Kaunas Office Outlook, 2020 H2

KAUNAS OFFICE OUTLOOK 2020 H2 All images: Detra Solar office Interior project: Urbondesign Photo: Norbert Tukaj ©

KAUNAS OFFICE MARKET KAUNAS OFFICE OUTLOOK, 2020 H2 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: Detra Solar office Interio2r project: Urbondesign Photo: Norbert Tukaj ©

KAUNAS OFFICE OUTLOOK, 2020 H2 KAUNAS OFFICE MARKET KAUNAS OFFICE MARKET NEW OFFICE LEASE DEALS LEAD TO GRADUAL DECLINE IN VACANCY RATES INSIGHTS MACRO INDICATORS 2020 office market. • At the end of 2020, the modern office -0.8% • Foreign investors have recognized space market in Kaunas stood at about Kaunas for the recent progress in 256,800 sqm. The leaseable area grew by GDP developing its investment environment. 12% in the first half but did not increase in The business ecosystem the city is the second half of 2020. The total office +1.1% building offers every opportunity for stock has almost doubled over the last 4 Kaunas to become a hub for smaller years. HICP business service centres and a well-suited • The recent intense development phase place for start-ups. The city is home to of the Class A and Class B office space 8.5% two leading Lithuanian universities, a segments in Kaunas has resulted in an large pool of students and the second ample supply of new office options. With Unemployment biggest workforce in the country. several new deals in the second half of the Companies entering the Kaunas market year, the leasing activity level was 65% +9.3% have better possibilities to hire fast and higher than H1 2020. The largest tenants build their teams under less pressure. were Telia, Eneba, Evolution Gaming, Wages Voltas IT, Shipzee and others. SUPPLY • The absence of new projects in the OFFICE MARKET 2020 In H1 2020, the Kaunas office market saw Kaunas office market will bring the office 256,800 sqm the launch of three new office projects vacancy rate below 10% in 2021. The that added 26,800 sqm of leasable space considerably high vacancy rate in the Total supply to the total office stock. No new office market is an excellent opportunity for projects were launched in H2 2020. tenants to discover Kaunas or expand in 15.7% the city’s office market. The rapid pace of market development • Companies in IT, Fintech and other Vacancy has resulted in substantial growth of active tenant sectors will have increasingly the Class A office segment, which now fewer office space options in the future. OFFICE MARKET FORECASTS 2021 makes up about 19% of the total stock. • Tenants with ambitious hiring plans 0 sqm The supply of Class A offices has been turn to the city of Kaunas because of increasing for the last three years, along its ample workforce and a vast supply New supply with the available space in this segment. of available office space. Immediate The MAGNUM business centre, located relocation availability and flexible leasing 8-10% in the city’s emerging central business solutions in terms of area and leasing district, has remained the biggest new period are the selling points of the Kaunas Vacancy office project in Kaunas. MAGNUM hosts Office Stock Source: Newsec New Stock by Class Source: Newsec Thousand, sqm 12% 0% Percentage 300 25% 25% 100 250 49% 80 200 60 87% 81% 150 19% 40 2020 100 50 20 0 0 A Class 13% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2019 Existing stock New Stock B Class 3

KAUNAS OFFICE MARKET KAUNAS OFFICE OUTLOOK, 2020 H2 18,000 sqm of Class A office space OFFICE DEVELOPMENT IN KAUNAS 2019-2021 AND PLANNED equipped with the most innovative solutions on the market. Developer/Owner Project GLA, sqm No new office development projects are 2020 Magnum 26,800 planned for 2021, but the office space 1 Viciunai Group JU1 18,000 supply is expected to increase by nearly 2 Domino Partneriai Brastos 14 1,400 22,000 sqm or almost 9% over the next 3 Sonex Consulting 7,400 2-3 years. The planned properties are Merkurijus 24,400 not expected to reach the market before Planned for 2022 and later Piliamiestis 5,100 2022-2023 as the construction work is 4 Litvalda H.O. Minkovskiu str. 6,800 yet to start. 5 YIT Lietuva Savanoriu ave. 375 10,000 6 Urban Inventors 2 500 7 Kalnieciai 51,200 TOTAL Source: Newsec “We believe that the work environment is closely related to the motivation and efficiency of staff, so we sought to improve the working conditions for our employees. The Prime Business Centre caught our attention because of its location and the lay- out of its premises, which we will be able to fully adapt to our needs,” Vaida Gicevičienė, Head of Real Estate at Telia Lietuva* Supply and Vacancy Source: Newsec Average Rent Rate Source: Newsec Percentage EUR/sqm/month 25 25 20 20 15 10 11% 19% 17% 16% 15 14-17.5 12% 10 7-11.5 13% 0% 9-14 12-13.5 11% 2020 H1 5 2020 H2 5 5% 2019 H2 0 Vilnius Kaunas Vilnius 1% Kaunas A class 2019 H1 0 2018 H2 Supply Growth Vacancy B class 4

KAUNAS OFFICE MARKET “Now is the best time to choose and make around 35,000-40,000 sqm. A gradual arrangements for a new office in the city. decline of vacant premises is forecast for The deal between Telia Lietuva and Prime 2021 as the average market vacancy level shows that the long-term importance of should drop below 10%. office space prevails,” Martynas Babilas, Head of Corporate Real Estate at Newsec RENTAL PRICES Advisory in the Baltics* The Kaunas office market managed to maintain the level of rent rates unchanged DEMAND the same scale are limited to a couple of in 2020. There was no correction of rental Nearly 10,000 sqm of office space was options. Tenants seeking to lease around prices. On the contrary, the rental rates leased in H1 2020 and almost 16,500 1,000 sqm or more have a wider choice of of new premises on offer have slightly sqm in H2 2020. The total annual level around 10 options in the market of more increased at the average consumer price of take-up dropped by 24% compared to than 60 modern business centres. A trend index. In the Class A segment, the average 2019. At least 20,000 sqm are expected to build larger scale properties has been rent was 12-13.5 EUR/sqm/month while to be leased in 2021 emerging in the market over the last four Class B spaces rented for – 7-11.5 EUR/ years. sqm/month on average. There are no The second half-year brought a number of indicators for price correction on the new deals to the market. Telia signed for VACANCY market. 3,800 sqm at Prime while Eneba leased The overall vacancy rate at the end of 3,700 sqm at Ozeskienes office building. 2020 was 15.7%, down from 17.1% in “Flexible leasing Evolution Gaming expanded by up to 2020 H1. At properties already built and conditions are 3,700 sqm at Alia, Voltas IT and Shipzee operating, over 40,000 sqm of space was increasingly acquired more space at Magnum, and vacant and available for lease. Almost more important YNOT Media and Ekomlita enlarged their a third of the premises available is in in attracting offices at BLC 2. buildings that began operating in 2020. reliable, long-term The absorption of the space on offer in tenants,” Sigitas The three largest tenants took up slightly Kaunas is expected to take more time, Jautakis, Director more than 40% of the total leased area in given that for the last several years, at Inoversa* 2020. The opportunities for tenants of the take-up in the market has averaged

OFFICE BUILDINGS IN KAUNAS KLAIPĖDA No Project Name Address, street 56 Openings of 2019 SILAINIAI 1 BLC2 K. Donelaicio str. 60 2 Kauno Dokas II Jonavos str. 7 3 Ausra verslo parkas Vytauto ave. 23, 27, 29 4 Prime Savanoriu ave. 367 5 Alia Raudondvario hwy. 107 6 Sqveras Karaliaus Mindaugo ave. 35 7 Karaliaus Mindaugo BC Kaunakiemio str. 1 8 S16 Statybininku str. 16 9 Longas Veiveriu str. 153 Openings of 2020 10 Magnum Karaliaus Mindaugo ave. 38 11 JU1 Julijanavos str. 1E 12 Brastos 14 Brastos str. 14 13 Workland Laisves all. 82 Openings of 2021 and later 14 Merkurijus Laisves all. 60 15 Piliamiestis Brastos str. 24 16 Minkovskiu H. O. Minkovskiu str. 17 Kalnieciai Savanoriu ave. 375 Existing Office Buildings 18 Arka Karaliaus Mindaugo ave. 37 19 River Hall Jonavos str. 60 20 Nemuno 3 Nemuno str. 3 21 Konversus Chemijos str. 15 22 Kalantos 49 Kalantos str. 49 23 Cube Savanoriu ave. 321C 24 V. Krėvės 57B V. Kreves ave. 57B 25 K26A V. Kreves ave. 26A 64 26 Kauno Dokas Jonavos str. 7 27 Kauno Duona V. Kreves ave. 129 28 Jonavos 30 Jonavos str. 30 29 B66 Barsausko str. ZALIAKALNIS 30 Renesansas 1 Juozapaviciaus str. 11 VILIJAMPOLE 58 31 Birzelio 23 Birzelio 23-osios str. 4 57 2 15 26 19 32 Pramones BC Pramones ave. 4A 5 12 28 33 Savanoriu 277 Savanoriu ave. 277 34 Sitis Veiveriu hwy. 139 35 Lapeno Namas Kestucio str. 38 52 36 Ausra Business Park A&B Vytauto str. 23, 27, 29 43 1 16303379618134150 37 Maironio 28 Maironio str. 28 59 20 38 Plaza BC Taikos ave. 141 39 Swedbank Maironio str. 26B OLD TOWN 40 BC 363 Savanoriu ave. 363A 41 Inovacijų 3 Inovaciju str. 3 42 Savanoriu 349 Savanoriu ave. 349 43 BLC Donelaicio str. 62 CENTRE 44 Artis Savanoriu ave. 178 45 Vytauto 32 Vytauto ave. 32 5 46 Diurablis Partizanu str. 63M 47 Savanoriu 221 Savanoriu ave. 221 ALEKSOTAS 48 Technopolis Europos ave. 121 49 BC 1000 Taikos ave. 88A 16 50 Nordic BC Savanoriu ave. 192 51 Savanoriu 292B Savanoriu ave. 292B 52 Capital Putvinskio str. 50 FREDA 53 Ausra Business Park Vytauto ave. 23, 27, 29 54 K26A V. Kreves str. 26A 55 Barkodas Pramones ave. 4D 56 Senukai BC Islandijos hwy. 32 57 NFQ (BTS) Brastos str. 15 58 BC Mikrovisata Savanoriu ave. 109 59 Ozeskienes 17 Ozeskienes str. 17 48 60 Maironio 11 Maironio str. 11 11 9 61 Pramones 23 Pramones ave. 23 34 62 Kalantos 34 R. Kalantos str. 34 63 Chemijos 9D Chemijos str. 19A 64 Neries BC Neries krnt. 18 65 Barkodas Pramones ave. 4E 66 Daimonda Taikos ave. 131B 67 Partizanu 15 Partizanu str. 15 Under development Office buildings Central business district Existing Office buildings New business district Old business district

41 EIGULIAI MURAVA KAUNAS FEZ VILNIUS 46 PETRASIUNAI 17 27 234240145 24 66 38 8 51 49 DAINAVA 33 67 31 54 25 47 50 61 44 65 32 55 21 GRICIUPIS 63 29 22 62 53 45 36 3 7 SANCIAI PANEMUNE 30

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KAUNAS OFFICE OUTLOOK, 2020 H2 KAUNAS 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] 9

NEWSEC ANALYSIS PRODUCTS KAUNAS OFFICE OUTLOOK, 2020 H2 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, Kaunas Office Outlook, Spring 2021 2020 Q4 2020 H1 Riga Office Outlook, Tallinn Office Outlook, Baltic Office Outlook, 2020 H1 2019 2019 Baltic Property Outlook, Baltic Investment Outlook, Newsec Property Outlook, 2020-2021 2019 Autumn 2020 Access Newsec’s market report portal here: www.newsecbaltics.com