daily basis. We will soon have fresh news when it comes to the development of the office portfolio within our company. At the moment, the MPC office portfolio reaches an occupancy rate of 97%, which is a very great and important success, especially considering that the Covid-19 pandemic is ongoing and that no one expected such a trend in this period.

eKapija: Some big plots of land were sold in New Belgrade. Are you possibly looking for some cooperation or potential co-investors there?

– MPC has been recognized in the market as a company that has truly unique locations, both for shopping centers and office buildings, but also for the fact that we care a lot for the principles of green building and for our facilities to have the highest certificates regarding the quality and the sustainability. We are very particular about it. We don’t realize projects at any cost, and we also don’t find all locations and projects interesting. We build exclusively top-quality A-class office buildings, choosing projects which are energy efficient and which have the best communication with the environment. We actively follow tenders, but, so far, no offered location has met the conditions for the purchase.

eKapija: Which of the individual office-projects of your company (Usce Tower Two, TLD, Navigator 2, Tri lista duvana, MPC Plaza) do you believe best suits the needs of the market at this moment and why?

– It is difficult to highlight any of them. Our idea is for projects not to compete against each other and for each one to cover a certain niche of potential tenants. For that reason, the projects are very different from each other. USCE Tower Two is the most modern office building in the country, of the high A+ class, in an attractive location, with excellent traffic connections, in close proximity to the most visited shopping center, with a phenomenal view to the capital of Serbia, and at the same time the technologically most advanced office building compared to the rest of the market. Navigator Business Center 2, as well as the entire Navigator complex, on the other hand, suit a large number of clients in our market, encompassing all the aspects that the tenants find important. Navigator Business Center Two is an imposing building with 27,000 square meters, with a phenomenal lobby, an area of over 3,000 m2 per floor, which is definitely the most important thing when it comes to primarily IT companies which are the dominant tenants and carriers of a new lease trend, because those are companies which are looking for an option of expansions, but they still want to be on a single floor. Essentially, other buildings in the market cannot offer that. TLD Belgrade is a city location, surrounded by facilities which are symbols of the capital of Serbia and there is nothing that can match it in that respect. TLD Belgrade is a smaller office facility, but it also has everything that suits multinational companies, which are our main tenants. MPC Plaza is the smallest facility, also in an attractive location in Mihajla Pupina Blvd, but it is an excellent option for companies which don’t have an exponential growth, while having the need to have their own office building. It is an ideal location for a single tenant.
A light at the end of the tunnel

eKapija: Covid, then, has not caused too much damage?

– I see a light at the end of the tunnel. At the beginning, there was fear, just like in all industries, considering the uncertainty that the pandemic brought. The whole situation was entirely unknown to us, it directly impacted coming to work and, with it, our tenants and the portfolio itself. On the other hand, I have always been optimistic, believing that it has to pass, that the job exists so that you would work at your work place, because the work atmosphere there is such that it increases the productivity of the employees, as opposed to working from home, and that it is only a matter of time before everything goes back to its previous state, where offices are used at either the full capacity or at a slightly changed capacity. The building occupancy is good, which means that the business flows are going back to normal, and the arrival of people to our buildings has evidently grown. It is only a matter of the day or the month when it all goes back entirely to the way it was before.
eKapija: What are the main differences between office spaces of A and B classes?

– Our market is not yet sufficiently developed, and we started doing commercial real estate some 10-15 years ago. Compared to the cities in the region, we still have less built office and retail space per capita. We amount to around a million square meters of office space, whereas Zagreb, for example, which is in our close proximity, has 1.5 million. As a consequence, the segmentation of the market to A- and B-class spaces is increasingly important. The price is set relative to the quality of the space and its location. Some years ago, we had the same price for each office space in New Belgrade. Today, that is not the case and it is a good trend, because it shows that the market is becoming mature.



eKapija: Is there a bigger demand for A- or B-class office spaces in Belgrade and can companies be motivated to move from adapted apartments and similar premises to modern offices through investments in less expensive spaces?

– The segmentation of the market is crucial. We follow the markets in the region and Europe a lot. The trend is to build an A-class business portfolio up to the moment when it is saturated, more precisely, as long as there are multinational companies which target A-class office spaces not older than 5 to 7 years. When this is filled out, the B-class market begins to grow, which entails call centers, share service centers and similar. Those are companies which come to employ a huge number of people and which seek large floor areas at affordable prices. This trend is only just developing in Belgrade. We predict that, in the next 5 to 10 years, that trend will be certain and that the high B class in peripheral locations will become prominent.

M. Radonjic

Balkans Real Estate d.o.o. Beograd

Ušće tower d.o.o. Beograd

MPC Properties

Bojan Jevremović

Ušće Tower 2

Ušće Tower

Ušće 2

Navigator Business Center

Navigator

Navigator 2

Tri lista duvana

TLD

Beo shopping Center

Mercator center

Delta City

Immo 2

MPC Plaza

MPC portfolio

MPC retail portfolio

office space

office

central business district

CBD

A class office space

A class

B class office space

B class

office space at the periphery