This post was automatically translated into English
For the second year in a row, the occupancy rate of business centers in Vilnius has reached record highs, not seen since 2007.
For the second year in a row, the occupancy rate of business centers in Vilnius has reached record highs, not seen since 2007. Although four new business centers opened their doors in Vilnius last year, and the total office space increased by 14 thousand square meters, the vacancy rate of A and B+ class business centers in the capital does not even reach 2 %.
“As in 2013, the growth in office demand in 2014 was driven by the improving economy of the country, the arrival of new international companies to Lithuania, and business development,” says Viktorija Orkinė, Director of the Asset Management Department of Eika.
There is a noticeable trend that companies tend to allocate more funds to rented premises and move from class B business centers to class A and B+ offices. For example, almost all companies that have recently moved into “Eikos Business Center” were previously located in class B business centers.
“Companies moving to new premises are investing more in their equipment and office furniture. More attention is paid to the comfort of employees: bicycle storage rooms, showers, as well as larger kitchenettes and employee leisure areas are installed, for which the most attractive premises are given, for example, with the most beautiful panorama. Previously, this view would probably have been the location of the management or director’s office,” – the representative of “Eika” lists the changes in rent. “As open-type offices become more popular, small conversation rooms – “booths” are becoming relevant.”
The most noticeable change is in the needs of tenants. The market is dominated by demand for larger offices, the area of which ranges from 500 to 2000 square meters. The main requirement is the largest possible typical floor area, therefore this trend is reflected not only in business centers under construction, but also in those being designed. Other criteria remain important, such as the location of the office, developed infrastructure near the business center and maintenance costs.
Until mid-2015, the vacancy rate in Vilnius A and B+ class business centers will remain minimal. Currently, the largest number of small companies renting premises up to 150 sq. meters are migrating, while large companies have already moved or are waiting to move to new business centers. More changes in the office market will occur after mid-2015, when the business centers currently under construction – “Quadrum”, “K29”, “Uniq”, “Premium”, “Vertingis” – will be completed.
With the opening of new business centers, it is likely that vacancy will increase for a while in all business center segments, but in the longer term, the number of vacant office spaces in class A and B+ will decrease and stabilize. Meanwhile, it will be more difficult for class B business centers to reduce vacancy. Previously built A and B+ office buildings will have to invest in system improvements and modernization in order to maintain their current class. Otherwise, the gradually decreasing value of “old” business centers will be reflected in office rental prices. The manager’s ability to quickly respond to tenant problems and the ability to maintain good relations with them will also have a significant impact.
“For example, in 2014, 86% of transactions at Eika Business Center consisted of contract extensions with existing tenants and 14% of new lease agreements, calculated on the leased area. We also have companies that have been with us since the opening of the business center in 2003 and 2006. As one of the main reasons why companies extend contracts and remain in our business center, company managers and employees indicate friendly relations with the manager, quick response to emerging problems, a solid business environment, a large parking lot, a great location in the city and a spacious view from the windows of the nearby Neris River and the Old Town,” says an Eika representative.
About the Eika group of companies
Founded in 1992, the company “Eika” is one of the largest real estate development and construction groups in Lithuania. The group of companies consists of: UAB “Eika” – a leader in the real estate market, valued for its innovation, reliability and responsibility; UAB “Eikos statyba” – a construction company with extensive experience in the construction and renovation of administrative, public, commercial, industrial and residential buildings.
More information:
Victoria Orkinė
Director of the Asset Management Department at UAB “Eika”
