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Vacancy rate in the Riga central shopping streets does not exceed 7 – 8%

  • This year started with an observable improvement of the situation in the retail space rental market. It can be concluded that the retail companies that survived the crisis have learned from their mistakes, and have become more attentive, when analyzing customer needs


Vacancy rate in the Riga central shopping streets does not exceed 7 – 8%

„This year started with an observable improvement of the situation in the retail space rental market. It can be concluded that the retail companies that survived the crisis have learned from their mistakes, and have become more attentive, when analyzing customer needs", informs Mr. Guntis Kanenbergs, Head of the Commercial Department of ARCO REAL ESTATE.

 

The retail space with the highest rent rates is occupied by representatives of more solvent industries (pharmacies, restaurants, clothing stores), which are able to constantly launch new offers to customers in their respective segments. This is often achieved with a variety of marketing campaigns or special offers to ensure that the customers feel welcome. High-quality offer and appropriate market strategy is an important part of business, which provides continuous customer flow, thereby creating a more sustainable business model.

 

Currently, the retail space rental market shows very little tenant turnover, which may indicate both the ability of tenants to adapt to the market situation and the customer satisfaction with the services rendered or goods sold. As to the city centre's leading shopping street sections, the vacancy rate does not exceed 7-8%. This is comparatively a very good indicator that might contribute to a rent growth trend by up to 5-7% per year in the near future. Rents in the central part of the Riga City currently are ranging from 14 to 25 EUR / m² on average, depending on the space location and size. In the Old Town, rent levels vary much more, ranging from 8 EUR / m² to 40 EUR / m², because in the Old Town, retail premises in a lot of cases are located in semi-basement floors, while retail premises with the highest rent rates are located in active sections of pedestrian streets, where a large proportion of customers are tourists.

 

„Most demanded retail premises are areas from 70 to 150m², as to most tenants such a space is sufficient to accommodate the offered products, or, for example, provide catering services. This is the optimal space size for many retailers to be able to ensure sufficient customer flow, and cover the monthly payments and gain profit", explains Mr. G.Kanenbergs.

 

Tenants renting larger areas exceeding 300 m², must more actively plan their offers to be able to ensure sufficient interest from the part of customers. Second-hand clothing stores that focus on low-cost products still are lessees of largest premises. In Latvia, there still is a very large proportion of buyers who prefer lower prices rather than the quality of the product or service to be bought. Purchasing power still remains to be low, but, judging from business tendency indicators collected by the CSB, consumer optimism compared with the previous year period has increased dramatically. In spite of growth of the GDP and wages, the fuel price growth and thus the transport cost increase will negatively affect the purchasing power of buyers.

 

Additional information:

Mr. Guntis Kanenbergs

ARCO REAL ESTATE

Head of Commercial Department

GSM +371 2863 2211

guntis.kanenbergs@arcoreal.lv

www.arcoreal.lv


17.04.2012.

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