Baltic States Office Outlook, 2023 Q2

Project: Novira Plaza Baltic States, 2023 Q2 Developers: Evernord Asset Management, Novira Capital

Vilnius Office Market 2023 Q2 Key Indicators Slow office market awaits a boost of activity Q-o-Q Y-o-Y Forecast Supply 1 069 400 sqm - The supply of office space in Vilnius - Few significant deals have taken place on 38 400 sqm increased by more than 38 000 sqm in Q2. the market in this period. Decisions on Stock 122 000 sqm The 2nd phase of the B+ class Cyber City office leases are typically being put off New supply and the B+ class S28 business centre joined until things get more stable. Under construction 14 300 sqm the list of completed projects. Both added - An interesting increase in activity can be modern office space in the Uptown district. seen in the recently enlarged sublease Demand 7.9 % - Office area currently under construction area. The terms for moving in are faster 5.9 % climbed to 122 000 sqm. Over 50% of that is here, and the spaces are very high-quality Take-up 9.5 % projected to see completion this year. and already outfitted. Renting furniture - Due to contractually mandated and equipment is an option, and there is Vacancy 19.0-21.5 €/sqm indexation, property owners raised rents at less risk that fit-out work will be done next 16.0-19.0 €/sqm the start of the year. They had no reason door. Total 12.0-15.3 €/sqm for rent increase in the second quarter. A class - The overall level of vacancy grew from \"Slowing economic B class 6.00-6.25 % 6.5% to 7.9%. While class A vacant growth is raising doubts 7.25-8.50 % premises decreased and the vacancy fell to Rent rates 5.9%, in class B, available space increased and slowing tenants and the vacancy rate rose to 9.5%. decision-making\" Prime - Take-up in Q2 2023 totaled 14 300 sqm, A class which is even less than the Q1 total of 19 B class 400 sqm. This forces a decrease in the annual projection to 80 000 sqm. It will be Yields difficult to reach that level, though, as tenants are evaluating relocation plans Prime more cautiously and responsibly. Secondary Kristina Zivatkauskaite Senior Analyst [email protected]

Tallinn Office Market Tenants are taking more time 2023 Q2 to consider relocation Key Indicators Q-o-Q Y-o-Y Forecast Supply 1 001 100 sqm - Despite the sluggish economy, the - Start-ups are having more trouble raising 22 800 sqm pipeline of new office buildings remains funds as investors have grown more Stock 101 900 sqm rather high. More than half of the new cautious. The effect, over time, is reduced New supply space is made up of Arter Quarter, Tule headcount and in some cases shutting Under construction 16 500 sqm Maja and Porto Franco projects. down companies. For the office market, Completion of these projects is planned to that means less demand for new, larger Demand 7.3 % be finished within the next two years. offices. 6.6 % Absorption 7.5 % - Overall office vacancy increased from - On a positive note, the job market has 6.8% to 7.3% in Q2 2023. B class vacancy stayed strong with no drastic rise in Vacancy 16.5-23.5 €/sqm was little changed from last quarter, but A unemployment, indicating that the overall 16.5-22.0 €/sqm class offices saw a jump of about +1.5% in vacancy rate will not increase sharply. Total 12.5-17.5 €/sqm available space. A class \"Strong job market B class 6.00-6.25 % - In Q2 2023, the office supply surpassed 1 indicates vacancy rate 7.50-8.50 % million square meters. Rent rates will not increase - If in previous years tenants mainly dramatically.\" Prime sought offices for expansion, the focus is A class now on more effective use of space. Rent B class costs have risen and companies are looking to downsize their offices, especially at a Yields time when many people are working from home offices. Prime Secondary Mihkel Männik Analyst [email protected]

Riga Office Market 2023 Q2 Key Indicators Coworking is setting records Q-o-Q Y-o-Y Forecast Supply 792 000 sqm - Coworking is proving its popularity by - Almost 90% of Q2 take-up was preleases, 0 sqm taking up space in existing and new office proof that good supply is creating good Stock buildings and even in shopping centres. To demand. New offices are attracting tenants New supply 121 650 sqm attract potential coworking clients, a with fresh, contemporary design and Under construction convenient location, a high-quality standards of wellbeing along with 15 100 sqm building and a decent area all look like competitive costs for utilities and Demand musts. In Q2 2023, Workland announced management. 9.7 % the opening of a 3 200 sqm coworking - IT players leased a decent amount of Take-up 9.4 % office on the 5th floor of the Galleria Riga office space in H1, both existing companies 9.8 % shopping centre. Also in Q2, the IWG and others now opening an office in Riga. Vacancy Group, under the coworking brand 15.0-18.0 €/sqm “Spaces”, preleased 2 300 sqm in the \"Projects are seeing Total 15.0-17.0 €/sqm Elemental Skanste class A office project. strong demand even A class 9.0-14.0 €/sqm Total take-up of coworking reached 9 000 B class sqm in the first half of 2023. before delivery\" 6.25-6.75 % - The office market is active. Existing Rent rates 7.50-9.00 % offices are reaching capacity and those under construction are signing preleases at Prime a much faster pace than was expected. A class - Take-up on the office market was strong B class in Q2, remaining at a level similar to the previous quarter, for an H1 2023 total of Yields over 30 000 sqm. Prime Secondary Inita Nitiša Real Estate Economist [email protected]