The country's business services sector is one of the most attractive in the Central and Eastern European region and has been recognized by the European Business Services Awards. Large commercial property lease agreements were concluded last year. According to market experts, Lithuania continues to be one of the leaders in the region with the growth of attracted investments expected in the second half of the year.

Global challenges did not stop foreign investments: record results achieved

According to Vida Staskonienė, director of the Investment Development Department of Invest Lithuania, 2022 can be characterized as finding opportunities in adverse circumstances. Economic and geopolitical uncertainty has forced companies to rethink their development plans and look for business optimization opportunities. However, last year was successful for Lithuania – with 30 new companies entering Lithuania, and 27 companies, which already operate in the country, approving their expansion plans.

"Against the background of the pandemic and geopolitical challenges, Lithuania remained competitive in attracting foreign investments because it paid exceptional attention to investors and looked for additional solutions that would alleviate the processes of integration of businesses into the Lithuanian market. In addition, our country's membership in NATO and the European Union, developed infrastructure, highly qualified talents, and favorable business environment encourage the development of already operating foreign companies in Lithuania and the establishment of new businesses. The results of direct foreign investments in recent years - as many as 57 projects have been attracted, which will create 5000 new jobs", says V. Staskonienė.

According to her, Lithuania remains an attractive location for IT companies, most of whose projects were closed this year. One of the reasons is the supply of highly qualified talent in our country.

"Lithuanian talents are highly valued and often become one of the main reasons for choosing Lithuania, but it is necessary to ensure that the supply of competent specialists will grow. It is critically important to have as many industry 4.0, fintech, and IT experts as possible: data analysts, artificial intelligence, cyber security specialists, programmers, and testers", says V. Staskonienė.

During the record-breaking year - high demand for commercial real estate

Positive results were evident in the commercial real estate market in 2022, and some of the biggest lease deals were closed. Among them is the leading IT company in Lithuania "Visma Tech" which concluded a 3000 square meters office space rental deal with the developers of the "Artery" business center in the capital’s central business district (CBD).

According to real estate services company Colliers International, in 2022, the total leased area of the premises reached 108 thousand. sq m - 7 percent more than in 2021. In 2022, the substantial demand in the office space market was generated by information and communication technology (ICT) companies - as much as 31 percent. Additionally, financial sector companies accounted for 12 percent of the market. These trends show that Vilnius is a growing and attractive city for business.

"After the end of the pandemic, the hybrid work model remained popular, so many companies are still facing the challenge of bringing employees back to the offices. Yet Vilnius stands out in the Baltic market because the demand for office space here remains at a high level," observes Colliers Partner Brokerage Department Director Sandra Jovaišaitė.

Office space in the central business district (CBD) of Vilnius is being rented out quickly. At the same time, rental prices remain stable and will not decrease for objective reasons, claims Marius Žemaitis, fund manager of Lords LB Asset Management. According to him, this is due to the limited space for development and the growing need for businesses to be established in this location. A typical rental price per square meter in an A+ class business center in the CBD ranges from 15,5 to 20 euros per square meter per month.

"We notice several constructions of business centers in Vilnius, with majority of the premises are already rented out. For example, the Artery business center's occupancy has already exceeded 60 percent, although the end of the project is scheduled only in the fall of this year. Leaders of various sectors will become new tenants in the A+ class business center - from one of the largest information technology companies in Lithuania, Visma Tech, to BMI Executive Institute, which organizes top-level management studies - and many other large, ambitious businesses," says M. Žemaitis.

V. Staskonienė also emphasizes the importance of modern infrastructure supply, stating that the infrastructure and quality offices are crucial for attracting international companies.

"Properly developed infrastructure is one of the most important elements that foreign investors take into account - it influences the attraction of new investments and the development of already successfully operating businesses. Developed plots in technology parks, free economic zones, and buildings are important for companies from different sectors. In the central areas of large cities, the supply of business centers is particularly relevant, which must continue to grow steadily to adapt to market needs," says V. Staskonienė.

A successful second half of 2023 is expected in the office market

According to the experts of Colliers International, 2023 should be two-fold for the commercial real estate market: the first half of the year will be slower, but the second half of the year should become a counterweight.

"Activation in the commercial real estate market should be observed in the second half of this year. It also coincides with the end of some business center projects. Of course, offices in high-class buildings will attract the most interest. The demand for high-quality buildings with sustainable technological or engineering solutions will grow, while older, energy-inefficient office buildings will be less marketable among future tenants.

A hybrid model for work remains popular, so companies tend to invest in smaller office spaces. They prefer central city areas, with more convenient infrastructure around, in energy efficient buildings - so that the final office rental costs are lower or remain at a similar level. At the same time, the quality and attractiveness of the office improve", S. Jovaišaitė shares her insights.

The expert says that tenants more often choose those office buildings in which sustainable engineering solutions are implemented - for example, flexible office planning, high-quality climate and air control systems, intelligent lighting solutions, solar panels, and elevator systems that allow generating part of the electricity needed for elevators for operation, as well as charging stations for electric cars, spacious parking. The BREEAM New Constructions certificate is also relevant, which shows that the project meets the generally recognized international requirements for a green building.

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