Although the indicators of the shopping streets in the capital city worsened, more daring businesses see potential

With more than a year since the first wave of the COVID-19 pandemic, Ober-Haus experts have evaluated how the situation has changed in the main shopping streets of Vilnius where the mood has been largely changeable.

“The entire retail and retail property sector in Lithuania has been facing a variety of challenges during this period. Smaller retailers found the period particularly difficult. The rapidly changing pandemic situation in the country, regular need to adapt to changing safety requirements and the limited financial capacity of small businesses have made the tenants of small retail premises particularly vulnerable,” Raimondas Reginis, Market Research Manager for the Baltics at Ober-Haus, said.

A survey on the situation in the main shopping streets (Gedimino Ave., Pilies St., Didžioji St., Vokiečių St.) of the city of Vilnius conducted by Ober-Haus in mid-2020 and mid-2021 shows that the situation is still stressful. If in mid-2020 the vacancy rate in these streets stood at 11.0%, so in mid-2021 it slightly increased to 11.9%.

“In the summer of 2020, people returned to shopping streets and injected optimism to retailers, particularly to the largest group of tenants – restaurants, cafes, bars and fast food outlets, which account for 38% of all retail premises in these streets of the capital city,” Reginis said.

With the lifting of the lockdown, people who have missed socializing and recreation occupied outdoor seating areas of retailers who provide food and beverage services and improved the performance indicators of such retailers. According to Statistics Lithuania, the turnover of food and beverage suppliers in Lithuania in H2 2020 increased by 27% compared to H1 2020. However, the overall performance in H2 2020 in this business sector remained 19% lower compared to record indicators in H2 2019. The second wave of the coronavirus made businesses essentially close again and at the end of 2020 the performance indicators noticeably declined again. In H1 2021, the performance indicators of food and beverage suppliers remained modest and were 9% lower than at the same time last year and 32% lower than in H1 2019.

According to Ober-Haus, in mid-2021, the highest vacancy rate was recorded in Pilies Street – at 18.5% and the lowest vacancy rate was recorded in Didžioji Street (9.1%). The vacancy rate in Gedimino Avenue stood at 11.0% and in Vokiečių Street – 10.2%.

Within a year, the highest increase in vacancy rate was in Pilies Street (from 11.3% to 18.5%), where over 50 retail units are based (located on the ground floor of the building, with at least one window facing the street and suitable for commercial activities).

Raimondas Reginis, Market Research Manager for the Baltics at Ober-Haus

“Since the overall number of retailers is not large, a few vacant retail premises can significantly change the relative indicator of the vacant space. On the other hand, Pilies Street is probably the most popular street visited by foreign tourists in Vilnius, so during the pandemic, the footfall decreased significantly affecting revenues of retailers,” Reginis noted.

Meanwhile, on Vokiečių Street there was one vacant space less in mid-2021 than a year ago, and the figure for the vacancy rate decreased from 12.5% to 10.2%. Despite the relatively small vacancy rate, the owners and tenants of this street will be facing additional challenges. This year, the renovation of the district heating system started on Vokiečių Street, and cafes and restaurants have to adapt to the works and to relocate or close their outdoor seating spaces. Once the renovation of the heating system is completed, the renovation of the entire Vokiečių Street will start, and the terms of the reconstruction have not yet been finalised.

“It is clear that the renovation works will significantly reduce the flow of potential customers in the street and this will affect all businesses located in the street, which, in addition, will have to deal with the challenges posed by the current pandemic. Therefore, the owners of retail premises on Vokiečių Street may expect the rise in the number of vacant premises in the coming years and the decrease in rental revenues,” Reginis said.

The structure of the tenants in the main shopping streets of the capital city has not changed substantially during the year. According to Ober-Haus, in mid-2021, most of the premises were occupied by restaurants, cafes, bars and fast food outlets and their share during the year decreased slightly from 38.6% to 37.9%. The share of clothing and footwear retailers accounted for 19.2%, jewellery, accessories, souvenirs and cosmetics – 14.9%, food stores – 3.1%, and the remaining 24.9% were beauty salons, offices, pharmacies, banks, bookstores and other retail or services units.

Given that the pandemic situation in the country is either improving or deteriorating, the expectations of the owners of retail premises in respect to the rental income remain uncertain. If some owners of such premises can offer lower rents than they were before to potential tenants, so other owners still expect to sign long-term lease contracts securing pre-pandemic rents.

In mid-2021, rents for medium-sized (about 100–300 sqm) retail premises in the main shopping streets of Vilnius (Gedimino Avenue, Pilies Street, Didžioji Street and Vokiečių Street) stood at 15.0–40.0 EUR/sqm and were on average 12% lower than those at the end of 2019. However, there are cases where owners of the premises sign long-term lease contracts with new tenants at 25-20% lower rents than they could lease before the pandemic started.

The overall indicators show that there is little optimism in the shopping streets of Vilnius, but interest in available retail space is not lost. “Some businesses see long-term prospects of these streets and the current market situation opens up much wider opportunities for them. If it was generally difficult to find suitable premises before the pandemic even by offering historically record rents, today the choice is wider and the rents are more attractive. Therefore, more daring entrepreneurs are trying not to miss their chance and are actively interested in their business development opportunities in the prestigious locations of the city,” Reginis said.

Latest news

All news
Ober-Haus Celebrates 25 Years: How Has the Property Market Changed in a Quarter of a Century?
2023-11-07

Ober-Haus Celebrates 25 Years: How Has the Property Market Changed in a Quarter of a Century?

In 1998, the Lithuanian real estate market was characterised by a lack of housing, poor credit conditions and an underdeveloped commercial real estate sector. Over the last 25 years, the number of apartments for sale has increased more than 10-fold, housing market activity has almost quadrupled, lending rates have fallen from double to single digits, and modern office buildings and shopping malls are now numbering in the hundreds – that’s the picture according to the Ober-Haus Real Estate Market Review 1998–2023, conducted to celebrate the company’s 25th anniversary. The Year 2000 Marked the Beginning of the Creation of the Lithuanian Real Estate Market The years 1998–2000 can be considered as the period when the real estate sector in Lithuania began to evolve. Due to the absence of credit services, the Lithuanian population was mostly only able to purchase a home using their own funds, and commercial construction with the intention to sell or lease was in its infancy. And so, 25 years ago, investors were developing single apartment blocks, business/office assets and shopping centres, where any new development for sale or rent was regarded as a significant event in the real estate market. The Russian economic crisis, which began in…

Buyers Show No Interest in Overpriced Housing
2023-10-24

Buyers Show No Interest in Overpriced Housing

The Ober-Haus Apartment Price Index for Lithuania (OHBI), which captures changes in apartment prices in the five largest Lithuanian cities (Vilnius, Kaunas, Klaipėda, Šiauliai and Panevėžys), remained unchanged in September 2023 (August 2023 figures had shown 0.4% growth). The overall level of apartment prices in Lithuania’s major cities grew by 2.6% over the last 12 months (an annual growth of 4.9% in August 2023). In September 2023, Klaipėda, Šiauliai and Panevėžys recorded 0.2%, 0.3% and 0.4% growth respectively, and the average price per square metre rose to EUR 1,613 (+3 €/m²), EUR 1,103 (+3 €/m²) and EUR 1,078 (+4 €/m²). Meanwhile, in Vilnius and Kaunas, the average price per square metre decreased by 0.1% month-on-month to 2.568 Eur (-3 €/m²) and 1.724 Eur (-2 €/m²) respectively. Over the year (September 2023 as compared to September 2022), apartment prices grew in all major cities of the country: in Vilnius – by 2.6%, in Kaunas – by 3.2%, in Klaipėda – by 1.6%, in Šiauliai – by 3.7%, and in Panevėžys – by 2.5%. The stagnation period in the Lithuanian housing market continues. Although the market activity indicators do not show any signs of improvement, the majority of home sellers have not…

Office sublease: thousands of invisible square metres
2023-10-02

Office sublease: thousands of invisible square metres

In the office segment, the phenomenon of sublease – the transfer of part of a company’s leased premises to a third party – became popular during the pandemic and has remained since. The market of subleased property is usually not included in the official statistics published by real estate agencies. According to OBER-HAUS, current tenants of Class A and Class B+ business centres in Vilnius alone could be offering several thousand or even tens of thousands of square metres of space for sublease. Sublease is usually simply understood as renting space not directly from the owner or manager of a business centre, but from an existing tenant established and operating in the business centre. The principle of sublease itself existed long before the pandemic, but has only become more popular in recent years as businesses switched to remote or hybrid work, consequently, the amount of space required for their operations has decreased. OBER-HAUS estimates that since the beginning of the pandemic, the average office space in Vilnius has decreased by about 30%. In other words, companies entering into new contracts today are renting office space by almost a third smaller than a few years ago. However, office lease contracts are…

All news

This website uses cookies. You can confirm your acceptance by clicking the "I Agree" button or by continuing to browse. I agree

Mail sent!

This site is registered on wpml.org as a development site.