At the end of 2015, modern office supply in Vilnius reached 442,000 m² and is expected to exceed 600,000 m² by 2017/2018. This booming development was mainly driven by low vacancy and large international companies such as Danske Bank, AIG and others relocating shared-service centres to Vilnius. Demand was influenced by economic growth, favourable labour market performance and attractive leasing conditions. New projects are mostly built on a speculative base and pre-let deals often occur only when construction starts, 6 to 12 months prior to physical move.
Vast speculative developments are likely to reverse the market and bargaining power is expected to gradually shift from landlords to tenants.
Since 2010, office supply has been decreasing steadily. At the end of 2015 the vacancy rate in Vilnius CBD bottomed at 1% for grade A properties, while the total market vacancy rate remained very low below 3%. Rents in Vilnius have been slightly increasing as new projects offer higher quality standards. At the end of 2015 the average market rent for prime office space in Vilnius CBD ranged €14.5 to €16/m²/month and reached €17/m²/month in some individual cases. In other central areas, rents ranged €10 to €15/m²/month.
Source : BNP Paribas Real Estate