Newsec Vilnius Office 2022 Q1

VILNIUS OFFICE MARKET 2022 Q1 Short overview www.newsec.lt FOLLOW US Picture: Girteka Park developed by Galio Group, Vilnius, Lithuania

VILNIUS OFFICE MARKET, 2022 Q1 HIGH DEMAND FOR CLASS A OFFICES IN VILNIUS OFFICE MARKET SUPPLY Total Stock 2022 Q1 2022F New Area PQ/PA VACANCY 954 400 m2 1 060 500 m2 Growth yoy 19 300 m2 125 400 m2 TAKE UP RENT RATES, 9.4% 13.4% 2022 Q1 ECONOMIC 2022 Q1 2022F INDICATORS 3-4% Class A 2.2% 8-9% Total 6.8% 2022F Area 2022 Q1 110 000 m2 Vs.5y avg. 30 200 m2 109% 120% CLASS A CLASS B+ 16-18¤ 10-14.5¤ GDP 2021 2022F Unemployment HICP 4.9 % 1.6 % Wages 7.1 % 7.3 % 4.6 % 9.8 % 9.8 % 8.8 % Source: Ministry of Finance; F – forecast, PQ – per quarter, PA – per annum www.newsec.lt FOLLOW US

DEMAND REMAINS HIGH FOR OFFICES IN Q1 2022 Take-up in the first quarter of the year was 30,300 sqm. Large leases were signed by the Workland co- working space, the Juodeliai Group, UNRVLD, and a number of IT, fintech, consulting and other companies that have not yet made their lease agreements public. About 70% of the total leased space was in the class A segment. NEW SUPPLY TAKE-UP IN VILNIUS Source: Newsec Two business centres in Vilnius were completed and opened their doors to tenants Thousand, sqm in the first quarter – the Girteka Park and the first CORE building added about 19,000 sqm of 140 office space to the market. Supply grew 2.1% during the quarter, with another 106,000 sqm 120 of new space due to be delivered by year-end. 100 5-YEAR AVERAGE 80 60 40 20 0 2019 2020 2021 2022F 2018 Q1 Q2 Q3 Q4 Forecast PRESSURE ON RENTAL RATES IS MOUNTING TIMEFRAMES TO FIT OUT PREMISES ARE In the class A and B+ segments, upward HARDER TO ESTIMATE pressure on asking rents is growing. Rising Active competition for tenants along with construction costs, driven by growing prices over-optimistic and unrealistic timelines for fit- for materials and construction work, leave no out can have consequences for landlords. If room for doubt. As overall vacancy in the deadlines for delivery to tenants are missed, market drops, landlords with a tolerable landlords may have to bear the costs of vacancy level at their projects are raising rents temporary offices or lease extensions. by around 5-10%. CHANCES OF A GAP IN NEW SUPPLY ARE UP VACANCY IN CLASS A FALLS TO A LEVEL Analysis of the supply of new projects in 2022 LONG UNSEEN shows office tenants have very limited choice. The overall level of vacancy in the market fell Five of the nine projects are fully occupied, from 7.8% to 6.8% in the first quarter, while with the rest already about 40% leased. The the vacancy rate in class A offices fell even amount of vacant space (around 35,000 sqm) more – from 3.4% to 2.2%. is very similar to quarterly take-up. If developers delay projects, the market will not see almost half of the supply that is planned for 2023. VIGILANCE IN THE OFFICE MARKET INCREASED IN Q1 2022 Despite the geopolitical situation, tenants operating in the market are considering and making decisions on office relocations and expansions. www.newsec.lt FOLLOW US