Office market: what are the bold plans of developers worth?
The start of 2012 did not bring any major changes to the Lithuanian commercial real estate market. Construction of commercial premises continued, new projects were introduced to the market, and attempts were made to lease or sell existing vacant premises. Movement in this sector was stronger in Vilnius after developers decided last year that it was time to revive the dormant commercial property market and to continue, as well as resume construction of new modern office buildings.
The development of business centres in Lithuania’s capital has become the mainstay of the commercial sector. In 2010, rapidly decreasing vacancies in office premises and the suspension of construction projects in the commercial premises sector determined the rather bold decision by developers to revive or resume the construction of new business centres. Earlier this year, reconstruction of a small business centre (about 2,000 sqm usable office area) was completed in the Vilnius district of Naujamiestis, Vytenio Street. The opening of such a small facility will not affect the Vilnius office market unlike other much larger projects currently being implemented, which will undoubtedly affect the performance of this sector. There are currently seven business centres under construction in the capital, with the consequent future availability of an additional 32,800 sqm of modern office space. Despite the rapidly growing competition, plans launching the construction of at least three other large business centres in the near future have been announced (the largest of these is the Quadrum business centre on Constitution Avenue). In view of these pending projects, the modern office market in Vilnius should theoretically be supplemented with over 80,000 sqm of usable office space over the next two years. The question naturally arises whether this planned investment is justified, and whether the capital needs this much office space in the near future?
The start of 2012 did not bring any major changes to the Lithuanian commercial real estate market. Construction of commercial premises continued, new projects were introduced to the market, and attempts were made to lease or sell existing vacant premises. Movement in this sector was stronger in Vilnius after developers decided last year that it was time to revive the dormant commercial property market and to continue, as well as resume construction of new modern office buildings.
The development of business centres in Lithuania’s capital has become the mainstay of the commercial sector. In 2010, rapidly decreasing vacancies in office premises and the suspension of construction projects in the commercial premises sector determined the rather bold decision by developers to revive or resume the construction of new business centres. Earlier this year, reconstruction of a small business centre (about 2,000 sqm usable office area) was completed in the Vilnius district of Naujamiestis, Vytenio Street. The opening of such a small facility will not affect the Vilnius office market unlike other much larger projects currently being implemented, which will undoubtedly affect the performance of this sector. There are currently seven business centres under construction in the capital, with the consequent future availability of an additional 32,800 sqm of modern office space. Despite the rapidly growing competition, plans launching the construction of at least three other large business centres in the near future have been announced (the largest of these is the Quadrum business centre on Constitution Avenue). In view of these pending projects, the modern office market in Vilnius should theoretically be supplemented with over 80,000 sqm of usable office space over the next two years. The question naturally arises whether this planned investment is justified, and whether the capital needs this much office space in the near future?
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