News

The vacancy rate in local shopping centres is expected to increase in the nearest future as several sporting goods and clothing retail chains are planning to close down their stores that are producing negative profit, a few have already done so. Important time for shop chains is December, because for many businesses the budgetary situation greatly depends on Christmas sales. Thus the relevant decisions for businesses that are facing financial problems about closing down stores will be made in the beginning of 2010.

 

In the office market rental rates have more or less stabilized. However, still quite actual is lease agreements’ renegotiation subject for tenants who concluded their contracts in the “boom time” and are paying rent that is significantly above market average.

 

Similarly to office sector, warehouse and industrial space rents and vacancy have also remained on the same level as one-two moths ago. There has been some higher interest toward large industrial premises in October, e.g. three Estonian companies concluded lease agreements to lease out approx. 5200 m2 of warehouse and office space in VGP Park Tallinn. However, further decrease in consumption and production will only add additional pressure to warehouse and industrial property market.

 

Contrarily to other rather passive market sectors, investment market has shown signs of activity. Last five months have indicated that interest toward real estate investment is rising. There have been several deals in the past few months and there are possible deals in the pipeline. The main interest objects are solid cash-flow properties with main focus on tenant sustainability. Foreign investors are still very cautious about their activities in Baltics overall while many Western-Europe markets (e.g. London, Paris etc) are very active and offer attractive possibilities.