Yet another lease transaction in Vilnius office market!
CBRE Baltics acted as an Advisory Partner in the EUROCASH1 Lietuva lease transaction at the B-class business center U219, securing 950 sqm of modern office space.
U219 will become the new home for EUROCASH1 Lietuva headquarters in Lithuania, where all of its administrative personnel will be relocated.
Enhancing student and staff experiences on campus, fostering dialogue, and nurturing innovation. What’s the secret ingredient that can bring it all together?
The answer comes out naturally! Whether it’s revitalizing a shopping center, optimizing an office building, reimagining a train station, or transforming a university campus, the role of food and beverage cannot be overstated! Kudos to Mareks Zeltins and Rīgas Tehniskā universitāte (Riga Technical University) leadership for spearheading the initiative to enhance amenities on campus!
On April 17, 2024 leaders from the industrial, logistics, and manufacturing markets met at the Baltic Logistics & Manufacturing Symposium!
The development of the Baltic region’s infrastructure, including initiatives such as RailBaltica and expanding intermodal hubs, has increased the potential for international logistics and manufacturing companies to establish themselves in the region. This has created a cautiously optimistic market sentiment, strategically promoting the region’s competitiveness.
A special shoutout to SIRIN Development, airBaltic, and StrongPoint for partnering with us on this year’s Symposium. We would also like to thank all the participants who joined us in discussing the next strategic advantage within Baltic industrial markets.
Marsh, a global leader in insurance broking and risk management, has expanded its presence in Riga and Vilnius.
CBRE Baltics is proud to have led the way with an integrated approach in the Baltics. Marsh’s decision to locate in the state-of-the-art business centers of VERDE and Flow reflects what the office is all about nowadays: strong demand for sustainable environment, integrated services, and prime locations.
Looking for the next tech hub?
Attracting and retaining top tech talent is crucial for business success. Among the identified markets across the region set to emerge as tech clusters, Tallinn is one of the key destinations, along with other markets such as Bucharest, Porto, Seville, Valencia, and Wroclaw.
The CBRE Global Tech Talent Guidebook 2024 provides the latest information on how to make confident and informed decisions in 2024.
Read more in our 2024 Gobal Tech Talent Guidebook: https://cbre.co/3Ih552G
Novartis Baltics has signed an office lease agreement on the new office location at Elemental Business Centre, one of the most sustainable office projects in Riga!
Full news articles:
EN: Elemental Business Centre has signed an office lease agreement with Novartis Baltics
LV: “Elemental Business Centre” parakstījis biroja nomas līgumu ar “Novartis Baltics”
Ideas. Leadership. Advocacy. Change. Welcoming 2024 with AmCham Estonia and their newly issued Vision Magazine!
Dedicated to showcasing the vibrant Estonian business ecosystem, this publication will be strategically positioned in key investor hubs like Tallinn Airport (TLL), hotels, Estonian Business and Innovation Agency, and ministries. Dive into pages 14-19 to explore the dynamic real estate trends in Tallinn, put together by the CBRE Baltics team.
State police of Latvia is embarking on a new chapter with the lease acquisition of over 4,000 sqm space at the distinguished Upmalas Biroji building.
This groundbreaking deal, in collaboration with Baltic Horizon, is not just a lease; it’s a statement. It proudly stands as one of the largest Latvian office lease agreements of the decade among public sector tenants in modern business centers.
Click HERE to read the post on LinkedIn.
Are you curious about the Baltic real estate prospects in 2024 – how similar and different they are across Estonia, Latvia, and Lithuania? Our team can help you with that!
2023 has been a challenging year due to persistent inflation and a 15-year high in interest rates, both of which negatively impacted economic growth and real estate markets. Across Europe, investment volumes have plummeted as investors grappled with declining asset values and increased borrowing costs. Although the Baltics have remained more resilient, the growth is fueled by local investment and lease markets. We enter 2024 with falling inflation and expectations for a reduction in interest rates.
The CBRE Baltics Research team is working on the full Market Outlook report which will highlight key trends in commercial real estate sectors set to unfold in 2024. Vilnius, Riga, Tallinn, stay tuned for the full publication and presentation. And for now, let’s take a sneak peek into some of the key trends shaping Baltic commercial properties.
As yields stabilize, the mismatch between buyers and sellers should narrow, with transactions picking up in the second half of 2024. Despite an overall decline in investment transaction numbers throughout 2023, the year-end witnessed a rebound in activity across Europe and the Baltics, offering cautiously optimistic prospects for 2024. Expectations include decompressing interest rates and improving overall market conditions.
Looking ahead to 2024, the commercial real estate landscape is poised for numerous bond redemptions and refinancing, sparking intense negotiations between property owners and financial institutions. Regarding yields, although they have both risen and stabilized, a price misalignment persists, contributing to reduced market activity. The anticipation is that, as financing costs decrease, there will be a subsequent increase in demand for new deals.
In the area of sustainability, the changing regulatory landscape, especially the introduction of CSRD, is expected to encourage various players in the commercial real estate market to enhance their ESG alignment throughout 2024. The CBRE study on green European properties already demonstrates extended benefits of ESG, including increased rent premiums, lower maintenance and utility costs, improved ROI, and more favorable financing terms.
Beyond 2024, a growing performance gap is anticipated between sustainable and non-sustainable buildings. Building sustainability is increasingly marked by certificates such as BREEAM or LEED, although certification trends are not yet as prominent among all retail and industrial players. However, in the office segment, nearly 50% of the stock is already certified across the Baltic capitals. Driven by the potential for rental premiums and supported by green lease agreements, owners and landlords are likely to step up their sustainability effort.
The current dynamics of the office market in the Baltic capitals are primarily shaped by local companies. Despite a robust pipeline of modern office spaces, concerns arise about potential oversupply and increased vacancies, given presumably longer timeframes needed to secure foreign direct investments. This uncertainty may result in a potential decrease in take-up aggregates in 2024. Furthermore, the surge in sub-lease options, fueled by downsizing and work-from-home policies, is expected to taper off, potentially resulting in a structural vacancy rate in the double digits across the Baltic capitals over the next 2-3 years.
In the current office market, tenants wield increased negotiating power, turning it into a tenant’s market. In response to evolving market dynamics, landlords are adopting strategic measures to attract and retain tenants. One notable trend is a significant increase in fit-out contributions over the last two years.
Although the industrial segment continues to stand strong, driving secondary cities’ growth, potential barriers to sustained expansion emerge in the form of labor shortages and challenges in attracting foreign players. However, the increasing interest in nearshoring to the CEE region brings hope for more foreign activity in the Baltics. With expectations of a better economy in 2024, the appeal of nearshoring to the Baltics is likely to grow.
On the other hand, urban logistics are becoming more prominent across the Baltics, with a rise in activity in stock office and self-storage unit developments. This increased interest hints at the sector’s potential, anticipated to unfold gradually through 2024.
Presently, the majority of Baltic retail stock exceeds 10 years in age, and a substantial portion surpasses the two-decade mark. Renovation, expansions and modernization are currently actively pursued within the Baltics to bring back the commercialization of the retail assets. To create attractive and inclusive retail destinations, some developers have also started leveraging multifunctional spaces and increasing the scale. The cornerstone for such a concept is to make use of the expertise of operators from different sectors.
In the realm of e-commerce, an ongoing transformation of the traditional retail market is evident, with the integration of online and in-store purchases being notably high in the Baltics. Consumers typically initiate product searches online and then visit physical stores to experience or assess the product before making a purchase.
The evolving residential landscape is prompting local developers and institutional investors to broaden their engagement in the Built-to-Rent segment. Fueled by the enticing potential for increased profitability and growing demand, a surge in new participants entering the market is anticipated in the coming years. The demand for rental units is driven by the fact that, currently, renting an apartment in any of the Baltic capitals is about 30% more cost-effective than purchasing it using credit (considering the year-end Euribor rate). As a result, the housing affordability index is dropping, leading residents to opt for rentals. Subsequently, co-living is garnering growing interest from Baltic investors as well.
In Europe, global travel is nearly back to 2019 levels, with short-haul leisure travel being the primary driver, while long-haul and business travel face challenges due to a weakened economic backdrop. Although regionally, travel trends are recuperating, the Baltics show the highest decrease in Europe in foreign visits, impacted by ongoing regional uncertainties and one of the highest inflations in Europe. Nurturing the experience will be crucial to ensuring a positive impact and attracting more tourists. Various airlines and bus companies, together with Rail Baltica developments, are set to play significant roles in enhancing connectivity, contributing to a more comprehensive network for travelers in the region.
