Vilnius, 6 February 2018 – Robust economic growth continues to drive office demand and outpaces robust supply. In the Q4 of 2017, Vilnius market has observed 13.9% y-o-y office stock increase, which currently stands at a 631,200 sq m. In 2017, 12 new office premises with 77,000 sq m. were delivered, which is slightly less than expected due to delayed openings of some new projects. This year, the supply is expected to slow down with six upcoming projects and circa 48,100 sq m. of new floor space. However, in 2019 the completions are planned to shoot to an impressive 125,620 sq m. with 11 office developments currently in the pipeline.
Ignas Gostautas, Senior Analyst of Lithuania Research & Consulting Services at CBRE Baltics comments: “The supply ahead is impressive according to the Vilnius standards. However, the potential tenants should not expect that market will be flooded with space. It is likely that all the planned projects are going to be delivered in time. Also, circa 70% of the area on the pipeline in 2018 and 40% of the pipeline in 2019 is already pre-let. Some influx of the office supply could be expected due to current tenants freeing existing stock.”
Demand for office space in Vilnius remains strong on the back of the growing local economy and improving the global confidence in the economic environment. While vacancy rate decreased only marginally to 4.6%, most of the newly opened buildings are four-fifths occupied. Among more notable Q4 transactions were Booking.com with 4,200 sq m at Penta business centre, and Cognizant with 3,700 sq m at Link business centre. CBRE Baltics represented both transactions at the clients’ side. Overall, in 2017 modern office take-up comprised ca. 72,400 sq m.
Denis Rein, Senior Consultant of Lithuania Advisory & Transaction Services at CBRE Baltics comments: “Expansions and openings of international shared service centres remain a large demand factor. Here I would like to emphasise the important work that is being done by Invest Lithuania, which manages to convince companies into set up operations in Vilnius”.
“Additionally, other already present companies are also actively looking to enlarge or upgrade their premises, including state-owned institutions. The economic conditions are favourable for improvement and continue to support the demand”, says Mr.Rein.
Rent prices have remained relatively stable in the Vilnius office market for a relatively long period. A class rent rates are currently between 14.0 – 16.5 EUR/sq m./month with 9.0 – 13.5 EUR/sq m/month for B class office premises.
Despite relatively long-running price stability, there are indications that rent prices may go upwards. Tight vacancies in the upcoming quarters and relatively more expensive projects on the pipeline establish good conditions for rent price increase, notes Mr.Rein.
About CBRE Baltics
CPB Real Estate Services is part of the CBRE affiliate network in the Baltics. CBRE is the world’s largest commercial real estate services and investment firm (based on 2016 revenue).
The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through circa 450 offices (excluding affiliates) worldwide.
CBRE Baltics offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting and property sales. Please visit our website at www.cbre.lt and www.cbre.eu.
Ignas Goštautas | Senior Analyst
CBRE Baltics | Research & Consulting
M +370 694 88318
Denis Rein | Senior Consultant
CBRE Baltics | Advisory & Transaction Services
M: +370 698 51 716 | M: +44 770 6563 160
Vineta Vigupe | Director
CBRE Baltics | Research & Consulting
M +371 291 62408