Latvia : Riga office marketYear 2016
- New projects are underway to improve supply with higher quality buildings
- The vacancy rate decreased to 6.5%, by far the lowest level in 5 years
- Retail accounts for 60% of the Latvian investment market
The vacancy rate decreased to 6.5%, by far the lowest level in 5 years
Riga office stock exceeded 600,000 m² at the end of 2016. New deliveries of modern offices were negligible during the last three years. A few new small-sized office buildings and premises were completed in 2016 with total area of approximately 7,000 m². The vacancy rate in Riga slightly decreased in 2016 and stood at around 6.5%. It is forecasted to increase a few percentage points in the upcoming years because of stock growth. Average rent rates are expected to remain stable with new office buildings offering higher quality standards likely to see better rental performance.
A number of big premium offices are currently under construction, including Z-Towers and Place Eleven. Several projects, including Business Garden Riga, Ulmana Offices Park, Jauna Teika, New Hanza City, Skanstes office building and others are expected to start construction in 2017. As a result, supply could potentially increase sharply by 2018.
Retail accounts for 60% of the Latvian investment market
Total transaction volume of Latvia exceeded €300 m. in 2016. The retail segment was dominant accounting for 60% of all investments, while the office segment took a 35% share. A similar investment volume is expected in 2017. Though yields have decreased significantly during the recent years, there is still an attractive gap compared to Western European levels. Average yields for prime office assets remain at around 7%.