Photo credit: Mukusalas business centre Riga Offices, Q 7 Limited new supply pushes vacancy level down 68, sq m.8 % 4,5 sq m 4,695 sq m 6.8 Picture: TELE Shared Service Centre: Teraudlietuves biroji, nd stage *Arrows indicate change from the corresponding quarter in the previous year KEY POINTS The Riga office market currently accounts for ca. 68, sq m of modern office space, taking into account withdrawals of,6 sq m during Q 7 In Q 7 the total modern office stock increased by 6,79 sq m or by.% if compared with Q 6 The stock was updated with two new speculative office buildings during Q 7 - Katrinas Osta and Place Eleven, which is located in the newly forming central business district Skanste The overall vacancy rate continues to decline, exacerbated by the continuing limited supply During Q 7, total leasing activity (excl. renegotiations) reached 4,5 sq m, representing a 9% decrease compared to Q 6 and a 58% decrease compared to Q 7 During H 7 the total investment volume in the Baltic region office sector was 8.7 m EUR, showing an increase of.% when compared with H 6 and a. increase over the quarter The leading office investment position during H 6 was held by Lithuania (49%), whilst 9% was generated in Latvia, leaving Estonia in third position with % Q 7 CBRE Research 7 CPB Real Estate Services, Affiliate of CBRE 7
Sq m Figure : Main Supply and Demand Indicators 45 4 5 5 5 5-5 Q 5 Q 5 Q4 5 Q 6 Q 6 Q 6 Q4 6 Q 7 Q 7 Vacant Space, sq m Completions, sq m Absorption, q-o-q, sq m Vacancy Rate, % (the right axis) 8% 6% 4% % % % % Source: CPB Real Estate Services, part of the CBRE Affiliate Network, July 7 SUP P LY Figure : Riga Office Market Take-Up by Quarters 4,,, 8, 6, 4,, Q 6 Q 6 Q4 6 Q 7 Q 7 Source: CPB Real Estate Services, part of the CBRE Affiliate Network; July 7 Figure : The Latest Indicators for Job Growth, Unemployment and Average Salaries in the Private Sector P I P ELI NE P R OJ ECTS Indicator May 7 May 6 Unemployment Overall (seasonally adjusted) 8.% 9. Job Growth, annual change*.%.% Average Gross Salary in Riga*,8 EUR/mth 956 EUR/mth Average Gross Salary in Latvia* 97 EUR/mth 85 EUR/mth DEM AND & ABSOR P TI ON *Data available for the Q per each corresponding period Source: Central Statistical Bureau; July 7 Figure 4: Take-Up by Locations, H 7 % % % Skanste Centre Pardaugava Other Source: CPB Real Estate Services, part of the CBRE Affiliate Network; July 7 Q 7 CBRE Research 7 CPB Real Estate Services, Affiliate of CBRE 7
Figure 5: Distribution of Office Lease Transactions by Size of the Accommodation, H 7 % V ACANCY % 8% -5 sq m 5- sq m -5 sq m 5-, sq m,-,5 sq m,5-, sq m,-, sq m Source: CPB Real Estate Services, part of the CBRE Affiliate Network; Q 7 Figure 6: Distribution of Leased Office Space by Size in terms of Total Area Leased, H 7 9% R ENT R ATES 8% % -5 sq m 5- sq m -5 sq m 5-, sq m,-,5 sq m,5-, sq m,-, sq m Source: CPB Real Estate Services, part of the CBRE Affiliate Network; Q 7 Figure 7: Vacancy Rate Vacancy Rate Q 7 Q 7 Q 6 Overall.8%.4% 4.% Class A.%.9%.9% Class B.% 4.% 4. Class B 5.%..9% Source: CPB Real Estate Services, part of the CBRE Affiliate Network; July 7 SALES ACTI V I TY Figure 8: Total Investment Volume by Sector in the 8 6 4 77 64 49 8 H 5 H 5 H 6 H 6 H 7 Retail Office Hotel Industrial Other Source: CPB Real Estate Services, part of the CBRE Affiliate Network, July 7 Q 7 CBRE Research 7 CPB Real Estate Services, Affiliate of CBRE 7
Figure 9 Largest Speculative Office Schemes Currently Under Construction LOFT office, Spec. Office GLA ~,5 sq m Imperial Palace, Spec. Total GLA ~6 795 sq m AKROPOLE, Spec. Office GLA ~ 9, sq m Z-Towers, Spec. Office GLA ~4, sq m Source: Office Landlords, July 7 JAUNA TEIKA, rd stage, Spec. Total GLA ~6, sq m BUSINESS GARDEN RIGA, I st. Office GLA ~4, sq m Figure : Office Schemes Currently under Construction and Planned Projects to be Started by 5 5 6 9 6 8 4 7 4 Local business district New CBD CBD/Embankment Vilnius Projects completed in H 7: () Teraudlietuves offices, nd stage (Mukusalas Business Centre); () Place ; () Katrinas Osta; Projects under construction: Projects in planning stage: () Z-Towers; () LOFT offices; () Teodors BC at Jauna Teika, rd stage; (4) Akropole Offices; (5) Imperial Palace; (6) Business Garden Riga; () SWH BC facade buildings reconstruction; () Origo BC; () New Hanza; (4) Carl Zeiss, (5) Skanste Business Centre; (6) Dzelzavas ; (7) Capital City; (8) Kalnciema offices; (9) Spice officse; () Valdemara offices. Source: CPB Real Estate Services, part of the CBRE Affiliate Network; July 7 Q 7 CBRE Research 7 CPB Real Estate Services, Affiliate of CBRE 7 4
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. 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 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 Representative offices in Vilnius and Tallinn Headcount 5 people Providing services in: Valuation, Consulting & Research, Property Sales, Property & Asset Management, Tenant Representation, Agency Services Retail, Offices, Industrial & Logistics. CONTACTS OFFI CES 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.