At the end of last year, Vilnius moved up into top 3 European cities with the smallest available office space. Lower vacancy rates are recorded only in Berlin and Munich, as shown by the BNP Paribas report based on the data collected by Newsec.
According to Ms Jurgita Šilaikytė, the Head of the Intermediation Group of the international real estate advisory company Newsec, although new modern offices will be built this year, the demand for modern space will remain higher than the supply.
In the last quarter of 2017, the average vacancy rate in Vilnius amounted to 3.4% and was lower than in the same period the year before, when it had been 4.8%. Less available office space was recorded only in Berlin and Munich, where vacancy rates were as low as 2% and 3.3%, respectively.
The availability of office space in capitals of neighbouring countries is higher than in Vilnius: the vacancy rate is 6.6% in Riga and 8.5% in Tallinn.
The highest availability of office space is recorded in Manchester – 14.3%, Helsinki – 14% and Birmingham – 13.5%.
It is forecasted that this year the office market of Vilnius will continue to show growth in the demand for modern offices stimulated by the development of companies, the entry of new companies and the need for renewal. At the same time, this trend will increase the supply of space in older office buildings.
“In 2018, service and competence centres will continue to grow, and it is also likely that new foreign companies will enter the market. Companies seeking higher-quality space will continue to move from older buildings into new ones, the demand for modern offices is likely to remain high. As companies relocate to new offices, the vacancy rate in older Class A office buildings will increase. Relocations of tenants will allow offices that have been operating in the market for a longer time to renovate freed spaces, re-evaluate optimal space utilisation options and attract a new tenant base,” says Ms Šilaikytė.
Four office buildings are to open in 2018 – all of them will be located in the central business quarter of Vilnius and will meet the Class A office requirements. Their total floor area will be only 39 thousand square meters, while the demand may be twice as high if this year’s growth rate stays the same.
“The demand for space in new offices remains high, and the most popular projects, e.g. the third tower of the 3 Burės office complex, are totally leased out before their official opening. Such market conditions create prerequisites for stable prices – a contribution to maintaining the balance is made by earlier-built offices that lost some tenants and are currently actively competing for new companies,” told Ms Šilaikytė.
The average rent for Class A office space in Vilnius in 2017 was EUR 16 per sq. m per month excluding VAT, while in 2016 it was EUR 15.8 per sq. m per month excluding VAT. In Riga, rental prices for offices were lower – EUR 15.5 per sq. m per month excluding VAT. In Tallinn, prices remain stable for the third consecutive year, at around EUR 17.5 per sq. m per month excluding VAT.
Around 80 thousand square meters of modern office space was leased in Vilnius in 2017.