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Market Research - Lithuania

Lithuania : Vilnius office market - March 2020

Low vacancy drives office preleasing and construction activity

A record level of take-up supports active development

By the end of 2019, the stock of mod-ern office premises in Vilnius totalled 724,100 sqm and the vacancy rate re-mains among the lowest in the Baltics. Around 300,000 sqm of new supply is under construction to meet improved demand. The record level of new lease transactions at 115,000 sqm in 2019 signals increasing demand for high quality newly developed space.  Net absorption remains positive indicating that the market remains attractive to newcomers as well as existing tenants. 


Tenants are coming from many sources. In the global business services sector, Vilnius have attracted some of the biggest names from the Fortune 500, including Moody‘s, AmerisourceBergen and McKesson. Vilnius is also experiencing development of the FinTech sector, which has already gained momentum and the biggest tenants such as Revolut are now present. The largest lease transactions in Vilnius included Tesonet who signed for 15,000 sqm in Sparta Campus, while Danske Bank Group IT Lithuania signed for another 13,000 sqm forming its campus in S7 office complex. Among the most significant was the Lithuania’s first tech unicorn Vinted who decided to relocate and signed 9,000 sqm in Uptown Park. Low vacancy is likely to remain as most of these transactions are pre-let.
 

Increased foreign investor confidence in the office market 

 

In 2019, the total investment volume in Lithuania was €436m, which is the highest ever recorded. Investors focused most money at the capital city Vilnius with a smaller share of capital allocated to the second city Kaunas. The office segment accounted for 76% of the total volume. Nordic and Western Europe investors drove market growth and responsible for large office transactions that brought renewed profile to Vilnius. Two of the largest office investment transactions in the Baltics history occurred in 2019. In February 2019, Eastnine purchased S7 office campus in Vilnius for more than €128m. At the end of 2019, Deka Immobilien bought a Quadrum business city from Schage Real Estate for more than €156m. It will be a challenge to maintain similar investment activity in 2020. Therefore, yield compression is no longer expected and will remain below 6% in the CBD.
 

 

Vilnius EOM - March 2020
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