Vilnius Office Outlook, 2020 Q2

VILNIUS OFFICE OUTLOOK 2020 Q2 Technopolis DELTA business centre anchored by Western Union

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2020 Q2 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. 2

VILNIUS OFFICE OUTLOOK, 2020 Q2 VILNIUS OFFICE MARKET VILNIUS OFFICE MARKET OFFICE – A PLACE TO MEET AND WORK TOGETHER! INSIGHTS 63,500 sqm projects in 2020 will in fact be handed • Data as of the end of Q2 2020 showed over, with a more notable correction Lithuania had managed to bring the Office take-up rose to a of new supply expected in late 2020 or COVID-19 pandemic under control and record in 2020 H1 2021. Developers of projects that are that the first wave, unlike in some other planned but where construction has countries of the world, had been halted. From 2.7% to 3.3% not yet started are likely to take the The global view of the pandemic at the opportunity to wait and reassess the end of June was quite different as the Vacancy increased situation of the market in the fall or even number of new cases reached the highest at year-end. level to date and the number of active 7 new projects • The leasing market was more active cases was steadily growing. than expected in Q2 2020, with take- • In June, with the end of the 3-month Planned in 2020 H2 up of more than 27,000 sqm. A lease quarantine and amid initial signs of transaction for 15,000 sqm of office recovery of the country’s economy, 260,000 sqm space was signed between Western Union the Bank of Lithuania improved its and Technopolis at the office campus in GDP growth forecasts for 2020. Under New supply under the Technopolis Ozas. That is the biggest the new base scenario for economic construction office deal so far this year not only in development, a GDP contraction of 9.7% Vilnius but in all the Baltic countries, is forecast in 2020 followed by growth showing active expansion of service of 8.3% in 2021. It is projected that, centres that are already operating on the due to the impact of the pandemic, the market. After the expansion, Western unemployment rate will rise this year to Union will occupy more than 25,000 sqm 11.9%, the average wage will decrease at the business park. 2.6%, and the average inflation rate for • The 2nd quarter’s main changes the year will be 0.6%. were in existing projects, while there • New development in the Vilnius office were no noteworthy lease transactions market has not stopped, with official during the period at properties that are in announcements of development plans development. It’s natural that during the and the start of construction for new quarantine owners gave more attention projects. Some 260,000 sqm of new to managing the situation that had come office space was under construction about and that tenants put expansion and at mid-year. The modern office market moving plans somewhat on hold. totalled roughly 740,000 sqm at the of • It cannot be said that the quarantine June and increased 2.7% during the 2nd period or stalled economy had no impact quarter. at all on office market tenants. Some did • It’s forecast that all planned office review their growth plans, made decisions Macro Indicators of Lithuania Source: Statistics Lithuania Social Indicators of Lithuania Source: Statistics Lithuania Percentage Percentage 10 20 5 15 0 10 5 -5 0 -10 -5 -15 -10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F GDP HICP F – Bank of Lithuania forecast Unemployment Gross Wage F – Bank of Lithuania forecast 3

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2020 Q2 VILNIUS OFFICE MARKET to allow employees to work more from general commercial space, the Paupys about 700 flats on the roughly 7 ha home and already now feel a reduced project is distinctive in being meant not territory of an industrial conversion need for office space. The market is only for the business community, but project. Developed by Darnu Group, the seeing an increased need for subletting also for locals and people in the entire project added 16,700 sqm of commercial of premises, but quick decisions and city given its broad offer of services, and varied-use space to the market. changes are prevented by existing lease shops and restaurants. Still, most of the The main office tenants at Paupys are agreements and long-term commitments, Paupys Business Home, about 70% of Ernst & Young, MV Group and Worldline. as well as by the technical limits for re- it, is office space. The development of Employees, people living in nearby flats planning spaces. new projects has not stopped and the and residents of the city will be able to • The market’s major tenants are market saw official announcements of take advantage of the planned commercial talking more openly about more flexible plans for new office projects and of the part: stores, services, a cinema, working conditions combining work at the start of construction (two new projects conferences and a gourmet market – all in office and work from home, and they’re in central Vilnius were presented: CORE, one place. Altogether, Darnu Group plans implementing cautious, well thought-out with 35,000 sqm of space for lease, and to invest about 150 million euros in the strategies for returning to the office, but CLOUD.Offices, with 5,000 sqm). At the Paupys conversion project. the need for an office remains. The office end of the first half of 2020, construction • The Green Hall 3 office building is is still the main workplace. Agreements was underway on 17 projects in Vilnius the final stage in the development of made by major market tenants (Western that will offer 260,000 sqm of office an ensemble of three office buildings Union, Telia) only confirm that. premises. At least another 130,000 of distinctive architecture on the right • It’s reasonable to think there will be sqm of office space, mostly spready bank of the Neris River. The leasable area companies whose leased area will shrink across the central business district, is totals more than 19,500 sqm, with the by up to 20% and whose employees will planned in 2022 or later. The Vilnius third building (2,800 sqm) set to house work from home or other places they office market is especially favourable for Moody’s, Novartis and a planned Monday choose. In such cases, though, the long- tenants at present due to the wide choice, Office coworking space. term impact on employees’ productivity and the new large-scale class B+ office With the office projects planned in 2020 and effectiveness should be studied well. buildings that are under construction will expected to be delivered, the Vilnius In any case, this quarantine and post- significantly boost the supply of quality office market will grow by an impressive quarantine period is too short to be able office space. 115,000 sqm. That will be a record for to draw long-term conclusions. new supply in a single year; over the New projects in Q2 2020: last 5 years, the annual new supply of SUPPLY • The Paupys Business Home is premises averaged 65,000 sqm. While During Q2 2020 the Vilnius office market a multifunctional block of several growth has been observed every year, this saw the completion of two new office commercial buildings sharing a common will be the first time new supply exceeds projects which added about 19,500 concept and harmoniously integrated 100,000 sqm. Construction that is well sqm of space to the rental supply. As into a new residential development of underway won’t be stopped, thus any Office Stock Source: Newsec Take-up Source: Newsec 20% Thousand, sqm Thousand, sqm 1,000 120 800 16% 100 14% 600 13% 7% 80 60 400 40 200 20 0 0 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2010 2011 2012 2013 2014 2015 2016 2017 2018 Existing Stock Additional Stock Q1 Q2 Q3 Q4 4

VILNIUS OFFICE OUTLOOK, 2020 Q2 VILNIUS OFFICE MARKET «New large-scale class B+ office buildings that are under construction will significantly boost the supply of quality office space.» more significant correction of plans for OFFICE DEVELOPMENT IN VILNIUS IN 2020-2022 AND PLANNED new supply can be expected only in late 2020 or 2021. Developers of projects Developer/Owner Project GLA, sqm that are planned but where construction has not yet started are likely to take the 2020 114,900 opportunity to wait a bit and reassess the situation of the market and their future 1 Urban Inventors Green Hall 3 2,800 plans. 2 Darnu Group Paupys 16,700 3 PST U219 15,000 DEMAND 16,200 The rental market was more active than 4 Hanner Business Stadium North 12,500 expected in Q2 2020. Take-up of office 5 Lords LB SEB HQ 9,700 space exceeded 27,000 sqm. The biggest 6 GALIO GROUP WAVE 12,500 office lease transactions were with 7 Vilbra Uptown Park 2,800 Western Union, Metso, and the Migration 26,700 Department. Smaller and mid-size 8 Invalda PK Zalgirio 94 tenants also signed new or expansion 9 Technopolis Technopolis NOVA 168,900 agreements: Macaw, Novartis, Infomedia, Magnetic MRO and others. Operators of 2021 15,600 coworking spaces took steps to expand as 9,500 well – SBA group’s Monday Office planned 10 Lords LB LVOVO 15,000 a new location and Swedbank’s RockIT 11 Skraidenis Office 100 40,000 financial technology centre announced 12 Baltic Horizon BH Meraki 5,000 an increase of space. Lease agreements 13 Vastint Business Garden Vilnius, stage I 13,000 were concluded in the first half of 2020 14 Koriai NT CLOUD Offices 35,000 for 63,500 sqm, which is nearly 55% of 15 GALIO GROUP Saltoniskiu 7, stage IV 14,000 the take-up for all transactions in 2019. 16 Asis CORE 7,200 That was due to a great start of 2020 and 6,000 several very large leasing deals. Most lease 17 GALIO GROUP Freedom 36 8,600 transactions in Q2 this year were for space 18 YIT Naujasis Skansenas/Zalgirio 112 at previously built properties, with almost 19 YIT Naujasis Skansenas/Linkmenu 17A 129,500 no bigger pre-lease deals in the period. 20 YIT Sky Office 10,000 VACANCY Planned for 2022 and later 9,500 The vacancy rate in Q2 2020 reached 19,000 21 Lords LB K18B 30,000 22 Transmedos Projektai Jasinskio 14 15,000 23 Capital Mill Unum 30,000 24 VK Investicijos Sparta Campus 16,000 25 Eika FLOW 26 Realco HERO 413,300 27 Hanner Business Stadium North East TOTAL Source: Newsec Vacancy Rate Source: Newsec Average Rental Rates Source: Newsec Percentage EUR/sqm/month 25 14.0-17.0 11.0-14.0 9.0-12.0 20 15 10 5 0 A Class 2009 Q2 2009 Q4 2010 Q2 2010 Q4 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 B Class A Class B+ Class B Class 5

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2020 Q2 VILNIUS OFFICE MARKET 3.3%, rising 0.6 %-points during the quarter, from 2.7%. More unoccupied space turned up in the class B segment, where the vacancy level is 4.3% (it was 2.9%). The class A vacancy rate shrank slightly, to 2.1% from 2.4%. At properties already built and operating, there was a total of 24,500 sqm of free space. About a third of the free premises can be found in the central business district, but they are spread across numerous office centres. Due to the pre-lease agreements for properties that are still in development and tenants who are gradually moving to new premises, space available for leasing in the Vilnius office market will only increase. In the class B segment, a stronger trend of rising vacancies will remain since most tenants at the office centres planned to open in 2020 will be moving from class B space. More than 60% of the class A supply that’s still planned for this year is already leased. RENTAL RATES There was no correction of rental prices in Q2 2020. On the contrary, newly offered premises and their rents slightly increased the price average (by up to 1%). In class A the average rent was 15.5 euros, in class B it was 11.9 euros, with the overall price level having started to rise slightly a year earlier. Asking rents for class A premises range from 14 to 17 euros/sqm/month. In class B+, rents range from 11 to 14 euros/sqm/month. Lower class B segment prices remain in the range of 9-12 euros/ sqm/month. Rents for properties in development remain higher than the market average. Managers of older office buildings, facing long-term vacancies, especially when bigger, or trying to avoid that amid the rapidly growing supply, are starting to offer more flexible leasing terms. 6

VILNIUS OFFICE OUTLOOK, 2020 Q2 NEWSEC ANALYSIS PRODUCTS 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, Baltic Property Outlook, Baltic Investment Outlook, Spring 2019 Spring 2019 2019 Baltic Office Outlook, Tallinn Office Outlook, Riga Office Outlook, 2019 2019 2019 Kaunas Office Outlook, Newsec Property Outlook, Newsec Property Outlook, 2019 H1 Autumn 2019 Spring 2020 Access Newsec’s market report portal here: www.newsec.lt 7

OFFICE BUILDINGS IN VILNIUS 80 TARANDE No Project Name Openings of 2020 Address, street 1 Green Hall 3 Upes str. 21 2 Paupys Aukstaiciu str. 7 3 U219 Ukmerges str. 219 4 SEB HQ Konstitucijos ave. 24 5 WAVE Savanoriu ave. 5 6 Uptown Park Svitrigailos str. 13 7 Technopolis NOVA V. Gerulaicio str. 18 8 Business Stadium North Rinktines str. 5 9 Zalgirio 94 Zalgirio str. 94 Openings of 2021 10 LVOVO Lvovo str. 37 11 Office 100 Paneriu str. 49 12 BH Meraki Ukmerges str. 310 13 Business Garden Vilnius, stage I Laisves ave. 10 14 Saltoniskiu 7, stage IV Saltoniskiu str. 7 15 CORE Ukmerges str. 126 16 Freedom 36 Laisves ave. 36 17 Naujasis Skansenas Zalgirio str. 112/Linkmenu str. 17A 18 CLOUD Offices Zalgirio str./Kalvariju str. 19 Sky Office Spaudos str. 7 Office buildings of 2022 and later 20 K18B Konstitucijos ave. 18B 21 Jasinkio 14 J. Jasinskio str. 14 22 UNUM Pilaites ave. 24 23 Sparta Campus Svirtigailos str. 32 24 FLOW Lvovo str. 21A 25 HERO Kalvariju st. 24A 26 Business Stadium North East Rinktines str. 3 Office buildings of 2019 and earlier JUSTI 27 Tower Konstitucijos ave. 15 28 Live Square Gedimino ave. 44A 79 29 Avia Solutions Group HQ Dariaus ir Gireno st. 21A 41 19 30 Quadrum Business City Konstitucijos ave. 21, 21B, 21C 22 78 31 Asgaard Keys Ukmerges str. 124 32 Link Saltoniskiu str. 9B 77 76 33 3 Bures III Giedraiciu str. 3 KAROLINISK 34 Business Stadium West Rinktines str. 5 35 Park Town West Hill & East Hill Lvovo str. 105; 101 16 36 Green Hall 2 Upes str. 21 37 Saltoniskiu 7, stage I, II & III Saltoniskiu str. 7 38 Technopolis PENTA Ozo str. 12A 39 Narbuto 5 Narbuto str. 5 PILAITE 40 Domus Pro Bieliunu str. 1 41 Duetto I & II Spaudos str. 8; 6 42 Eleven Kareiviu str. 11 43 B Nordic 26 J . Basanaviciaus str. 26 44 City Zalgirio str. 90 45 135 Zalgirio str. 135 46 Technopolis DELTA J. Balcikonio str. 9 47 Highway Savanoriu ave. 178A 48 Uniq A. Gostauto str. 12A 49 k29 Konstitucijos ave. 29 50 Premium Sporto str. 18 51 IBC (International Business Centre) Seimyniskiu str. 3A, 3, 1A / A. Juozapaviciaus str. 6/2 52 3 Bures Lvovo str. 25 53 Europa Konstitucijos ave. 7 54 Swedbank HQ Konstitucijos ave. 20A 55 GV18A Gelezinio Vilko str. 18A 56 Danske Bank Saltoniskiu str. 2 57 Saltoniskiu 10C Saltoniskiu str. 10C 58 Baltic Hearts Ukmerges str. 120 59 Green Hall Upes str. 21 60 Marenta Business Centre Kestucio str. 65 61 Vertas Gyneju str. 16 62 Merchants' Club Gedimino ave. 35 63 Plaza 31/1 Vilniaus str. 31 / Islandijos str. 1 64 Business Centre 2000 Jogailos str. 4 65 Basanaviciaus 15 J. Basanaviciaus str. 15 66 BC 12 J. Jasinskio str. 12 67 MG Baltic J. Jasinskio str. 16, 16A, 16B, 16C 68 Eika Business Centre A. Gostauto str. 40A, 40B LAZDYNAI 69 G40 A. Gostauto str. 40 LAZDYNELIAI 70 Business Centre Svitrigailos 11B Svitrigailos str. 11B, 11H, 11M 71 Vytenio 46 Vytenio str. 46 72 Skraidenis Naugarduko str. 100, 102 73 LJB Savanoriu ave. 28 74 Evita Savanoriu ave. 18 75 L3 Laisves ave. 3 76 GRTJIrNIaGp&eIJSAciNKjaES Menulio str. 7, 11 77 Pilaites ave. 16 78 Atea J. Rutkausko str. 6 79 Grand Office Virsuliskiu ln. 34 80 Orange Office Senasis Ukmerges rd. 4 81 Trio Perkunkiemio str. 3, 5, 7 82 Business Park Four Perkunkiemio str. 2, 4, 6 GARIUNAI 83 One Ukmerges str. 322 84 Kamane Ukmerges str. 369A 85 Sostena Ukmerges str. 280 86 Evolution Ukmerges str. 223 87 Akropolio Business Centre Ozo str. 25 88 BH-92 Zalgirio str. 92 89 Zalgirio Business Centre Zalgirio str. 88 90 North Star Ulonu str. 2 91 Ulonu Business Centre Verkiu str. 25C / J. Galvydzio str. 1 92 Domus Centre P. Luksio str. 32 93 Ozo Business Centre Ozo str. 10A 94 Technopolis ALFA V. Gerulaicio str. 1 95 Technopolis BETA J. Balcikonio str. 3 Under development Office buildings 96 Technopolis GAMA Kalvariju str. 204 Existing Office buildings 97 NCBC Kareiviu str. 6 CBD 98 Eta Zirmunu str. 107 Secondary Business locations 99 Zirmunu Business Centre Zirmunu str. 139 100 Sunrise Valley Sauletekio al. 15 101 VITP Mokslininku str. 2A ZEMIEJI 102 Vilnius TechPark Antakalnio str. 17 PANERIAI

VILNIUS OFFICE OUTLOOK, 2020 Q2 101 SANTARISKES 83 81 82 12 JERUZALE 40 84 TURNISKES PASILAICIAI 85 FABIJONISKES 99 BALTUPIAI 100 3 46 96 98 95 INISKES 7 94 97 42 86 38 93 SESKINĖ 87 91 92 90 VIRSULISKES SNIPISKES ANTAKALNIS 45 ZIRMUNAI 6 153312515847375556 35 4 17 9 88448918 102 KES 60 39 49 834 50 6 30 524720150353223425 26 36 59 1 51 ZVERYNAS 48 61 62 28 67 2166 6968 64 63 43 65 UZUPIS SENAMIESTIS 2 5 NAUJAMIESTIS 75 13 74 70 73 6 23 71 RASOS MARKUCIAI VILKPEDE 72 11 PAVILNYS NAUJININKAI 47 29

VILNIUS OFFICE MARKET VILNIUS OFFICE OUTLOOK, 2020 Q2 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 OULU our services on the global market. This makes Newsec Northern Europe’s only TRONDHEIM full service property house, and provides us with a unique ability to forecast the TAMPERE future. HELSINKI Newsec is the result of a unique STOCKHOLM history of growth, characterised by constant originality of thinking. The TALLINN first issue of the comprehensive market analysis, Newsec Property Outlook, was published in 2001. The Group expanded internationally into Finland BERGEN OSLO GOTHENBURG RIGA AARHUS KLAIPEDA COPENHAGEN MALMÖ KAUNAS VILNIUS 9

VILNIUS OFFICE OUTLOOK, 2020 Q2 VILNIUS OFFICE MARKET 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 Roseni str. 7 Cell +370 698 83827 EE-10111 Tallinn E-mail [email protected] Phone +372 664 5090 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] 10