Grade A space is expanding to meet improved demand
After years of comparatively low activity, the Riga office market started showing signs of expansion. The city is set to grow by about 90,000 sq m of modern office stock that will be commenced in 2019-2020. Falling vacancy rates for both class A and B premises show demand for new premises. Historically, class A made up just 15% of all stock, but this proportion is expected to increase in the coming years with the new development.
With increasing development activity, Riga is seeing a number of office clusters beginning to form. There are speculations as to which part of the city will become central to business activities. The Skanste area remains a prime candidate with plans to develop several different business campuses. However, the west bank of the Daugava river is most likely to become the prime office cluster, as several developers have invested in land plots and plan on developing modern business centres.
Lithuanian investors buy properties for development in Riga
The office segment is particularly appealing to investors – the Riga office segment accounted for 60% of transaction volume. Lithuanian investors are acting as developers and are planning to invest more than €600m in new projects construction in Riga. Owing to a relatively small amount of local investors and an underdeveloped office market, Riga remains attractive to international players. Large-scale investors such as Hanner, Lords LB Asset Management, Capitalica Asset Management and Vilniaus Prekyba intend to invest in development in the office, retail and residential real estate sectors.