HB Reavis CEO exclusive interview - why Brexit is a blip
One of HB Reavis’s London projects was the refurbishment of a 75,000 sq ft office on Southwark Street
Slovakia's HB Reavis looks to replicate eastern European success in the UK, reports Tom Ravenscroft.
In 2013, Central Europe’s largest office developer, HB Reavis, set its sights on London. The goal was to replicate the success it has had on home turf over the past 20 years, and to become a major player in the London construction and development market.
HB Reavis was founded in Bratislava, Slovakia, and following the fall of Communism, established its reputation by developing high-end offices for international brands needing a presence in the country.
Outgrowing the Slovakian market, it expanded across Central and Eastern Europe, opening offices first in neighbouring Czech Republic, then Poland and Hungary to become a powerhouse in the region.
In 2015 HB Reavis brought 273,000 sq m of office space to market, making it the third largest commercial developer in Europe, according to PropertyEU’s Top Developers survey.
"In the short term, yes Brexit may have an impact, but we believe that this will be minor and temporary - and in fact, could present an investment opportunity for us. We developed in Bratislava when others weren't interested, and it's gone very well for us."
Tomáš Jurdák, HB Reavis
To grow the company further, establishing an office in London was the next logical step for the developer.
“We were looking to diversify our portfolio by expanding outside of Central and Eastern Europe. London is undoubtedly the most developed real estate market in Europe, with long-term strength and a transparent manner of operating – it seemed a great fit for HB Reavis, and has proven as much since we entered,” explains Tomáš Jurdák, UK CEO of HB Reavis.
The developer currently has three schemes under development in the city, including a 12-storey commercial development incorporating more than 100,000 sq ft of Grade A office accommodation at 20 Farringdon Street and the refurbishment of a 75,000 sq ft office on Southwark Street.
The jewel in HB Reavis’ London portfolio, however, is the Brexit-defying 33 Central on London Bridge. “It’s our first scheme in London, which we recently sold to US bank Wells Fargo for £300m — one of the single largest office deals of the year, and the first major transaction in the City following the referendum vote,” says Jurdák.
On the subject of Brexit, HB Reavis is bullish. As a privately owned company it believes it can take the opportunity to invest while others may not have the appetite. “In the process of choosing where HB Reavis should expand to first outside of CEE, we chose the UK because it is an undeniably robust financial centre, in or out of the EU,” says Jurdák.
“In the short term, yes Brexit may have an impact, but we believe that this will be minor and temporary – and in fact, could present an investment opportunity for us. We developed in Bratislava when others weren’t interested, and it’s gone very well for us.”
The developer has big ambitions for London, which it sees as being a global showcase for its brand, and is aiming to begin developing another half a dozen sites in 2017 alone. “There’s no doubt that London is a key market for us,” continues Jurdák. “As an integrated development company, with control every step of the way from procurement through to asset management, we can take a term-long view – and in the long term, we are very confident in the London market.”
HB Reavis is aiming to replicate its entry and firm establishment in Poland, to which it expanded in 2008, says Jurdák. In only a few years, the developer became one of the key players in the Warsaw commercial property market, which currently accounts for 30% of its business. “We want to mirror that success. We are now rebalancing our portfolio and intend to focus a third of our development pipeline here [in London] by 2019.”
The Foster-designed tower in Warsaw
Compared to Central and Eastern Europe, London has a much more developed office market. “The major difference is that the company must discover a completely different supply chain. We have yet to develop long term relationships in London – though we are on our way,” says Jurdák.
“Even though we have our own construction arm of the business, we look to partner with high-quality consultants who know the market,” he adds. At 20 Farringdon, for example, HB Reavis appointed Aecom Construction Services as official delivery partner, which ensures flexibility in the workforce and resources for the project.
This desire to create long-term partnerships is Jurdák’s key driver for selecting suppliers, and obviously if a supplier performs well, HB Reavis is happy to use them again. “We enjoyed working with John Robertson Architects, the designers on 33 Central, so much that we’ve hired them for a project in Bratislava,” explains Jurdák.
“Professionalism, integrity, honesty, are essential characteristics of a supplier,” adds Paul Neto, managing director of HB Reavis Construction. “They must also always ensure that safety is first and deliver on promises.”
Neto also notes that what makes a subcontractor really stand out is coming forward with solutions the client hasn’t already come up with. “If you’re a professional contractor, you’re an expert in what you do and can really help drive value and innovation. When we can learn something new, we find it a very beneficial partnership.”
The clear message from Jurdák and his team is that HB Reavis is determined to make London a showcase for the company’s work, and if the trajectory here matches that of Poland then we will be seeing a lot more developments by the company.
We may even see a landmark project in the not-too-distant future too, as the company has recently announced the development of a tower in Warsaw, designed by Foster + Partners, that is set to be taller than the Shard, making it the tallest building in Europe outside of Russia. “We are design-led and client-focused, so given the right circumstances, a landmark structure would not be not outside the realm of possibility,” concludes Jurdák.
61 Southwark Street