Riga Office Market, 2021 Q3

RIGA OFFICE MARKET 2021 Q3 Short overview www.newsec.lv FOLLOW US

RIGA OFFICE MARKET, 2021 Q3 THE NEW HIGH-QUALITY, SUSTAINABLE PROJECTS THAT ENTER THE MARKET WILL BE ATTRACTIVE TO COMPANIES WHICH ARE RIPE FOR RELOCATION SUPPLY Total Stock 2021 Q3 2021F VACANCY New Area PQ/PA TAKE UP 757 000 m2 758 500 m2 Growth yoy 3 000 m2 4 500 m2 Class A 1.1% 1.0% Total 2021 Q3 2021F 14.4% 13.3% Area 12.5% 12.0% 2021 Q3 2021F 24 000 m2 60 000 m2 RENT RATES, CLASS A CLASS B 2021 Q3 ECONOMIC 14-18¤ 9-16¤ INDICATORS GDP 2020 2021F www.newsec.lv Unemployment HICP -3.6 % 4.1 % Wages 8.1 % 7.5 % 0.1 % 2.8 % 6.2 % 8.9 % Source: Ministry of Finance; F - forecast 2 FOLLOW US

TAKE-UP EXCEEDS EXPECTATIONS ACTIVE DEVELOPMENT IN SKANSTE Elemental Skanste In July, Pillar Capital began construction of the New Hanza office building. With a leasable area exceeding 12 000 sqm, this class A facility will be nearly zero- energy consumption. The first floor will have catering and commercial premises. Meanwhile, in September Kapitel signed an agreement with Merks on the construction of the Elemental Skanste by 2023 to supply more than 20 000 sqm of class A office space certified BREEAM Excellent. Two office buildings will be joined into one, providing an interesting architectural solution for Skanste. TAKE-UP CONTINUED ACCELERATING IN 2021 Q3 PRE-LEASE OFFICE CONSTRUCTION Take-up of 24 000 sqm in Q3 was driven by a GALIO Group has signed an agreement with Merks for the number of small and medium-sized deals and one construction of an office building on G. Zemgala Street. A significant pre-lease agreement. Amid demand for 11 000-sqm office will be leased to SEB. It will be one of both class A and class B offices, overall market three office buildings in the project. All the buildings will vacancy fell from 13.2% to 12.5% during the have BREEAM Excellent certification and offer premises quarter. Many businesses took the pandemic as a for entertainment, events and relaxation. chance to focus on office changes, development With a large amount of office space due to be delivered in and planning for the future. The office market is the near future, pre-lease agreements are set to increase for the most desirable space, with a focus on enhancing expected to remain dynamic in Q4. employees’ wellbeing. SAME OFFICE, NEW OWNER EXPANSION In September, the EfTEN Real Estate Fund 4 Eastnine leased 1 300 sqm of office space in the acquired the Jaunā Teika office campus from Valdemara Centrs to the Norwegian IT company Pearl Hanner Group for €131m. The campus’s net Group. The tenant will move in in April 2022 under a 6- leasable area exceeds 50 000 sqm. Roughly 50 year lease agreement. Pearl Group is one of northern tenants occupy the current buildings, two of which Europe's leading suppliers of solutions for enterprise were built recently – in 2018 and 2019. EfTEN resource planning (ERP), customer relationship already owns other office buildings in Latvia, management (CRM), e-commerce and marketing. With its including for example the Duntes Biroji, the head office in Norway, the company employs more than Tērbates Biznesa Centrs and the airBaltic 250 people in a variety of countries. Headquarters acquired in 2020. COMPANIES IN RIGA NOW HAVE TWO OPTIONS – TO CHOOSE FROM EXISTING VACANT SPACE OR WAIT FOR NEW PROJECTS AND MAKE PRELEASE AGREEMENTS. 3 www.newsec.lv FOLLOW US 3