Vilnius among 5 European cities with the lowest office space vacancy rate

2017 06 07

Vilnius keeps its position in the top five European cities with the lowest office market vacancy rate. The vacancy rate is lower only in Berlin, Zurich, Geneva and Munich. Vacant office space area in Vilnius is expected to increase, but it will remain at the lowest rate in Europe.

According to the data of Newsec, the international real estate consulting services company, Vilnius had 2.9 per cent of vacant offices at the end of 2015, which according to this indicator put it on the first position among the largest European cities. At the end of 2016, the average vacancy rate (vacant office space) reached 4.8 per cent, of which 3.5 per cent in class A and 5.5 per cent in class B office buildings. At the beginning of 2017, the vacancy rate in the capital of Lithuania amounted to 5.6 per cent, of which 3.4 per cent in class A and 6.8 per cent in class B office buildings.

According to Jurgita Šilaikytė, the Head of Brokerage at Newsec, the supply and demand situation of the office market in Vilnius is strong and balanced.

“Last year the rented office area in Vilnius comprised 72,000 sq. m., while the average vacancy rate of open office buildings at the moment of opening was very high and reached nearly 70 per cent. At the end of the year, the average vacancy rate of all modern offices amounted to 4.8 per cent. As a comparison, in thriving European markets a vacancy rate of 7-8 per cent is considered to be a strong rate.

In the current and coming years the office market in Vilnius will add almost 140,000 sq. m. of new office area. Class A offices are expected to comprise as much as 68 per cent of the new supply. This allows a forecast of a consistently growing vacancy rate and wide choices offered to tenants, however there will be no excess of vacant office space, as the majority of tenants have already concluded lease agreements with the owners of buildings currently in construction,” stated J. Šilaikytė.

According to the Newsec representative, a low vacancy rate in other European cities is determined by economic aspects: office demand in Berlin with a mere 2.8 per cent of vacant office space is a result of the economic growth in the region, however the supply remains limited. A similar situation can be observed in Zurich, where the vacancy rate is only 2.9 per cent and business development stimulates companies to move into modern offices. High office demand in Munich is a reflection of the strong economy, while last year’s 4.2 per cent vacancy rate is the lowest in the past 15 years.

The highest vacancy rate of as much as 15 per cent is reported in Warsaw. Significant vacant space is also registered in Amsterdam (13.6%) and Helsinki (13.5%).

In 2015, the office space supply in Warsaw reached a record level of 660,000 sq. m., which was supplemented by another 410,000 sq. m. of new space last year. This space has not been rented on time, which caused a dramatic increase of the vacancy rate. The historic high vacancy rate in Amsterdam is gradually dropping – the rent of vacant offices is promoted by the economic growth. Last year, the vacancy rate in the centre of Helsinki went up, while its decrease was registered outside the city centre. This is a result of high office rent prices in the centre and preference given to offices with a smaller area.

The newest data on the vacancy rate have been published in the European Office Market Report presented by BNP Paribas Real Estate and in the Inside Vilnius Office Market Q1 2017, a review published by Newsec. Newsec is the official member of BNP Paribas Real Estate alliance performing the research.

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