Vilnius Office Outlook, 2021 H1

VILNIUS OFFICE OUTLOOK 2021 H1 Girteka Park Business Centre (former Freedom 36) Development by GALIO GROUP

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2021 H1 YOUR PARTNER IN THE BALTICS Newsec, the Full Service Property House in Northern Europe, is the solid choice of partner within Advisory and Property Asset Management. With sharp analyses, hard facts and just the right skill set, we’ve got you covered. All Images: Girteka Park (former Freedom 36) Develo2per: GALIO GROUP

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET VILNIUS OFFICE MARKET CALMER Q2 GENERATES STRONG TAILWINDS FOR THE SECOND HALF OF THE YEAR INSIGHTS MACRO FORECASTS 2021 summer. • ECONOMY GROWTH IS BACK. After • POSITIVE TRENDS FOR THE SECOND experiencing a slight recession caused +4.1% HALF OF THE YEAR. Although not all by the pandemic in 2020, in 2021 the projects planned for 2021 have been Lithuanian economy began showing GDP fully leased, on-going negotiations and distinct signs of recovery, posting 1.2% current market demand indicate the of growth in GDP for the beginning +2.6% emergence of more positive trends. of the year. Both businesses and the Due to extended lease decision-making general population at large have adapted HICP processes, short-term year-end vacancy to the new reality. The accelerating may reach as much as 10-12%. Estimates vaccination process and declining 7.6% of future supply indicate that landlords operational constraints have laid the – especially those managing older grounds for a gradual recovery, and the Unemployment buildings – will be forced to accept long- Lithuanian economy in 2021 could grow term vacancies. by 4.1%. Meanwhile, in the coming years, +7.9% • ONE NEW PROJECT. Most of the the economic recovery is expected projects slated for 2021 should be to accelerate, with growth in 2022 Wages completed in the second half of the year. projected to reach 4.4%. In Q2 2021, the Class A+ project Bokšto • TAKE-UP REACHES THE MIDWAY OF OFFICE MARKET 2021 H1 Skveras, located in the Old Town, was THE ANNUAL FORECAST. With the area introduced into the Vilnius real estate of concluded leases during the second 871,300 sqm market. quarter reaching 14 300 sqm, 2021’s • ANNUAL SUPPLY. The first half of half-yearly result of half-year already Total supply 2021 saw the introduction of only 25% of amounts to more than 45 thousand sqm. the supply expected to arrive this year. Two-thirds of that leased area consisted 6.6% Following the delivery of the larger part of deals of 500 sqm or more. of this year’s supply in the summer and • VACANCY DECREASED. Overall market Vacancy autumn, we expect to see the completion vacancy fell from 7.1% to 6.6% during the of the new projects and the settlement of second quarter, while vacancy in Class A 231,900 sqm tenants. offices declined more significantly, from • MAJOR NEW CLASS A OFFICE 5.9% to 4.9%. Under construction PROJECTS. Class A projects scheduled • LARGE AREA AGREEMENTS AT THE for, or already under construction in the NEGOTIATION PHASE. Even though OFFICE MARKET FORECASTS 2021 Central Business District will be large major office tenants have plans to in scale and suitable for multiple tenant expand, decision-making processes 955,500 sqm types. A total of four scheduled – Core, will only turn into signed leases in late Artery, FLOW and HERO – will deliver Total supply 10-12% Vacancy 147,700 sqm Under construction Macro Indicators of Lithuania Source: Statistics Lithuania Social Indicators of Lithuania Source: Statistics Lithuania Percentage Percentage 10 20 15 7,5 5 10 5 2,5 0 0 -2,5 -5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F GDP HICP F - forecast Ministry of Finance Unemployment Gross Wage F - forecast Ministry of Finance 3

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2021 H1 more than 100,000 sqm of office space. “At the end of last year, it became clear • RESCHEDULED DELIVERY TERMS that a hybrid or mixed work model will be FOR OFFICE PROJECTS. The supply the future for all of us. <..> Employees of office space planned for 2022 are ready for this change: 56 percent say has been decreasing due to changes they would like their work to be based on in construction and development the hybrid model,” said Eglė Radeckienė, schedules. About 30,000 sqm of office Head of Human Resources at the insurance space that’s currently under construction company BTA.* will be delivered later, in 2023. However, total supply in 2022-2023 may increase to rise, yet the impact of the latter on WORK MODEL. More and more office by about 200,000 sqm or 21%. Market office rental prices remains to be seen. tenants, such as Vinted, BTA, Girteka practice indicates that in cases where • ACCELERATION OF A NEW HYBRID Logistics and others have been testing project development has not yet started, the signing of the first major tenant lease agreements can be very difficult. • STABLE RENTAL RATES. With the on-going build-up of pressure in the construction market, project development and fit-out costs continue Office Stock Source: Newsec Take-up Source: Newsec Thousand, sqm 12% Thousand, sqm 1,200 13% 120 16% 1,000 14% 100 7% 800 80 600 60 400 40 200 20 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Existing Stock Additional Stock Q1 Q2 Q3 Q4 4 *Source: www.bta.lt

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET and implementing a variety of hybrid OFFICE DEVELOPMENT IN VILNIUS 2021-2023 AND PLANNED GLA, sqm work models. It will likely take 3 to 6 months to assess the impact of these Project 111,800 changes on both the companies’ performance and the office market. 2021 15 000 1 LVOVO 2 600 NEW SUPPLY CONTINUES TO GROW 2 Boksto Skveras 9 500 The Vilnius office segment experienced 3 Office 100 40 000 a calmer period in terms of new supply 4 Business Garden Vilnius, stage I 5 000 delivery. Three office projects: Business 5 CLOUD Offices 13 000 Garden Vilnius 1st stage by Vastint 6 Saltoniskiu 7, stage IV 5 500 Lithuania, LVOVO by Lords LB Asset 7 CORE, stage I 14 000 Management and Bokšto Skveras by 8 Girteka Park (former Freedom 36) 7 200 Baltisches Haus, were launched in the 9 Naujasis Skansenas/Zalgirio 112 Vilnius market during the first half of 118,100 the year. These projects added 27,600 2022 sqm of new supply, and increased total 10 BH Meraki, stage I 7 800 area by 3.3%, reaching 871,300 sqm. An 11 CORE, stage II 30 000 additional 84,200 sqm of office space 12 Cyber City 30 000 supply from 7 projects is expected to 13 Business Stadium North East 16 000 be added by the end of 2021. Of the 14 Darboteka 5 000 annual office supply slated for the 2021, 15 Office Boutique 1 600 only 25% has been commissioned in 16 K22 6 700 the first half of the year. In light of this, 17 Aerocity 11 000 several new projects are expected to be 18 LJB, stage II 10 000 completed later this summer or later this fall, – these include two class A business Planned for 2023 and later 108,200 centres, Core and Saltoniškų 7, in the 19 BH Meraki, stage II central district of the capital city, and 20 Naujasis Skansenas/Linkmenu 17A 7 800 the class B+ business centres Business 21 Sky Office 6 000 Garden Vilnius, Office 100, Naujasis 22 Unum 8 600 Skansenas, Cloud Offices, and Girteka 23 Artery 19 000 Park (former FREEDOM36). Annual 24 FLOW 21 800 supply growth rate maintains at 13% 25 HERO 15 000 and is expected to remain at the similar 30 000 level in 2022. The newest addition to TOTAL the very central CBD location supply was 338,100 the LVOVO project, and additional space Source: Newsec will now only be added in 2023, with the completion of the ARTERY, FLOW and “Once quarantine has ended, we will provide HERO business centres. our employees with the opportunity to An additional 9 business centres with a continue working partially remotely. We will total leasable area exceeding 118,100 invite colleagues to remember the value of sqm are scheduled to open their doors live meetings, and to dedicate two or three in 2022. A further 6 projects are under days a week to working in the office. The rest construction or in planning stages, with a of the time they can work remotely,” said leasable area exceeding 78,000 sqm are Aušra Bijaminienė, Girteka Logistics’ Chief slated for 2023. 38% of this area is under People Officer.* Vacancy Rate Source: Newsec Average Rental Rates Source: Newsec Percentage EUR/sqm/month 25 16.0-17.5 10.0-14.0 9.0-12.0 20 15 10 5 0 A Class 2011 Q2 2011 Q4 2012 Q2 2012 Q4 2013 Q2 2013 Q4 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2017 Q2 2017 Q4 2018 Q2 2018 Q4 2019 Q2 2019 Q4 2020 Q2 2020 Q4 2021 Q2 B Class A Class B+ Class B Class *Source: www.girteka.eu 5

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2021 H1 “For the second year in a row, we are living in a period of limited opportunities. Companies are adapting and rethinking their normal work organization processes. <..> Although the hybrid work model is currently being practiced by many organizations, not all of the future challenges are fully clear,” said Aušra Bytautienė, Director of the Association for HR Professionals.* construction in 2021 Q2. the LJB second stage development, are TAKE-UP IN LINE WITH A LONG-TERM Among the new development each planning to supply under 10,000 AVERAGE announcements are new projects in sqm to total market stock, thereby adding Both large and small companies were the Naujamiestis district of the capital. additional options for potential tenants. active during the first quarter of 2021. Smaller scale projects such as K22, and Five tenants signed areas of more than 6 *Source: www.delfi.lt

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET 1,000 sqm and took 53% of total leased area. Dexcom, Wargaming, Alter Domus, Amber Grid and others were among the office tenants who made the biggest deals. The second quarter of the year was dominated by lease deals for smaller floor space areas in already built modern business centres whose general area of lease transactions stands at 14 thousand square metres. Among the office tenants who made the biggest deals were CPO LT, Civinity, FLO Health, Panevezio Keliai and others. All available office space in the Bokšto Skveras complex was fully leased to Glera Games, PVcase, Cloudion and Baltisches Haus. The total floor space 7

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2021 H1 area of offices leased over the first half for larger spaces per employee, in some of the year was 45 thousand square cases almost twice the historical standard metres, which is in line with the average of 10-12 sqm per person. Tenants are, of transactions for the most recent five however, behaving very differently on a half-year periods. case by case basis, making it difficult to discern a clear trend or direction in their A SHORT-TERM VACANCY DECLINE IS plans. TEMPORARY More and more companies are adapting to The total available area for lease the new reality, and implementing hybrid fluctuated during the first six months working from home and office models. of the year. At the end of Q2 2021, the Summertime and the somewhat improved vacancy rate in Vilnius declined slightly, ongoing pandemic situation are giving reaching 6.6%, compared to 3.4% the management the time and space to make previous year, and 7.1% in Q1 2021. The balanced and survey-based decisions availability of ready to move-in premises regarding further work organization. More has not shown significant growth. On the rapid migration back to offices can be contrary – A class availability decreased expected once a higher immunisation rate by 13% during the half year, while B class has been reached. According to various increased by 10%. sources, a significant breakthrough is At the end of 2021 total market vacancy likely as early as the end of summer and will most likely exceed double digit levels autumn may be “back-to-office” season. and form a substantial supply source in Based on public open data, the IT and GBS the currently quite tight market. sector and other large companies, who “The Vilnius office market is maintaining its momentum as more and more companies are again becoming convinced that office space will remain relevant as the main environment for collaborative and creative work,” said Martynas Babilas, Head of Tenant Representation at Newsec Baltics. STABILITY IN RENTAL RATES form a large share of office occupiers, had Leasing activity contributed to stable already reached an immunisation rate of rental prices in 2021 Q1. Landlords are 80-90% by midsummer. A bounce-back adopting a strategy of splitting vacant effect in lease transaction volumes and a premises between smaller tenants to return to higher market activity is already maintain prices and occupancy levels. With expected in the second half of 2021. the on-going build-up of pressure in the construction market, project development and fit-out costs continue to rise, yet the impact of the latter on office rental prices remains to be seen. THE WORK-FROM-HOME MODEL UNDERGOES HYBRID TRANSFORMATION Companies are preparing for the upcoming major return to the office space as the country continues to undergo a massive vaccination program. It is also evident that recruiting processes for market newcomers and GBS companies are also intensifying. Companies that are growing are planning new offices. They are looking 8

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET 9

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2021 H1 TARANDE OFFICE BUILDINGS IN VILNIUS 10 57 No Project Name Openings of 2021 Address, street 1 LVOVO Lvovo st. 37 2 Boksto Skveras Boksto st. 6 3 Office 100 Paneriu str. 49 4 Business Garden Vilnius, stage I Laisves ave. 10 5 CLOUD Offices Zalgirio str./Kalvariju str. 6 Saltoniskiu 7, stage IV Saltoniskiu str. 7 7 CORE, stage I Ukmerges str. 126 8 Girteka Park (Freedom 36) Laisves ave. 36 9 Naujasis Skansenas Zalgirio str. 112 Openings of 2022 and later 10 BH Meraki Ukmerges str. 10 11 CORE, stage II Ukmerges str. 126 12 Cyber City Svitrigailos str. 32 13 Business Stadium North East Rinktines str. 3 14 Darboteka Paupio str. 50 15 Office Boutique Dainavos str. 7 16 K22 Kauno str. 22 17 Aerocity B. Karvelio str. 10 18 LJB, stage II Savanoriu ave. 28 19 Naujasis Skansenas/Linkmenu 17A Linkmenu str. 17A 20 Sky Office Spaudos str. 7 21 UNUM Pilaites ave. 24 22 ARTERY Konstitucijos ave. 18B 23 FLOW Lvovo str. 21A 24 HERO Kalvariju str. 24A 25 Jasinkio 14 J. Jasinskio str. 14 Openings of 2020 and earlier 1 Green Hall Upes str. 21 2 Paupys Aukstaiciu str. 7 JUSTI 3 U219 Ukmerges str. 219 4 SEB HQ Konstitucijos ave. 24 21 215520 5 WAVE Savanoriu ave. 5 54 53 6 Uptown Park Svitrigailos str. 13 7 Technopolis Ozas Ozo str. 12A/J. Balcikonio str. 3; 9 KAROLINISK /V. Gerulaicio str. 1; 18 8 /Kalvariju str. 204 8 Business Stadium North & West Rinktines str. 5 9 Zalgirio 94 Zalgirio str. 94 10 Tower Konstitucijos ave. 15 11 Live Square Gedimino ave. 44A 12 Avia Solutions Group HQ Dariaus ir Gireno st. 21A 13 Quadrum Business City Konstitucijos ave. 21, 21B, 21C PILAITE 14 Asgaard Keys Ukmerges str. 124 15 Link Saltoniskiu str. 9B 16 3 Bures Lvovo str. 25/Giedraiciu str. 3 17 Park Town West Hill & East Hill Lvovo str. 105; 101 18 Saltoniskiu 7, stage I, II & III Saltoniskiu str. 7 19 Narbuto 5 Narbuto str. 5 20 Domus Pro Bieliunu str. 1 21 Duetto I & II Spaudos str. 8; 6 22 Eleven Kareiviu str. 11 23 B Nordic 26 J . Basanaviciaus str. 26 24 City Zalgirio str. 90 25 135 Zalgirio str. 135 26 Highway Savanoriu ave. 178A 27 Uniq A. Gostauto str. 12A 28 k29 Konstitucijos ave. 29 29 Premium Sporto str. 18 30 IBC (International Business Centre) Seimyniskiu str. 3A, 3, 1A / A. Juozapaviciaus str. 6/2 31 Europa Konstitucijos ave. 7 32 Swedbank HQ Konstitucijos ave. 20A 33 GV18A Gelezinio Vilko str. 18A 34 Danske Bank Saltoniskiu str. 2 35 Saltoniskiu 10C Saltoniskiu str. 10C 36 Baltic Hearts Ukmerges str. 120 37 Marenta Business Centre Kestucio str. 65 38 Vertas Gyneju str. 16 39 Merchants' Club Gedimino ave. 35 40 Plaza 31/1 Vilniaus str. 31 / Islandijos str. 1 41 Business Centre 2000 Jogailos str. 4 42 Basanaviciaus 15 J. Basanaviciaus str. 15 LAZDYNAI 43 BC 12 J. Jasinskio str. 12 LAZDYNELIAI 44 MG Baltic J. Jasinskio str. 16, 16A, 16B, 16C 45 Eika Business Centre A. Gostauto str. 40A, 40B 46 G40 A. Gostauto str. 40 47 Business Centre Svitrigailos 11B Svitrigailos str. 11B, 11H, 11M 48 Vytenio 46 Vytenio str. 46 49 Skraidenis Naugarduko str. 100, 102 50 GRLEvJIBiGtaISKES Savanoriu ave. 28 51 Savanoriu ave. 18 52 L3 Laisves ave. 3 53 JIN&JAN Menulio str. 7, 11 54 Trapecija Pilaites ave. 16 55 Atea J. Rutkausko str. 6 56 Grand Office Virsuliskiu ln. 34 GARIUNAI 57 Orange Office Senasis Ukmerges rd. 4 58 Business Centre One, Trio, Four Ukmerges str. 322/Perkunkiemio str. 2, 4, 6, 3, 5, 7 59 Kamane Ukmerges str. 369A 60 Sostena Ukmerges str. 280 61 Evolution Ukmerges str. 223 62 Akropolio Business Centre Ozo str. 25 63 BH-92 Zalgirio str. 92 64 Zalgirio Business Centre Zalgirio str. 88 65 North Star Ulonu str. 2 66 Ulonu Business Centre Verkiu str. 25C / J. Galvydzio str. 1 67 Domus Centre P. Luksio str. 32 68 Ozo Business Centre Ozo str. 10A 69 NCBC Kareiviu str. 6 Under development Office buildings 70 Eta Zirmunu str. 107 Existing Office buildings 71 Zirmunu Business Centre Zirmunu str. 139 CBD 72 Sunrise Valley Sauletekio al. 15 Secondary Business locations 73 VITP Mokslininku str. 2A 10 ZEMIEJI PANERIAI

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET 73 SANTARISKES 58 59 JERUZALE 20 TURNISKES PASILAICIAI 60 FABIJONISKES 71 BALTUPIAI 72 ANTAKALNIS 7 69 70 22 INISKES 61 3 68 66 67 56 65 VIRSULISKES SESKINĖ 62 ZIRMUNAI 3 SNIPISKES KES 8 29 25 13 1171154631358436 17 199 9 632464 5 37 19 28 4 13 10 1 1624 ZVERYNAS 1 31 23 27 38 323232 30 44 2543 111539 41 45 40 46 2 23 42 SENAMIESTIS UZUPIS 2 14 5 NAUJAMIESTIS 51 52 1850 47 4 6 12 MARKUCIAI 48 16 RASOS VILKPEDE 49 3 PAVILNYS NAUJININKAI 17 26 12 11

NEWSEC ANALYSIS PRODUCTS VILNIUS OFFICE OUTLOOK, 2021 H1 NEWSEC MARKET REPORTS REQUEST ANY REPORT [email protected] Thanks to Newsec comprehensive knowledge we are able to offer a number of analysis and segment market reports which give you a valuable summary of the property market. Newsec Property Outlook, Vilnius Office Outlook, Riga Office Outlook, Spring 2021 2020 Q4 2020 H2 Kaunas Office Outlook, Tallinn Office Outlook, Baltic Office Outlook, 2020 H2 2019 2019 Baltic Property Outlook, Baltic Investment Outlook, Newsec Property Outlook, 2020-2021 2019 Autumn 2020 Access Newsec’s market report portal here: www.newsec.lt 12

VILNIUS OFFICE OUTLOOK, 2021 H1 VILNIUS OFFICE MARKET THE FULL SERVICE PROPERTY HOUSE IN NORTHERN EUROPE Newsec — The Full Service Property in 2001, Norway in 2005, the Baltic Newsec has approx. EUR 39 billion under House in Northern Europe — is by far the countries in 2009 and Denmark in 2016. management and annually signs lease largest specialised commercial property The Norwegian asset and property agreements of some 760 000 sqm, firm in Northern Europe. management companies First Newsec manages transactions of some Asset Management and TM Partner EUR 3 billion and does real estate Newsec manages more properties and were acquired in 2012. In 2013, Newsec valuations of underlying property worth carries out more transactions, more acquired Jones Lang LaSalle’s Swedish almost EUR 180 billion. Thanks to large lettings and more valuations than any property management operation. In volumes, local presence combined other firm in Northern Europe. Through 2017, Newsec grew with the acquisitions with in-depth understanding of a range this great volume, and the knowledge of Norwegian Basale and Danish Datea, of businesses, Newsec has a unique and depth of our various operations, we further strengthening the position within expertise of the real estate market in acquire extensive and detailed knowledge Property Asset Management. Northern Europe. of the real estate market. In turn, we can quickly identify business opportunities Newsec was founded in 1994 and is that create added value. today a partner-owned company with some 2000 co-workers spread across Our prime market is Northern Europe, the seven Nordic and Baltic markets. but through our alliance membership with BNP Paribas Real Estate, we offer our services on the global market. This makes Newsec Northern Europe’s only full service property house, and provides us with a unique ability to forecast the future. Newsec is the result of a unique TRONDHEIM OULU history of growth, characterised by constant originality of thinking. The TAMPERE first issue of the comprehensive market analysis, Newsec Property Outlook, HELSINKI was published in 2001. The Group STOCKHOLM expanded internationally into Finland TALLINN BERGEN OSLO GOTHENBURG RIGA AARHUS KLAIPEDA COPENHAGEN MALMÖ KAUNAS VILNIUS 13

● CONTACT AND ADDRESSES VILNIUS OFFICE OUTLOOK, 2021 H1 CONTACT AND ADDRESSES More analytical information at Newsec: Office solutions at Newsec: LITHUANIA Konstitucijos ave. 21C Head of Research and Analysis Head of Brokerage LT-08130 Vilnius Mindaugas Kulbokas Jurgita Ragaise Phone +370 5 252 6444 Cell +370 652 10556 Cell +370 659 66808 E-mail [email protected] E-mail [email protected] E-mail [email protected] www.newsec.lt Senior Analyst Tenant Consulting LATVIA Kristina Zivatkauskaite Head of Corporate Solutions Vesetas str. 7 Cell +370 610 38171 Martynas Babilas LV -1013 Riga E-mail [email protected] Cell +370 616 12216 Phone +371 6750 84 00 E-mail [email protected] E-mail [email protected] www.newsec.lv Landlord Consulting Head of Office Solutions ESTONIA Indre Narauskaite Pärnu mnt 12 Cell +370 698 83827 EE-10146 Tallinn E-mail [email protected] Phone +372 533 05313 E-mail [email protected] Office FIT-OUT Service www.newsec.ee Head of Project Management Tadas Grincevicius Cell +370 679 79779 E-mail [email protected] Office Care and Property Management Head of Office Management Group Justas Bandza Cell +370 6555 8989 E-mail [email protected] 14