Kaunas office outlook 2021 H1

KAUNAS OFFICE OUTLOOK 2021 H1 All images: Voltas IT office, BC Magnum, Kaunas Interior project: ARCHAS UAB Photo: Leonas Garbačauskas

KAUNAS OFFICE MARKET KAUNAS OFFICE OUTLOOK, 2021 H1 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: Voltas IT office, BC Magnum, Kaunas Interior project: ARCHAS UAB 2Photo: Leonas Garbačauskas

KAUNAS OFFICE OUTLOOK, 2021 H1 KAUNAS OFFICE MARKET KAUNAS OFFICE MARKET DEMAND FOR MODERN OFFICE SPACE AMONG TENANTS REMAINS STEADY INSIGHTS MACRO STATS FOR 2020 offices in the future. • At the end of 2021 H1, the modern • The vacancy rate on the Kaunas office office space market in Kaunas stood at -0.9% market will fall to 7-8% in 2021 amid the roughly 255,400 sqm, or 0.9 sqm per lack of new projects. capita. The total leaseable area has not GDP • The Kaunas office market will see increased since 2020 H1. needs for some 50,000 sqm over the next • Lack of new supply on the market is +1.1% 1.5 to 2 years, suggesting a shortage of resulting in reduced availability. Class A new supply may be felt. space available for lease is the least since HICP development began in 2018 and class B SUPPLY vacancies are down significantly too. 8.5% In 2020, the Kaunas office market saw • With a variety of deals in the first the launch of three new office projects half of the year, leasing activity was 44% Unemployment that added 26,800 sqm of leasable space higher than in 2020 H1. The largest to the total office stock. No new office tenants included TeleSoftas, SneakyBox, +10.2% projects were launched in 2020 H2 or Adeo Web, Tandemum, Biomapas, Inhus 2021 H1. Engineering, and Delamode. Wages Class A offices account for about 19% • An active H1 and positive projections of the total stock, which is still low. The for H2 suggest 2021 will be another OFFICE MARKET IN 2021 H1 supply of class A offices has increased successful year for the office lease market rapidly in recent years, with available in Kaunas. 255,400 sqm space in the segment also growing. Class • R&D departments of rapidly growing B has seen more balanced growth, with manufacturing companies in Kaunas Total supply high-quality class B Class properties being region seem set to emerge as a new added to the market gradually. segment of office tenants in light of 10% No new office development projects are the well-suited ecosystem and dynamic planned in 2021, though the supply of development of industry in the city. Vacancy office space is set to increase due to • Companies that sucsessfully survived the renovation of 8,000 sqm as part of the first pandemic year or were not OFFICE MARKET FORECASTS the TAIKOS project, with most of that impacted by it are seeking to move to FOR FULL YEAR 2021 space becoming available for lease. New larger offices. properties currently being planned or • Exporters of ICT services may provide 8,000 sqm under construction are not expected to substantial demand for office space, reach the market before the end of 2022 though Fintech and other active tenant New supply or in 2023. sectors will face decreasing options for 7-8% Vacancy Office Stock Source: Newsec New Stock by Class Source: Newsec Thousand, sqm 12% 3% Percentage 82% 300 25% 18% 25% 100 250 50% 2021 80 200 60 87% 81% 150 19% 40 2020 100 50 20 0 13% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 0 2019 Existing stock New Stock A Class B Class 3

KAUNAS OFFICE MARKET KAUNAS OFFICE OUTLOOK, 2021 H1 DEMAND the Blaster cluster of companies, signed spaces are gradually decreasing as the Nearly 14,500 sqm of office space was a lease for 3,000 sqm at BLC2 and newest developments fill out their sets of leased in 2021 H1, making the market Biomapas agreed to lease roughly another tenants. 44% more active than in 2020 H1. Total 1,000 sqm there. Meanwhile, Inhus take-up may decrease by a modest 5-7% Engineering signed a lease at Brastos 14 VACANCY for 2021 as a whole, with at least 10,000 and Delamode Baltics leased 200 sqm at The overall vacancy rate at the end of sqm expected to be leased in H2. the Magnum Business Centre. 2021 was 10.0%, down from 15.3% in The first half of the year brought a Large deals on the Kaunas market are 2020 H2. At properties already built and number of deals. TeleSoftas, SneakyBox, those for more than 1,000-2,000 sqm. operating, over 26,000 sqm of space was Adeo Web and Tandemum, acting as The options available for leasing such vacant and available for lease. Vacant “Our goal is to offer progressive Lithuanian IT companies that are competing successfully around the global offices that ensure a healthy environment for the members of their teams and promote productive work.” Giedrius Muliuolis, CEO of Urban Inventors Supply and Vacancy Source: Newsec Average Rent Rate Source: Newsec Percentage EUR/sqm/month 25 25 20 20% 19% 19% 20 15 17% 12% 15% 15 14-17.5 10 10% 10 7-11.5 12% 9-14 12-13.5 5 5 5% 1% 2019 H2 2020 H1 0% 0% 0 Vilnius Kaunas Vilnius 2019 H1 Vacancy Kaunas A class 0 2020 H2 2020 H1 2018 H2 Supply Growth B class 4

KAUNAS OFFICE MARKET “Seeing the rapid development of the office space decreased by more than 30% company, we made the decision to move to during the first half of the year. Just as new premises in order to ensure attractive 6 months before, almost a third of all conditions for our growing team and create premises available are in buildings that modern spaces that fit our image and are began operating in 2020. That shows suited to our changing needs.” Audrius demand is balanced across market Sveikata, General Manager of Biomapas segments. Absorption of the space on offer in Kaunas has slowed, considering OFFICE DEVELOPMENT IN KAUNAS 2019-2021 AND PLANNED that for the last several years take-up on the market averaged approximately No Project Location GLA, sqm 35,000-40,000 sqm. Expected take-up in 2021 is closer to 25,000 sqm. A gradual 2020 Karaliaus Mindaugo ave. 26,800 decline in vacant premises is forecast in 1 Magnum Julijanavos st. 18,000 the second half of 2021, with the average 2 JU1 Brastos st. 1,400 market vacancy level seen dropping below 3 Brastos 14 7,400 7-8% this year and even lower in 2022. Taikos ave. 8,000 2021 8,000 RENTAL PRICES 4 TAIKOS Savanoriu ave. Rents were unchanged on the Kaunas Raudondvario rd. 35,000 office market in 2021 H1 with no Planned for 2022 and later Savanoriu ave. 2,500 correction seen in the class A segment, 5 Kalnieciai Laisves alley 5,000 though in the class B segment rents at 6 Sanitex HQ Brastos st. 5,600 older, non-renovated properties came 7 Administrative building O. and H. Minkovskiu st. 5,100 under pressure. In the class A segment, 8 Merkurijus 6,800 the average rent was 12-13.5 EUR/sqm/ 9 Piliamiestis 10,000 month, while class B spaces were renting 10 Nemunaiciai 69,800 for 7-11.5 EUR/sqm/month on average. There are no signs of any notable price TOTAL correction on the market. Source: Newsec

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 2022 and later 14 Merkurijus Laisves all. 60 15 Piliamiestis Brastos str. 24 16 Nemunaiciai 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, 2021 H1 KAUNAS OFFICE MARKET CONTACT AND ADDRESSES More analytical information at Newsec: Office solutions at Newsec: LITHUANIA Konstitucijos ave. 21C Head of Research and Analysis Commercial Real Estate Advisor LT-08130 Vilnius Mindaugas Kulbokas in Kaunas Phone +370 5 252 6444 Cell +370 652 10556 Aivaras Katinas E-mail [email protected] E-mail [email protected] Cell +370 687 70117 www.newsec.lt E-mail [email protected] Senior Analyst LATVIA Kristina Zivatkauskaite Head of Brokerage Vesetas str. 7 Cell +370 610 38171 Jurgita Ragaise LV -1013 Riga E-mail [email protected] Cell +370 659 66808 Phone +371 6750 84 00 E-mail [email protected] E-mail [email protected] www.newsec.lv Tenant Consulting Head of Corporate Solutions ESTONIA Martynas Babilas Pärnu mnt 12 Cell +370 616 12216 Workland Vabaduse E-mail [email protected] EE-10146 Tallinn Phone +372 533 05313 Landlord Consulting Phone +372 534 68308 Head of Office Solutions E-mail [email protected] Indre Narauskaite www.newsec.ee Cell +370 698 83827 E-mail [email protected] Office FIT-OUT Service 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, Riga Office Outlook, Autumn 2021 2021 H1 2021 H1 Kaunas Office Outlook, Tallinn Office Outlook, Newsec Property Outlook, 2020 H2 2019 Spring 2021 Baltic Property Outlook, Baltic Investment Outlook, Baltic Office Outlook, 2020-2021 2019 2019 Access Newsec’s market report portal here: www.newsec.lt