Office rents hit bottom

  • 2010-06-03
  • Staff and wire reports

 RIGA - After rent for class A and B office space dropped 40 - 45 percent last year, the lease rates have stabilized at the beginning of 2010, according to the office space market overview by the real estate company Ober Haus, reports Nozare.lv. Currently, class A office space can be rented for 7 - 12 euros per square meter, whereas rent rates for class B office space range from 5 to 8 euros, says Ober Haus.

Many companies have used this present opportunity to move to offices of better quality and in better locations. Since the vacancy rate is approximately 30 percent, landlords are scrambling to offer favorable conditions, such as free parking, to attract tenants. The current rent rates also make Riga more attractive for foreign companies planning to open offices in Riga, say Ober Haus experts.

The current rent rates in combination with low labor costs and a developed business environment are the advantages that make Riga attractive to foreign companies. For instance, Cytec Industries has signed agreement on renting premises in the Europa business center, after a survey of the office space markets in other Eastern European cities including Tallinn, Vilnius and Warsaw. The opening of Cytec Industries’ offices in Riga will create around 150 new jobs.
Ober Haus believes that class A and B office space rent rates will not decrease any further. Moreover, since very few new office buildings are in development at the moment, the offer prices on the office space market are unlikely to increase in the short- to medium-term, which means that the proportion of vacant office space will only gradually decrease. This, together with the expected GDP growth in 2012, will cause rent rates to increase over the next two years, Ober Haus experts say.