Newsec’s experts: logistics and industrial RE – still an undiscovered gemstone

The manufacturing and logistics real estate sector is undergoing a renaissance – in order to remain competitive, manufacturers are increasingly investing in new technologies and application of innovations in their activities. Old buildings that count for decades cannot always serve this purpose; therefore, according to Mr M. Kulbokas, an expert at Newsec, an international real estate advisory company, companies are actively looking for places for new factories.

“When travelling from Vilnius to Kaunas, we can see fast-growing modern logistics centres and buildings of manufacturing companies bearing the names of international companies. In a few years, the logistics and industrial RE market should repeat the renaissance of Vilnius business offices,” says Mr M. Kulbokas.

Logistics companies are planning to open more than 85.4 thousand sq. m of new storage space in Lithuania in 2018, and in the next few years, 772 million euros will be invested in the development of industrial RE projects. In the nearest future, the largest logistics projects in Lithuania will be implemented by the international transport and logistics service providers Girteka Logistics and Transimeksa. The industry is rapidly expanding in the territory of Kaunas FEZ, where Hella, an electronics corporation, has already opened its factory. In 2019, the technology and top-class tire manufacturer Continental as well as the developer and manufacturer of medical equipment Hollister Incorporated will open there their subsidiaries.

Investment throughout Lithuania

According to the expert, the most promising cities for industrial projects are Kaunas, Klaipėda and other smaller towns and regions of Lithuania. Meanwhile, Vilnius will remain a city of services, because it is much more expensive to develop such projects there than in other places in Lithuania.

Free economic zones (FEZ) offer especially attractive economic conditions for the development of industrial projects, where it is possible to accelerate the formation of land parcels and adapt them to the needs of investors. In total, seven FEZs have been established in Lithuania with more than 70 companies operating in them.

The market is still stagnating

Mr M. Kulbokas states that we have all the conditions to attract international manufacturing and logistics companies to Lithuania, but we have not exploited them yet – in recent years, the demand for industrial premises has been growing faster than the supply.

“We have a lot of unused land and we are acting very irresponsibly when we do not accept international investors. According to the data of Investuok Lietuva, due to a lack of preparation and the market stagnation, we lose at least 13 customers per year which would invest in Lithuania at least 110 million euros and would create a thousand of workplaces,” says Mr M. Kulbokas.

He emphasizes that Lithuania has already proved to be strong and successful in the development of office space; therefore, we are able to attract manufacturing companies equally efficiently.

“We have already taken care of white-collars in business offices, and now it’s time to start thinking about industrial workers who are coming back to Lithuania after emigration in increasingly large numbers and a large wave of which is expected after Brexit,” notes the Newsec’s expert.

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