Lithuanian commercial real estate market is stabilizes

Industrial

Property consultant Colliers has reported that Lithuania’s commercial real estate segment is showing stabilization.

Increasing supply of office premises is forecasted to exceed the demand in the nearest two years, while the market of warehousing premises has already reached its intensive growth stage, the agency said in a press release. Besides, growth of commercial real estate market became more even at the national scale – increasing number of projects are developed not only in Vilnius but in other cities as well.

Growth of supply of office premises is in particular active in Vilnius.  In 2007, offices of the total area of 32,000 square meters (sq.m) were on supply. According to the forecasts of Colliers International, this year the supply of new premises will increase more than twice – up to 75,000 sq.m.  In 2009, the area of new premises should be two times bigger and increase up to 147,000 sq.m.  “When the area of offices in Vilnius reaches 403,000 sq.m. after the year 2009, the supply will be satisfied, the area of vacant offices in the office centres may increase for a while,” said Managing Director of Lithuanian Unit of Colliers International Marek Kavalevski.

The Kaunas market is awakening – upon construction of 3,000 sq.m. office premises this year and 5,000 sq.m. last year, the supply of new office premises in 2009 will jump up to 43,000 sq.m.  Upon construction of 22,000 sq.m. office premises in Klaipeda this year, the total area of modern premises will increase up to 72,000 sq.m., and the demand will be satisfied in full. 

Offices of over 300 sq.m. area remain the most popular in the capital city, in Kaunas and Klaipeda - premises under 200 sq.m. area.  Lease prices underwent 10%-20% rise in all three cities in the last year, the same dynamics should remain this year as well.

Supermarkets hardly had any vacant areas in 2007, while their lease prices remained stable, they should not experience any drastic jump this year either.  “Area intended for commerce undergoes intense growth in Siauliai - by the commercial area per 100 inhabitants, soon this city will leave Kaunas and Vilnius behind.  Among other trends - intensive development of small retail chains in smaller towns and developments of specialised “do it yourself,” renovation and finish shops can be mentioned”, said M. Kovalevski.

By the warehousing area per region, Vilnius has the biggest area in Lithuania, but the share of warehousing area market is declining in the capital city.  According to M. Kovalevski, Kaunas has the biggest potential to become the logistics center, this city also experiences the most rapid growth – in the year 2007 alone, the warehousing area increased by more than three times.

In Klaipeda, a lot of warehousing projects are still in planning phase currently, while growth of areas can be expected as soon as this year.  Colliers International also suggests paying attention to Panevezys.  It is an attractive location for logistics centre, while the land price is 5 – 6 times lower than in Kaunas or its outskirts. “Upon joining the Schengen area, Lithuanian companies are capable of offering more efficient and faster servicing of neighbouring Baltic markets. Strategically convenient geographical position, Via Baltica motorway, supply of labour force and competitive premises lease prices make development of logistics in Panevezys region attractive not only for Lithuanian but also for neighbouring Latvian and Estonian companies,” said Kovelvski.

Warehousing premises of the area 2 ,000 – 2,500 sq.m. are the most popular in Lithuania, but premises of the area 500 – 800 sq.m. are also in demand.

Analysing situation in the Lithuanian hotel market, experts of Colliers International notice a number of positive factors which will help to sustain the trend of hotel occupancy growth in the future. “Joining the Schengen area, reconstruction and development of airports, forecasted growth of recreational tourism and foundation of SPA centres, sanatoria and health complexes dealing with seasonal occupancy problem - all these factors will determine growing hotel areas in the future,” stated. M. Kovalevski.

When considering changes that took place in this market last year, the most striking novelties were opening of new hotels in Kaunas and Trakai, and change of owners of several hotels.  The biggest gap between the demand and supply is observed in the segment of economy hotels, the demand is not satisfied. (press release)

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