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Commercial property rental market survey of the 2011 summer months

  • Demand in the office space segment has remained stable. In particular, offices with the area of up to 120m ² have been demanded.


Commercial property rental market survey of the 2011 summer months

 

Office space
Demand in the office space segment has remained stable. In particular, offices with the area of up to 120m ² have been demanded. Tenants often ask for offices with a small number of rooms, up to 3 rooms with a separate room for manager, a negotiating room, as well as appreciate existence of a lavatory and a kitchenette in the office. It is observed that tenants are more and more frequently looking for office space located directly in the surroundings of the housing estates of Riga, close to employees' homes.


Free office space area decrease trend is less pronounced than in the spring months. Free office space in Riga ranges from 12% to 25%, depending on the office category. Results of leasing of higher-end office buildings are certainly better than in the previous year's corresponding period, due to various reasons, for example, due to improved sentiment of the company owners and their desire to provide employees with better quality working conditions.


The office space rent level continues to grow a bit, by 5-7%, and in some cases by up to 12%, compared with the previous year's corresponding period.


Retail space
According to observations, the Riga city centre retail space leasing intensity has been relatively steady, with the non-leased space mostly consisting of space of poorly-demanded size or location. In August, there was observed a greater rotation of tenants than in the previous period. Successful retail store location, access to potential customer groups is by far the decisive factor for sustainable operation of the retail store, as there is no significant change in the purchasing power of the population because the level of wages and inflation is increasing simultaneously. During the summer months, in the city centre shopping and public catering areas which are frequently visited by tourists, the situation in the tenancy market was stable. It is expected that the situation will continue to improve and the number of vacant rental space will tend to decrease. Commercial space rental rates have a small, but steady upward trend. In our opinion, low level of solvency during the off-season, the previous heating season bills, prudence of banks as to financing of the working capital are the main reasons of the slow growth of rent rates in the retail property sector.


In the streets of the central part of Riga, retail space rental rates are varying significantly depending on the location of the store. The rent level in the most advantageous locations is up to 25 EUR/m². Similar rent levels are observed in large shopping centres with grocery anchor tenants. In shopping centres situated in not so advantageous locations or in smaller shopping centres the rent rates are from 8 EUR/m². The demand for points of sale in housing estate supermarkets is relatively high, and there are few possibilities to enter into short-term tenancy relationships.


Warehouse and industrial space
Demand is steady growing in the production and warehouse space segment. Demand for space comes mainly from the following sectors: manufacturing of metal structures, rubber processing industry, food production, car repair shops. The demanded warehouse space rent level generally is low, equivalent to 1-1.5 EUR/m². The warehouse segment of areas up to 500 m ² was the most demanded one in the summer months.

 

 

Additional information:

Guntis Kanenbergs

Head of commercial department


23.09.2011.

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