Riga Office Outlook, 2021 H2

RIGA OFFICE OUTLOOK 2021 H2 Project: Novira Plaza Developer: Novira Capital

RIGA OFFICE MARKET RIGA OFFICE OUTLOOK, 2021 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. Project: Preses Nama Kvartāls Deve2loper: Lords LB

RIGA OFFICE OUTLOOK, 2021 H2 RIGA OFFICE MARKET RIGA OFFICE MARKET REMAINS STABLE INSIGHTS MACRO INDICATORS IN 2021 supply in two years’ time, spread across various parts of the city. • The Bank of Latvia updated its +4.8% economic forecasts in December. While CONSTRUCTION STARTED ON the figures are slightly less optimistic GDP RECORD NUMBER OF OFFICES than the September forecast, they still In 2021, construction works commenced show a positive picture of the economy, +3.2% on six spacious class A office projects: with GDP projected to grow 4.2% in the Preses Nama Kvartāls, Verde, 2022 and 4.0% in 2023. HICP Elemental Skanste, New Hanza, Novira Plaza and Gustavs, with a total area of • At the end of 2021, an estimated 68% 7.6% over 107,000 sqm. Verde and Gustavs of the population was fully vaccinated. are scheduled for delivery in 2022, the Unemployment rest in 2023. • Take-up in 2021 stood at 66,000 Altogether, 15 office projects are planned sqm, which is much higher than initially +11.7% over the next two years to deliver more forecast. than 213,000 sqm of high-quality office Wages space. While almost 15% of the space • Vacancy fell by 3.8 %-points during is booked under pre-lease agreements, 2021 and stood at 12% at the end of the OFFICE MARKET 2021 including two office buildings for SEB, the year. remaining space will give tenants a great 757,000 sqm opportunity to choose from a variety of • In 2021 only 3,000 sqm of new office high-class offices built in keeping with space was delivered, namely, space in the Total supply the latest trends and requirements. very centre of Riga, on Raiņa Boulevard, But the Riga market needs to be ready which was tailor-renovated to the 12.0% to absorb such a large supply. Intensive latest energy, environment and health movement from lower class offices or standards by Baltic RE Group for Printful. Vacancy older class A offices, expansions, and new local and foreign businesses would • SEB Latvia has signed pre-lease OFFICE MARKET 2022-2023 create decent demand and help avoid a agreements with Galio Group and 118,000 sqm situation of oversupply. Linstow Baltic for the future lease of two offices which combined exceed 23,000 Under construction sqm. 213,000 sqm • The Riga market is set to see a large volume of new, high-quality office space Planned stock “The VEF district is one of the most progressively developing areas in Riga and we are happy to be a part of it by developing brand new business space for companies working in Latvia. Buildings must serve people, protect the environment and create a harmonious city,” said Kaspars Beitiņš, a Member of the Board of GALIO Development in Latvia Source: www.galio.lt 3

RIGA OFFICE MARKET RIGA OFFICE OUTLOOK, 2021 H2 SEB PURSUES PRE-LEASE Riga, across the street from Linstow’s issuance for the project to EUR 13 million. AGREEMENTS IN RIGA expanded Origo shopping centre and In 2020, EUR 3 million of bonds were In July 2021, SEB Group’s business new fully let high-class business centre priced to yield 6.5%, and in 2019, EUR services centre in Riga signed an Origo One. SEB will become the anchor 5 million were sold at a 5% yield. The agreement with Galio Group on moving tenant of the new office development. first stage of construction at Verde is its office to the new Gustavs Business Preparatory work started already in expected to reach completion in the Centre on Gustava Zemgala Street in the 2021, with a planned opening in 2025. second half of 2022, with completion of VEF district in the first half of 2023. SEB the full complex planned in 2023. will occupy approximately 11,000 sqm RIGA OFFICE PROJECTS WIN At the end of 2021, the Lords LB Asset and accommodate over 1,000 employees. BACKING OF BANKS AND INVESTORS Management subsidiary PN Project On top of that, in October 2021, SEB To finance the Verde project, a received EUR 50 million of funding Latvia signed an additional pre-lease fund managed by Capitalica Asset for the construction of a 26,500 sqm agreement with Linstow Baltic regarding Management in October 2021 sold an office building, the first stage of the the planned office building at Ernesta additional EUR 5 million of bonds at extensive Preses Nama Kvartāls project. Birznieka-Upīša 2 in the very centre of a yield of 5.5%, bringing total bond The Nordic Investment Bank (NIB) and “For some time now, the need for physical work premises and the related challenges in offices have become bigger, more diverse and even completely transformed. Modern ways of working require a different office design and agenda,” said Valdis Turlais, Rimi Latvia’s Chairman of the Board Source: www.db.lv Project: Preses Nama Kvartāls Developer: Lords LB Macro Indicators of Latvia Source: Statistics of Latvia Social Indicators of Latvia Source: Statistics of Latvia Percentage Percentage 12 25 20 9 15 10 6 5 3 0 0 -3 -6 -5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F GDP HICP F - forecast Central Bank of Latvia Unemployment Gross Wage F - forecast Central Bank of Latvia 4

RIGA OFFICE OUTLOOK, 2021 H2 RIGA OFFICE MARKET Project: Preses Nama Kvartāls Developer: Lords LB “SEB’s headquarter in the area will further reinforce the strategic importance of this location and pave the way for more office developments as well as retail and service functions in its surroundings. The cooperation also underpins the importance of both companies’ commitments to sustainability,” said Frode Grønvold, the CEO of Linstow Baltic Source: www.linstowbaltic.lv Office Stock Source: Newsec Vacancy Rate Source: Newsec Thousand, sqm Percentage 30 1200 1000 25 800 20 800 15 600 10 200 5 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Existing Stock Additional Stock A Class B Class 5

RIGA OFFICE MARKET RIGA OFFICE OUTLOOK, 2021 H2 OFFICE DEVELOPMENT IN RIGA IN 2022-2023 Citadele Bank each agreed to provide loans of EUR 25 million, making this the Period Developer/Owner Project Office area, sqm first NIB-financed BREEAM Excellent 2022 building in the Baltics. Total costs of the Capitalica Verde Rīga, Stage I 46 250 first stage of the Preses Nama Kvartāls 2023 Pillar Capital New Hanza 15 000 will exceed EUR 76 million. Galio Group Gustavs, Stage I 12 700 Barona Kvartāls Brīvības 155 12 400 EMPLOYERS SEE THE IMPORTANCE Vilia Investments Hallo 4 500 OF GOOD OFFICES 1 650 At the end of 2021, Rimi Latvia was Vastint Business Garden Rīga, Stage II 166 600 finalizing the reconstruction of its Riga Lords LB Preses Nama kvartāls, Stage I 27 500 office on Deglava Street at a total cost of Novira Capital Novira Plaza 25 000 EUR 8.4 million. The office now boasts Kapitel ELEMENTAL Skanste 21 800 modern, sustainable, energy-efficient Confidential Office Building 20 500 solutions such as lighting that uses Capitalica Verde Rīga, Stage II 20 000 motion sensors, automatic regulation of Galio Group Gustavs, Stage II 15 000 ventilation based on CO2 intensity and of Confidential Balasta dambis 14 000 air temperature based on the time of day, LNK Properties Forburgas biroji 12 000 and more. Open collaboration areas were Mukusals Biznesa Centrs Zeiss Biroji 6 500 added for active exchange of ideas, along 4 300 with quiet spaces for high-concentration work and so-called telephone booths. Source: Newsec Modern kitchens and special areas for informal conversation were also created. Special attention was given to physical activeness, with a yoga area and gym nearly completed by year-end. “We really wanted this building to serve as an example of sustainability and a pleasant and creative environment for new ideas in the workplace. In collaboration with Printful, we have found a common understanding of the above values, resulting in an innovative building that is both natural and people-friendly,“ said Giovanni dalla Zonka, the founder and CEO of the Baltic RE Group Source: www.world-today-news.com Average Rental Rates Source: Newsec Office Stock by Class Source: Newsec EUR/sqm/month Thousand, sqm 1000 800 14.0-16.0 9.0-16.0 14.0-18.0 600 EUR/sqm/month EUR/sqm/month EUR/sqm/month 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F A Class B Class Prime A Class B Class 6

RIGA OFFICE OUTLOOK, 2021 H2 RIGA OFFICE MARKET www.nasdaqbaltic.com Project: Preses Nama Kvartāls Developer: Lords LB A new office on Raiņa Boulevard was “The strategy to be the first on the let and designed by Baltic RE Group capital market to offer the opportunity for Printful according to the latest to invest in bonds tied to business accessibility and health standards, centres has proven amply justified,” with an elevator, low thresholds and pointed out Andrius Barstys, the CEO wheelchair-accessible sanitary facilities. of Capitalica Asset Management, The premises were equipped with which is Verde’s developer state-of-the-art systems for centralized drinking water and air recovery. UVC Source: www.nasdaqbaltic.com lamps and ozone generators were also installed to limit the risks of viruses and allergens. In addition, bicycle storage and charging points for electric cars will be available. 7

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RIGA OFFICE OUTLOOK, 2021 H2 RIGA OFFICE MARKET THE FULL SERVICE PROPERTY HOUSE IN NORTHERN EUROPE Newsec — The Full Service Property The Group expanded internationally the seven Nordic and Baltic countries. House in Northern Europe — is by far into Finland in 2001, Norway in 2005, In 2018, Newsec opened a London the largest specialised commercial the Baltic countries in 2009 and office to assist international investors property firm in Northern Europe. Denmark in 2016. The Norwegian asset interested in the Nordic and Baltic and property management companies region. Newsec has approx. EUR 68 Newsec manages more properties and First Newsec Asset Management and billion under management and annually carries out more transactions, more TM Partner were acquired in 2012. In signs lease agreements of approx. lettings and more valuations than 2013, Newsec acquired Jones Lang 1.5 million square meters, manages any other firm in Northern Europe. LaSalle’s Swedish property management transactions of some EUR 3 billion and Through this great volume, and the operation. In 2017, Newsec grew does real estate valuations of underlying knowledge and depth of our various with the acquisitions of Norwegian property worth almost EUR 265 operations, we acquire extensive and Basale and Danish Datea, further billion. Thanks to large volumes, local detailed knowledge of the real estate strengthening the position within presence combined with in-depth market. In turn, we can quickly identify Property Asset Management. In 2018, understanding of a range of businesses, business opportunities that create Newsec opened a London office to assist Newsec has a unique expertise added value. international investors interested of the real estate market in northern in the Nordic and Baltic region. Europe. Our prime market is Northern Europe, but through our alliance membership Newsec was founded in 1994 and is with BNP Paribas Real Estate, we offer today a partner-owned company with our services on the global market. This some 2 400 co-workers spread across makes Newsec Northern Europe’s only full service property house, and OULU provides us with a unique ability to forecast the future. TRONDHEIM A history of growth Newsec is the result of a unique history of growth, characterised by constant originality of thinking. The first issue of the comprehensive market analysis, Newsec Property Outlook, was published in 2001. BERGEN TAMPERE OSLO HELSINKI STOCKHOLM TALLINN GOTHENBURG RIGA AARHUS MALMÖ KLAIPEDA PANEVEZYS COPENHAGEN KAUNAS VILNIUS 9

CONTACT AND ADDRESSES RIGA OFFICE OUTLOOK, 2021 H2 CONTACT AND ADDRESSES More analytical information at Newsec: Newsec in Latvia: LATVIA Head of Strategic Analysis, Chairman of the Board, Newsec in Latvia Vesetas Street 7 Newsec Advisory in the Baltics Girts Grinbergs LV-1013, Riga Mindaugas Kulbokas Cell +371 2942 4847 Phone +371 6750 84 00 Cell +370 652 10556 E-mail [email protected] E-mail [email protected] E-mail [email protected] www.newsec.lv Office solutions at Newsec: Real Estate economist Tenant Consulting ESTONIA Inita Nitisa Head of Corporate Solutions Pärnu mnt 12 Cell +371 254 97 060 Martynas Babilas EE-10146 Tallinn E-mail [email protected] Cell +370 616 12216 Phone +372 533 05313 E-mail [email protected] E-mail [email protected] www.newsec.ee Office FIT-OUT Service Head of Project Management LITHUANIA Tadas Grincevicius Konstitucijos ave. 21C Cell +370 679 79779 LT-08130 Vilnius E-mail [email protected] Phone +370 5 252 6444 E-mail [email protected] Head of Commercial PM, PAM Baltics www.newsec.lt Justas Bandza Cell +370 6555 8989 E-mail [email protected]