Office net absorption on the rise
At the end of 2016 the stock of modern office premises in Vilnius reached 526,700 m². Openings of five large projects in 2016 increased total office stock by 19%. It is expected that during 2017–2018 approximately 140,000 m² of new office space will be commissioned in Vilnius. More than two thirds of the new stock will be Grade A offices in the CBD.
The average vacancy rate of classified office buildings in Vilnius increased to 4.8% (3.5% for Grade A offices and 5.5% for Grade B offices)and is expected to grow further due to scheduled openings in coming years.
The average market rent for existing prime office premises in Vilnius CBD stood at a range of €168-€192/m²/year. The average rent rates for both Grade A and Grade B properties have been increasing slightly for the past few years.
The major office lettings completed in 2016 were dominated by shared service centres operators and IT companies that already occupy nearly 25% of all office space in Vilnius and are expected to grow further. Almost twice the long-term absorption average of 35,000 m² per year occurred in Vilnius in 2016. Advanced deals are typical in the Vilnius office market as leases are often signed 6 to 18 months prior to hand over of space.
Investment in commercial real estate in Lithuania remains well above average
The property investment market was also active in 2016. Lithuania collected near €300 m. for the third year in a row. More than half of it was recorded in the capital city Vilnius. In 2016, the most active investment segment in Vilnius was the office market, which took more than 33% of all investment. In 2017, only a slight increase in commercial real estate investment is expected.
Despite growing international attention for the Baltic States, key investors are predominantly Nordic, Baltic and Russian players. Dominating the investor type are international funds with established presence, along with local funds and private investors.