Title: Riga’s Office Market Experiences Unprecedented Growth, Creating Opportunities for Businesses
Subtitle: High Construction Activity and Increasing Pre-Leasing Agreements Drive Demand for New Office Spaces
Riga, June 20, 2023 – The office market in Riga is currently undergoing a significant transformation, with a surge in construction activity and the introduction of several large-scale projects. This wave of development, which began in 2020 and is set to continue until 2025, marks an unprecedented influx of office space in the market.
Traditionally, the completion of office buildings in Riga occurred in smaller waves, with only a few buildings or larger office centers being completed at a time. However, the current situation is different, as developers are responding to the growing demand for modern office spaces that meet the needs of the moment.
While there are no comprehensive statistics on the speed at which office buildings have been filled in the past, it is worth noting that buildings completed 5-7 years ago were approximately 45% leased upon completion, which was considered a success at the time.
The current projects under construction reflect the changing dynamics of the market. For example, the “Verde” A building, completed last year, was 75% filled at the time of handover. Building B of the same complex, scheduled for completion in November this year, has already leased approximately 70% of its office space. Similarly, the “Elemental Business Center” project, set to be completed this fall, has already filled half of its premises.
This increase in pre-leasing agreements can be attributed to buildings that prioritize environmental, social, and governance (ESG) criteria, including sustainability and energy efficiency. Tenants in the market are placing importance on energy efficiency, cost optimization, and reduced utility bills, while still maintaining a representative and high-quality working environment.
Projects like “Verde,” known as the greenest project in Riga, and the “Elemental Business Center,” which features a unique heating/energy pile system for enhanced energy efficiency, are particularly attractive to tenants in the current market.
The motivation to move into these new office buildings extends beyond companies previously located in lower-quality or older buildings. Many companies, including those in relatively new buildings, are also opting to relocate. The decision to move is often driven by the opportunity to improve the quality of premises, comply with ESG criteria, and create a more appealing working environment. Additionally, attracting and retaining talent is a key consideration, as the workplace and environment play a significant role in employee satisfaction.
The current market presents an opportune time for businesses to optimize costs and rent office spaces that precisely meet their needs. Following the COVID-19 pandemic, many companies have reduced their office space requirements. However, existing buildings often have functional limitations or lessor conditions that hinder downsizing. In contrast, the new buildings in Riga offer attractive and interesting options for tenants, with the opportunity to start fresh and rent the exact amount of space required.
While discounts on new building leases are not substantial, the benefits lie in the quality improvement they offer. Signing preliminary contracts can provide better terms, and the size of the company can influence negotiation outcomes. However, these advantages are not exclusive to larger tenants, as the current market provides options for businesses of all sizes.
When comparing the total costs of renovated Class B buildings and new Class A premises, the difference is not significant. Class B buildings typically range from 16-20 euros per square meter per month, while Class A buildings range from 17-21 euros. This affordability allows Class B tenants to move into higher-class buildings without exceeding their existing budget.
As Riga’s office market continues to awaken from its “winter’s sleep,” businesses are presented with a unique opportunity to secure modern, sustainable, and energy-efficient office spaces that align with their needs and contribute to their success.
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What role does the quality of office premises and alignment with ESG criteria play in attracting and retaining talent in Riga’s office market
Le in employee satisfaction and productivity.
The unprecedented growth in Riga’s office market is creating opportunities for businesses across various sectors. The surge in construction activity and the availability of new office spaces are driving the demand for modern, sustainable, and energy-efficient premises.
Developers are responding to this demand by constructing large-scale projects that prioritize ESG criteria. Buildings like the “Verde” complex and the “Elemental Business Center” are attracting tenants with their green features and energy-efficient systems. These projects have already secured significant pre-leasing agreements, indicating the strong demand in the market.
Not only are companies in older or lower-quality buildings opting to move into these new offices, but even those in relatively new premises are also considering relocation. The motivation behind these moves includes improving the quality of premises, aligning with ESG criteria, and creating a more appealing working environment. The ability to attract and retain talent is also a crucial factor in these decisions.
Overall, the unprecedented growth of Riga’s office market is providing businesses with opportunities to upgrade their offices, improve sustainability efforts, and enhance their workplace environment. The surge in construction activity and increasing pre-leasing agreements highlight the strong demand for modern and energy-efficient office spaces in the city.
