The Board Chairman of Real Estate Developers' Alliance Ints Dālderis says that Lithuanians are the most active in developing office spaces in Rīga.
"Lithuanians, Estonian developers like Novira Plaza, which is just opened on Marijas Street, there is really an Estonian developer, but the capital fund is in Lithuania. Latvian architects work on this and Latvian construction companies. For every developer, it's a different business model and a lot of it is that the office center builds, fills them with tenants and then sells them already to other investors dealing with their long-term management. There are models in which the developer himself builds or renovates and then also sustains him in the long term,” Dālderis says.
Ģirts Jansons, head of commercial space sales and lease division at Arco Real Estate, estimates that the offer in the office rental market is currently extensive and the available space exceeds 100,000 square metres.
"The spaces are filling slowly because new enterprises come into Latvia less frequently than before, many are worried about the war in Ukraine. But the biggest deal in office rentals in the Baltics has taken place in Rīga. The tech company, Indian "Tech Mahindra", chose "Jaunā Teika" as their location and about 500 professionals will work there. The office they leased is about 3,700 square meters, but these cases are rare," he said.
Jansons added that local businesses often change spaces to smaller or to higher-class.
“Among those local businesses, demand for areas is average, well, from 150 to up to 400, 500 square meters. Prices have basically not changed. Class A offices are offered rent ranging from €14 to €16 per square meter, [..] Class B range from €10 to €12 per square meter,“ says Jansons.
"Skanste City" is one of the biggest office buildings in Rīga with an area of 50,000 square meters. It was bought 6 years ago by real estate investors SG Capital. The board chairman of the company Harijs Švarcs said that the rental prices are higher than mentioned by Jansons.
“We can have top floors in some office house which can be 20 and over euros per square metre and we may as well have some sort of discount on the first tenant and he can get even under 14. But, I'd say, its prices don't fall, they're even climbing and there's a very objective reason for that - in the past few years, construction costs have risen by 20, 30, 40%, and the rental prices are still well behind this increase," said Švarcs.
He says competition in the rental market and encourages wider supply among developers.
Construction of the Press House block, which is being built around the historic Press House building and was planned to create not only a business centre but also a multi-purpose leisure, sporting, entertainment and cultural center and hotel, has been temporarily suspended. Construction of new offices is currently suspended due to high construction costs.
