Lithuanian Commercial Market Commentary Q4 2011
Although the development of the Lithuanian commercial property market was quite sluggish in 2011, there was nonetheless, to the joy of property owners, a little price growth. Compared to 2010, property development volumes in this sector in 2011 were a third higher, but they were considerably lower than the quantity of floor area built in previous years. In 2011, developers in major Lithuanian cities carried out projects to construct office, retail and warehousing premises totalling 70,000 sqm of leasable area. This is almost six times less than the amount that was built annually in 2007–2009. This situation was caused by the natural response of developers to processes taking place both in the real estate market and the economy of the country. Projects are now being developed only if there is prior assurance concerning the occupancy of the building, i.e. by concluding lease contracts or other significant agreements in advance. This turn of events has led to a decrease in investment in the construction of new commercial buildings based on the belief in optimistic future prospects, but not on specific contracts.
In 2011, one office building, Evita, was built in Vilnius, and that was the only office building opened in the three major cities in Lithuania (Vilnius, Kaunas and Klaipėda). This new project supplemented the modern office market in Vilnius by 2,300 sqm and did not have any major impact on the development of the market. The total supply of modern offices in the capital city in 2011 increased just 0.5% and amounts 446,500 sqm. The shortage of new supply influenced the positive developments in the occupancy rate of office premises. Over the last quarter of 2011, the vacancy rate of office premises in Vilnius decreased from 9.4% to 8.8%. At the end of 2010, this indicator was 9.9%. The total area of vacant office premises in Vilnius at the end of 2011 decreased to 39,400 sqm. The overall vacancy rate of modern office premises in Kaunas decreased from 6.3% to 5.4% and amounted to 4,100 sqm, and in Klaipėda the vacancy rate fell from 18.6% to 17.5% and amounted to 10,600 sqm of area available in completed business centres.
Although the development of the Lithuanian commercial property market was quite sluggish in 2011, there was nonetheless, to the joy of property owners, a little price growth. Compared to 2010, property development volumes in this sector in 2011 were a third higher, but they were considerably lower than the quantity of floor area built in previous years. In 2011, developers in major Lithuanian cities carried out projects to construct office, retail and warehousing premises totalling 70,000 sqm of leasable area. This is almost six times less than the amount that was built annually in 2007–2009. This situation was caused by the natural response of developers to processes taking place both in the real estate market and the economy of the country. Projects are now being developed only if there is prior assurance concerning the occupancy of the building, i.e. by concluding lease contracts or other significant agreements in advance. This turn of events has led to a decrease in investment in the construction of new commercial buildings based on the belief in optimistic future prospects, but not on specific contracts.
In 2011, one office building, Evita, was built in Vilnius, and that was the only office building opened in the three major cities in Lithuania (Vilnius, Kaunas and Klaipėda). This new project supplemented the modern office market in Vilnius by 2,300 sqm and did not have any major impact on the development of the market. The total supply of modern offices in the capital city in 2011 increased just 0.5% and amounts 446,500 sqm. The shortage of new supply influenced the positive developments in the occupancy rate of office premises. Over the last quarter of 2011, the vacancy rate of office premises in Vilnius decreased from 9.4% to 8.8%. At the end of 2010, this indicator was 9.9%. The total area of vacant office premises in Vilnius at the end of 2011 decreased to 39,400 sqm. The overall vacancy rate of modern office premises in Kaunas decreased from 6.3% to 5.4% and amounted to 4,100 sqm, and in Klaipėda the vacancy rate fell from 18.6% to 17.5% and amounted to 10,600 sqm of area available in completed business centres.
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