Strong office development activ ity continues

Transcription

1 New stock, sq m Riga Office, Q4 216 Strong office development activ ity continues 595,6 sq m 3.9% 1,56 sq m 9,85 sq m 7. *Arrows indicate change from the corresponding quarter in the previous year Figure 1: Modern Office Stock Completions from and Forecast for 217F-219F F 218F 219F Completions (speculative) Completions (B-T-S) Forecast completions Stock growth, % KEY POINTS According to the flash estimate annual real GDP increased by 2.1% in Q4 216 when compared to Q The annual GDP growth is set to achieve 1.6 % for 216 OFFI CE SUP P LY Unemployment fell by up to 9.5% during 216 and will decrease in the next two years by at least 1 percentage point. Estimations regarding GDP in 217 are positive and we foresee growth accelerating by 2.7% Riga modern office stock currently stands at the level of 595,6 sq m In Q4 216, total leasing activity exceeded 1, sq m, while the overall vacancy rate remained stable Prime net rents for smaller premises up to 1, sq m stood at the level of EUR/sq m/month; larger offices were offered for EUR/sq m/month in the market COM P LETI ONS IN R I GA In 216 CBRE estimates total investment volume for cash flow generating office buildings in Latvia at about 88.6 m EUR in total, showing an increase by 2 if compared with 215 Q CPB Real Estate Services, Affiliate of CBRE 217 1

2 Figure 2: Largest Speculative Office Schemes Under Construction in Q4 216 H1 217 Teraudlietuves Biroji, 2nd stage, Spec./BTS GLA 1,9 sq m H1 217 Place Eleven, Spec. GLA 15, sqm H1 217 Katrinas Osta GLA 1,6 sq m H1 218 H2 217 TEODORS at JAUNA TEIKA, Spec. Z-Towers, Spec. GLA 15,2 sq m GLA 24, sq m H2 218 AKROPOLIS, Spec. GLA 9, sq m Figure 3: Riga Total Modern Office Stock Development Total stock, sq m Completions, sq m *Excluding Stock Withdrawals Figure 4: Office Completions in 216 Air Baltic HQ Location Tehnikas street 3, Marupes district Developer Reverta/NIF Projekts 1 Anchor tenants Air Baltic Corporation DEM AND Teraudlietuves biroji, stage 1 Location Developer Anchor tenants Mukusalas street 42, Riga MBC/Realto Tele2 Shared Service Centre D91 Location Darzciema street 91 Developer Anchor tenants New View Estates Latvia Idea Port Riga, Europart Latvia Source: Office Landlords, January 217 Q CPB Real Estate Services, Affiliate of CBRE 217 2

3 Figure 5: Largest Speculative Office Projects to be Started in 217 SWH BC facade offices, Spec. Developer: SWH Grupa GLA 9,5 sq m BUSINESS GARDEN RIGA, 1st stage Developer: VASTINT GLA 14,2 sq m VALDEMĀRA BIROJI, Developer: LNK Properties GLA 5, sq m CARL ZEISS, Developer: Mukusalas Biznesa Centrs GLA 4, sq m Figure 6: Distribution of Take-Up by Location in Riga, % 22% 19% 43% Skanste Centre Pardaugava Other Figure 7: Distribution of Office Lease Transactions by Size of the Accommodation 216 V A CA NCY 6% 4%3% 25% -15 sq. m 15-3 sq. m 17% 3-5 sq. m 5-1, sq. m 1,-1,5 sq. m 15% 1,5-3, sq.m 3 3,-1, sq.m Figure 8: Distribution of Leased Office Space by Size in terms of Total Area Leased 17% 18% 12% 5% 14% 12% 22% -15 sq. m 15-3 sq. m 3-5 sq. m 5-1, sq. m 1,-1,5 sq. m 1,5-3, sq.m 3,-1, sq.m Q CPB Real Estate Services, Affiliate of CBRE 217 3

4 Sofia Zagreb Prague Tallinn Riga Vilnius Katowice Krakow Lublin Poznan Szczecin TriCity Warsaw Wroclaw Bucharest EUR/sqm/month Figure 9: EMEA Office Market Rent Cycle Table 1: Vacancy Rate Vacancy Rate Q4 216 Q4 215 Overall 3.9% 4.4% M A R K ET R ENTS Class A 1.3% 3.2% Class B1 4.7% 6. Class B % Figure 1: Yields and Rents e Prime Rent, EUR/sq m/month Prime Net Yield, % (the right axis) Average Rent EUR/sq m/month Overall Vacancy Rate, % (the right axis) Figure 11: Prime Rents in CEE region countries I NV ESTM ENT I N THE OFFI CE SECTOR 25, 2, 15, 1, 5,, -5, -1, /sq m per month Change, y-o-y, % Q CPB Real Estate Services, Affiliate of CBRE 217 4

5 Millions Figure 15: Riga Office Market Indicators Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Vacant Space, sq m Completions, sq m Take-Up, sq m Absorption, q-o-q, sq m Vacancy Rate, % (the right axes) 8% 7% 6% 5% 4% 3% 2% 1% Figure 16: Investment * Volume by Sector in Latvia I NV ESTM ENT A ND A CQUI SI TI ONS IN Office Retail Industrial Mixed-Use Hotel Other *Only cash flow generating commercial properties, with transaction volume above 1 million EUR Figure 17: Investment by Sector in Latvia in 216 1% 1% 6% 3 62% Office Retail Industrial Mixed-Use Hotel Source: CPB Real Estate Services, part of the CBRE Affiliate Network, January 217 FULL TI M E EM P LOYEES IN M ODER N OFFI CES Figure 18: Investment by Sector in the in % 37% 37% Office Retail Industrial Mixed-Use Hotel Q CPB Real Estate Services, Affiliate of CBRE 217 5

6 sq m/per emplyee Figure 12: Estimated Office Occupiers in Riga, e 25% 2 15% 1 5% -5% -1-15% -2-25% 22% 22% 23% 22% 23% 23% 23% 23% 24% 25% 26% e 3, 25, 2, 15, 1, 5,, Total employees in Riga, Change, %, y-o-y Change of estimated office employees* in Riga, %, y-o-y Share of office employees in Riga, % (right axis) *Estimated office occupied posts in Riga, including the six main sectors as the largest office occupiers Source: Latvia Statistics, CPB Real Estate Services, part of the CBRE Affiliate Network Figure 13: Growth of Main Office Occupied Sectors During the Last Ten Years Information and communication Financial and insurance activities In particular, technology s influence on building selection, workplace change and innovation in CRE processes will become increasingly important. Real estate activities Professional, scientific and technical activities Administrative and support service activities Gambling and betting activities Source: Latvia Statistics, CPB Real Estate Services, part of the CBRE Affiliate Network Figure 14: Modern Office Space per One FTE, e e Modern office stock per employee, sq m Change of estimated office employees* in Riga, %, y-o-y (right axis) Modern office stock change**, %, y-o-y (right axis) *Estimated office occupied posts in Riga, including the six main sectors as the largest office occupiers **State owned office buildings excluded, only private modern stock (built-to-suit and speculative) Q CPB Real Estate Services, Affiliate of CBRE 217 6

7 RESEARCH DEFINITIONS Total Modern Stock represents the total completed class A and B space (occupied or vacant) in the private and public sector at the survey date. Includes owner occupied (OO) space. Vacant Space represents the total net rentable floor space in existing properties, which is physically vacant and being actively marketed as at the survey date. Vacancy Rate - represents the percentage ratio of total Vacant Space to Modern Total Stock. Take-Up Represents the total floor space, including renewals, known to have been pre-let, sold or pre-sold to tenants or owner-occupiers during the survey period. Prime Rent Represents the top open-market tier of rent that could be expected for a unit of standard size (commensurate with demand in each location), of the highest quality and specification and in the best location in a market at the survey date. The Prime Rent should reflect the level of which relevant transactions are being completed in the market at the time. If there are no relevant transactions during the survey period, the quoted figure will be more hypothetical, based on an expert opinion of market conditions. Absorption represents the change in occupied stock within a market during the survey period. Net Effective Rent represents a rent that would be achieved, less the incentives paid by the owner. The average net effective rent for a market is the market net base rent less incentives which are amortised over the term of lease. ABOUT CPB R EAL ESTATE SER V I CES: Part of the CBRE Affiliate Network Headquartered in Riga, Latvia from 211 Headcount 22 people Providing services in: Valuation, Consulting & Research, Property Sales, Property & Asset Management, Tenant Representation, Agency Services Retail, Offices, Industrial & Logistics. CONTACTS Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CPB Real Estate Services.