Colliers CEE Report

EX DING BORDERS

OFFICE MARKET IN 15 CEE COUNTRIES

October 2019 OFFICE MARKET IN 15 CEE COUNTRIES

INTRODUCTION CONTENTS 2 Welcome to our publication about the office sector in Central and Eastern Europe. The report presents the situation in the office markets in 15 CEE countries (Albania, Belarus, Bulgaria, Croatia, Czechia, Estonia, INTRODUCTION Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Serbia, Slovakia and Ukraine). In the study, we focused on key market indicators such as total office stock, take-up and leasing conditions, vacancy levels, space under construction and a forecast for the upcoming years. The presentation of the office market in each country is also enriched with a short commentary, an interesting fact from the market and photos of modern office projects. 4-5 The report has been divided into 3 parts: • A map presenting 15 CEE countries with key economic data; ECONOMIC DATA • The comparative part, where on aggregated charts we present H1 2019 office market data for 15 CEE countries; • Presentation of the office market in each country.

In recent years, the CEE region has been characterized by dynamic development, which goes hand in hand with the growth of modern office projects. We forecast that by 2021 the total office stock in the 2 6-7 15 CEE countries will exceed 30 million m . More and more office buildings can boast of prestigious certificates, modern technological and environmental solutions or an innovatively designed space. OFFICE MARKET We believe that thanks to this publication the potential of the 15 CEE countries will be rediscovered IN 15 CEE COUNTRIES IN H1 2019 and will be further developed. It is worth looking at what opportunities each country has to offer. We hope you find this an interesting read! 8-36 15 CEE COUNTRIES PROFILES

Albania 8 AUTHORS Belarus 10 Bulgaria 12 Croatia 14 Czechia 16 Estonia 18 Kevin Turpin Dominika Jędrak Anna Maroń Hungary 20 Regional Director Director | Research Analyst | Research Latvia 22 of Research | CEE and Consultancy Services and Consultancy Services +420 606 725 032 +48 666 819 242 +48 882 014 433 Lithuania 24 [email protected] [email protected] [email protected] Montenegro 26 Poland 28 Romania 30 Serbia 32 Slovakia 34 Ukraine 36

2 COLLIERS INTERNATIONAL | H1 2019 3 RYNEK BIUROWY W KRAJACH CEE ESTONIA 1 5.0% TALLINN 2 3.9% 1.3 MILLION 3 € 1,341 LATVIA 4 46,150 1 6.5% ECONOMIC 2 4.8% 3 € 1,036 4 80,355 1.9 MILLION RIGA DATA LITHUANIA 1 5.7% BELARUS 1 4.4% 2 3.4% 2.8 MILLION 3 € 1,263 2 3.0% 4 111,260 VILNIUS 3 € 463 4 268,100 MINSK

9.5 MILLION 38.4 MILLION

POLAND COUNTRIES WARSAW 15 1 3.8% 2 5.1% KYIV CZECHIA 3 € 1,173 UKRAINE 4 1,230,300 1 1.9% 1 9.2% PRAGUE 2 2.9% MILLION SLOVAKIA 42.2 2 3.3% 3 € 1,263 3 € 382 MILLION PEOPLE 1 5.4% 162 4 290,000 10.6 MILLION 4 1,520,000 2 4.1% 5.4 MILLION 3 € 1,023 BRATISLAVA 4 133,060 2 HUNGARY 9.8 MILLION MILLION M 1 3.4% 4.9% BUDAPEST OF EXISTING 2 ROMANIA 27 3 € 1,100 4,0% 4 280,000 1 OFFICE SPACE 19.5 MILLION 2 4,1% ZAGREB 3 € 1,073 4.1 MILLION CROATIA 4 531,590 1 7.1% SERBIA BUCHAREST 2 2.7% 1 11.7% 2 BELGRADEBELGRADE MILLION M 3 € 834 2 4.4% 3.7 4 160,000 3 € 435

BULGARIA UNDER CONSTRUCTION 4 256,000 7.2 MILLION 1 4.4% 0.6 MILLION MONTENEGRO 3.2% SOFIA 7 MILLION 2 PODGORICA 1 15% 3 € 617 4.5% LEGEND 2 4 270,380 3 € 775 1 Unemployment rate (%) 4 19,210 2 GDP growth 2017/2018 (%) TIRANA 3 Average monthly gross salary (EUR/month) POPULATION ALBANIA 4 Number of students 2.9 MILLION 1 12.1% 2 4.2% 3 € 422 4 COLLIERS INTERNATIONAL | POLSKA | 2019 5 4 113,000 OFFICE MARKET IN 15 CEE COUNTRIES

Total office stock 2(m ) and vacancy rate (%) New supply in H1 2019 (m2) in H1 2019

200,000 180,000 6,000,000 12% 160,000 5,000,000 10% 140,000 4,000,000 8% 120,000 100,000 3,000,000 6% 80,000 OFFICE 2,000,000 4% 60,000 40,000 1,000,000 2% 20,000 0 0% 0 e a t t v k a e a a s b e a t t v k a e a a s b s s s c u a nn iu e s s s c u a nn u e lav e n ri o lli n av e n ri o li i rad s are ap Kyi o Rig S a iran il rad sl Kyi o Rig S l iran n g h d Mi g T T V g are ap Mi g a T il el c d Prag Zagr el ch d d Prag T V Zagr B rati u Bu o Warsaw B rati u o Warsaw MARKET B B P B B Bu P Total stock Vacancy rate

IN 15 CEE Take-up in H1 2019 (m2) Space under construction in H1 2019 (m2)

500,000 1,000,000 COUNTRIES 400,000 800,000 300,000 600,000 200,000 400,000 100,000 200,000 IN H1 2019 0 0 e a t t v k a e a s b s s s c u a a nn u e lav e n ri o lli i rad s are ap Kyi o Rig a iran n Kyiv Riga g h d Mi g S T T il Minsk Soa Tallin el c d Prag V Zagr Prague Tirana VilniusZagreb B rati u Bu o Warsaw Warsaw B B P BelgradeBratislavaBucharestBudapest Podgorica

The total modern office stock in the 15 CEE countries In H1 2019, in all capitals of 15 CEE countries, tenants in H1 2019 reached 27 million m2. In H1 2019 leased over 1.5 million m2 of modern office space. developers completed 707,000 m2 , while 3.7 million The most active tenant sectors included: IT, m2 is currently under construction. professional services and banking. The BPO/SSC sector is also developing dynamically in the majority The largest resources of modern office space of the 15 CEE countries. The most popular city among were recorded in Warsaw (5.5 million m2), Budapest tenants in H1 2019 was Warsaw (almost 406,000 m2 (3.6 million m2) and in Prague (3.5 million m2). leased space), Budapest came second (243,400 m2) Stock over 1 million m2 was noted in Bucharest and Prague third (211,030 m2). (2.6 million m2), Sofia (2.2 million 2m ), Kyiv (1.9 million m2), Bratislava (1.8 million m2), Zagreb The lowest vacancy rate was recorded in Belgrade (1.35 million m2) and Minsk (1 million m2). (3.5%), Minsk (3.8%) and Zagreb (4.5%). The most amount of available office space in H1 2019 was noted The largest increase of new supply in H1 2019 in Sofia (10.2%), Bucharest (10%) and Podgorica was noted in Bucharest with a 23% increase over the (10%). whole 2018. Second place in terms of the amount of new office space completed in H1 2019 was taken Currently, the largest amount of modern office space by Sofia (91,000 m2), followed by Warsaw under construction is in Warsaw (832,730 m2), (80,500 m2). The majority of modern office projects is Budapest (464,000 m2) and Sofia (437,000 2m ). located in the capitals of the countries, although office We forecast that in 2021 the supply of modern office markets are also developing in regional cities. stock will exceed the level of 30 million m2. Waltrovka, developer: Penta, Prague

6 COLLIERS INTERNATIONAL | H1 2019 7 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA Demand for class A office space continued unabated ALBANIA LITHUANIA during H1 2019, especially for large-sized open plan VILNIUS offices. Much of this increase in activity was driven

MINSK by re-locations and/or expansions of international companies on the look out for higher quality office BELARUS space and specifically, serviced offices.

Tirana’s office stock remained unchanged in H1 2019, TIRANA POLAND OFFICE MARKET H1 2019 WARSAW and reached 107,100 m2, with prime office rental KYIV rates stable. We forecast a slight downward pressure TOTAL STOCK: 107,110 m2 on primary rental rates over the next few quarters, PRAGUE UKRAINE as new projects due to be delivered to the market 2 NEW SUPPLY: 0 m in the next 12 months will increase the availability CZECHIA of office stock. VACANCY RATE: 8.9% SLOVAKIA BRATISLAVA 2 European Trade Center (ETC Building), TAKE-UP: 330 m Primary rents currently stand at EUR 24.50 developer: Edil-Al shpk m2/month in the CBD and EUR 18.00 m2/month SPACE UNDER BUDAPEST 37,230 m2 in the periphery, with secondary rates at CONSTRUCTION: HUNGARY EUR 18.00 m2/month in the CBD and EUR 14.00 ROMANIA RENTAL RATES Class A: 24.50-18.00 ZAGREB m2/month in the periphery. (EUR/M2/MONTH): Class B: 18.00-14.00 CROATIA BUCHAREST Kastrati Group, Balfin Group, BELGRADEBELGRADE MAIN DEVELOPERS: SERBIA Edil Al shpk, Alb Star shpk

OTHER MARKETS: Durres, Vlora MONTENEGRO SOFIA BULGARIA PODGORICA

TIRANA LARGEST PROJECTS ALBANIA UNDER CONSTRUCTION PROJECT DEVELOPER

Downtown One Project Kastrati Construction shpk Forever Green Tower AL & GI shpk MET Tirana Building MET Invest shpk

Twin Towers, developer: TID shpk ABA Business Center, developer: Gener 2 shpk

MARKET DATA

Total office stock 2(m ) evolution Take-up (m2) in Tirana (2015-2021) and vacancy rate (%) in Tirana (2015-2021) Albania is going 180,000 20% 25,000 18% 16% 140,000 20,000 through its first green 11.1% 12% 12% 15,000 100,000 9.8% 9.3% 8.9% 8.8% 9% 8% 10,000 60,000 certification process 4% 5,000

20,000 0% 0 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 for LEED Gold for forecast forecast forecast forecast forecast forecast Total stock Vacancy rate *take-up calculated as difference between occupied stock in subsequent years Downtown 1 building. Downtown One Project, developer: Kastrati Construction shpk

8 COLLIERS INTERNATIONAL | H1 2019 9 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA Minsk office market can be characterized BELARUS LITHUANIA as a landlord market. Vacancy has been decreasing VILNIUS over the last two years due to insignificant new

MINSK supply comparing to growing demand. Currently the market vacancy rate amounts to 3.8%. BELARUS Rents are also growing and stand at EUR 25.00- 30.00 m²/month for class A and EUR 12.00-23.00 MINSK POLAND OFFICE MARKET H1 2019 WARSAW m²/month for class B. KYIV TOTAL STOCK: 1,024,750 m2 Demand for office space is primarily driven by PRAGUE UKRAINE the ICT sector (information and communications 2 NEW SUPPLY: 37,300 m technology): ICT companies occupy 35% of spaces CZECHIA in speculative business centers. VACANCY RATE: 3.8% SLOVAKIA BRATISLAVA TAKE-UP: 37,800 m2 Class B2 office space is prevalent on the market and amounts to 58% of the supply, class B1 occupies SPACE UNDER BUDAPEST 340,000 m2 40% of the market. Riviera Business, developer: Zavod Bulbash CONSTRUCTION: HUNGARY ROMANIA RENTAL RATES Class A: 25.00-30.00 ZAGREB (EUR/M2/MONTH): Class B: 12.00-23.00 CROATIA BUCHAREST Tapas Holding, Dana Holdings, BELGRADEBELGRADE SERBIA MAIN DEVELOPERS: Gazprom Transgaz Belarus, Sigmapolus, Interservice MONTENEGRO SOFIA BULGARIA PODGORICA OTHER MARKETS: Brest, Mogilev

TIRANA LARGEST PROJECTS ALBANIA UNDER CONSTRUCTION PROJECT DEVELOPER

MU Gazprom Center Gazprom Transgaz Belarus Volna, developer: Sigmapolus Futuris Business Center, developer: Tapas MU Shanter Hill Interservice MU Nezavisimostsi ave. Corporation A.N.D.

MARKET DATA Futuris Business

Total office stock 2(m ) evolution Take-up* (m2) in Minsk (2015-2021) Center is the first and vacancy rate (%) in Minsk (2015-2021)

1,500,000 16% 160,000 building in Belarus 13.8%

1,200,000 12% 120,000 where multimedia 900,000 8% 7% 7% 5.5% 5% 80,000 600,000 4% 4% systems are 4% 3.8%

300,000 0% 40,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 integrated directly forecast forecast forecast forecast forecast forecast Total stock Vacancy rate *take-up calculated as difference between occupied stock in subsequent years into the architecture. Futuris Business Center, developer: Tapas

10 COLLIERS INTERNATIONAL | H1 2019 11 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA In H1 2019, the supply of modern office space BULGARIA LITHUANIA in Sofia marked a 4% total stock growth and 2 VILNIUS reached 2,202,000 m .

MINSK Total take-up was 66,400 m2 for the first half of the BELARUS year. In the surveyed period, 31% of all deals were due to relocations, expansions of companies already present on the Bulgarian market (25%) and SOFIA POLAND OFFICE MARKET H1 2019 WARSAW pre-leases (20%). KYIV TOTAL STOCK: 2,202,000 m2 The main sectors on the demand side were: IT and PRAGUE UKRAINE outsourcing (45%), professional services (16%) 2 NEW SUPPLY: 91,000 m and life sciences (8%). Average asking rental levels CZECHIA VACANCY RATE: 10.2% remained unchanged. For class A offices they were SLOVAKIA 2 2 BRATISLAVA EUR 15.00 m /month – CBD, EUR 14.00 m /month – TAKE-UP: 66,400 m2 Broad Center and EUR 13.00 m2/month – for Suburbs. SPACE UNDER BUDAPEST 437,000 m2 Telus Tower, developer: GEK Terna CONSTRUCTION: HUNGARY ROMANIA RENTAL RATES Class A: 13.00-15.00 ZAGREB (EUR/M2/MONTH): Class B: 10.00 CROATIA BUCHAREST GTC, Garitage Investment, BELGRADEBELGRADE MAIN DEVELOPERS: SERBIA Capital Fort

OTHER MARKETS: Plovdiv, Varna, Burgas MONTENEGRO SOFIA BULGARIA PODGORICA Garitage Park is the TIRANA LARGEST PROJECTS ALBANIA first Central and Eastern UNDER CONSTRUCTION European multifunctional PROJECT DEVELOPER

Garitage Park Garitage Investment Management complex to have achieved Sky Fort Fort Noks Synergy Tower Bulgarian Real Estate Fund (BREF) an Excellent Final

Certificate according to Capital Fort, developer: Fort Noks the International Scheme MARKET DATA of BREEAM Communities Total office stock 2(m ) evolution Take-up (m2) in Sofia (2015-2021) and vacancy rate (%) in Sofia (2015-2021) 2012. There are only 7

250,000 3,000,000 16% 14.1% projects registered on the 2,500,000 12% 200,000 12% 10.1% 2,000,000 10% 9.2% 10% 10% BRE (British Certification 9% 8% 150,000 1,500,000

4% 100,000 1,000,000 Organization) website

500,000 0% 50,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 that have achieved such forecast forecast forecast forecast forecast forecast Total stock Vacancy rate a final certification rating. Garitage Park, deweloper: Garitage Investment Management

12 COLLIERS INTERNATIONAL | H1 2019 13 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA Prime headline rent in Zagreb has been stable Market is characterized by low vacancy rate during the last few years ranging from CROATIA LITHUANIA in the competitive office stock, currently standing EUR 14-15 m²/month. Average rent for class A also VILNIUS at around 4.5%, which was last recorded in 2008. remained stable, despite drop in vacancy rate,

MINSK Zagreb office market is characterized by strong standing at EUR 12 m²/month. Average rent demand in class A buildings and continuous vacancy in class B buildings ranges from EUR 8-10 m²/ BELARUS rate drop due to slow delivery of new supply. month.

ZAGREB POLAND OFFICE MARKET H1 2019 WARSAW KYIV TOTAL STOCK: 1,350,000 m2 PRAGUE UKRAINE NEW SUPPLY: 10,000 m2 CZECHIA VACANCY RATE: 4.5% SLOVAKIA BRATISLAVA TAKE-UP: 9,300 m2

SPACE UNDER BUDAPEST 27,000 m2 CONSTRUCTION: HUNGARY ROMANIA RENTAL RATES Class A: 12.00 ZAGREB (EUR/M2/MONTH): Class B: 8.00-10.00 CROATIA BUCHAREST GTC Group, VMD Group, Trius BELGRADEBELGRADE MAIN DEVELOPERS: SERBIA Nekretnine

OTHER MARKETS: Rijeka, Split MONTENEGRO SOFIA BULGARIA PODGORICA

TIRANA LARGEST PROJECTS ALBANIA UNDER CONSTRUCTION PROJECT DEVELOPER

Matrix GTC Group R21 Croatian Insurance Company VMD Strojarska, developer: VMD Group Sky Office, developer: TEHNIKA The highest building

MARKET DATA in Zagreb is one

Total office stock 2(m ) evolution Take-up (m2) in Zagreb (2015-H1 2019*) of the towers within and vacancy rate (%) in Zagreb (2015-2020*) the VMD Strojarska 80,000 1,400,000 16% 14% 1,350,000 12% 55,000 complex with

1,300,000 7.5% 8% 30,000 4.5% 4.5% 4.5% a rooftop bar and 1,250,000 4% 4% 4%

1,200,000 0% 5,000 2015 2016 2017 2018 H1 2019 2019 2020 2015 2016 2017 2018 H1 2019 a 360°view of the Total stock Vacancy rate forecast forecast

*latest available data *latest available data Capital city. City Plaza, developer: VMD Group

14 COLLIERS INTERNATIONAL | H1 2019 15 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA The Prague office market continued its strong CZECHIA LITHUANIA performance in H1 2019. Some 80,000 m2 of new VILNIUS office space was delivered to the market during

MINSK the first six months, with prospects for further 122,000 m2 to be completed before the year-end. BELARUS Occupier demand remained strong. Net absorption (total change in occupied stock) was positive both PRAGUE POLAND OFFICE MARKET H1 2019 WARSAW in Q1 and Q2 and remains in positive figures for KYIV 17 consecutive quarters. Cumulatively it reached TOTAL STOCK: 3,566,930 m2 117,000 m2 in 2019 so far, which is a 47% increase PRAGUE UKRAINE year on year. NEW SUPPLY: 79,940 m2 CZECHIA VACANCY RATE: 4.6% By mid-year, the vacancy rate in Prague was SLOVAKIA 2 BRATISLAVA at 4.6%, which represents some 162,500 m TAKE-UP: 211,030 m2 of vacant space. This low availability is largely in favour of landlords and puts pressure on SPACE UNDER BUDAPEST 317,760 m2 rental growth. Current prime rent for class Florentinium, developer: Penta CONSTRUCTION: HUNGARY A premises in the city centre is in the range ZAGREB ROMANIA RENTAL RATES Class A: 11.50-26.75 of EUR 22.00-22.50 m2/month with prospects (EUR/M2/MONTH): CROATIA for further growth. Class B: 7.65-20.50 BUCHAREST BELGRADE Crestyl, Skanska, Penta, J&T, BELGRADE MAIN DEVELOPERS: SERBIA There are also some trophy assets in the city AFI Europe centre with exceptional build quality which have rents higher than the quoted prime, and similarly OTHER MARKETS: Brno MONTENEGRO SOFIA BULGARIA PODGORICA some pipeline projects have higher asking rents. Rental growth is spreading from city centre to other

TIRANA submarkets as well. With the current pipeline and demand level we do not see room for significant LARGEST PROJECTS ALBANIA vacancy increase; therefore, we expect the rental growth to continue. By the year end, the prime rent UNDER CONSTRUCTION could increase to EUR 23 m2/month. PROJECT DEVELOPER

Harfa Office Center Kaprain Waltrovka, developer: Penta Bořislavka KKCG Butterfly Karlín by AFI Dock In Five Crestyl Europe: the office building with the largest vertical MARKET DATA garden in Europe. The facade of the building is Total office stock 2(m ) evolution Take-up (m2) in Prague (2015-2021) and vacancy rate (%) in Prague (2015-2021) planted with 41,000 plants 5,000,000 14.6% 16% 560,000 in 584 small „gardens“, 4,000,000 10.6% 12% 520,000 covering the area of 3,000,000 7.5% 8% 480,000

5.1% 2 5.1% 4.8% 440,000 2,000,000 4.6% 4% 4% 1,500 m . Designed by

1,000,000 0% 400,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 David R. Chrisholm of CMC forecast forecast forecast forecast forecast forecast Total stock Vacancy rate Architects. Butterfly Karlin, developer: AFI Europe

16 COLLIERS INTERNATIONAL | H1 2019 17 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA The office market in Tallinn has continued ESTONIA LITHUANIA to demonstrate consistent activity during the last six VILNIUS and a half years, resulting in buoyant demand and

MINSK high development activity.

BELARUS By Q2 2019, the estimated total stock (speculative + built-to-suit) of modern office facilities was approaching ca. 1 million m2. New total supply TALLINN POLAND OFFICE MARKET H1 2019 WARSAW delivered to the market reached ca. 94,400 m2 KYIV in 2018 and 13,200 m2 in H1 2019. TOTAL STOCK: 969,300 m2 PRAGUE UKRAINE Development activity is seen both in the CBD and 2 NEW SUPPLY: 13,200 m well-developed citywide office subareas (e.g. CZECHIA Ülemiste City) as well as in new developing areas VACANCY RATE: 5.2% SLOVAKIA BRATISLAVA (e.g. Tallinn harbour area, Telliskivi Quarter). TAKE-UP: 26,400 m2 In H1 2019, rental rates for properties in good locations SPACE UNDER BUDAPEST 130,000 m2 remained more or less stable, although the gap Maakri Quarter, developer: Maakri Kvartal CONSTRUCTION: HUNGARY between the lower and upper margins of asking rents ZAGREB ROMANIA RENTAL RATES Class A: 14.00-18.00 continued to widen, seeing an increase in the upper (EUR/M2/MONTH): CROATIA margins of asking rents. Class B: 11.00-15.00 BUCHAREST BELGRADE Technopolis Ülemiste, Porto BELGRADE SERBIA The vacancy rate in speculative class A and class Franco, Fausto, Mainor B1 new buildings remains considerably low (below MAIN DEVELOPERS: Ülemiste, Fund Asset, Kawe, 6%), indicating a good absorption ratio for new office MONTENEGRO SOFIA BULGARIA Capital Mill PODGORICA premises. Some increase in vacancy rates (as well as some downward pressure on rents) were observed OTHER MARKETS: Tartu TIRANA in several existing older class B1 office buildings in various locations across the city. ALBANIA LARGEST PROJECTS UNDER CONSTRUCTION Tammsaare Business Centre, developer: Kaamos PROJECT DEVELOPER In Tallinn there is Ülemiste Porto Franco Porto Franco Fahle Park Fausto Capital City, the largest Smart City Sepapaja 1, Ülemiste City Technopolis Ülemiste in the Baltics and biggest privately owned business MARKET DATA campus in Northern Europe. More than 15% of total Total office stock 2(m ) evolution Take-up (m2) in Tallinn (2015-2021) and vacancy rate (%) in Tallinn (2015-2021) modern speculative office 100,000 1,400,000 8% space in Tallinn is located 6.2% 80,000 6% 6% 1,000,000 5.4% 5.3% 5.6% 5.6% in Ülemiste City. 5% 5.1% 60,000 4%

600,000 An interesting fact is that 40,000 2% Ülemiste City probably has 200,000 0% 20,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 forecast forecast forecast forecast forecast forecast the closest office campus to Total stock Vacancy rate an international airport. Ülemiste City, developers: Technopolis Ülemiste and Mainor

18 COLLIERS INTERNATIONAL | H1 2019 19 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA At the end of 2019 H1, the total office stock HUNGARY LITHUANIA in Budapest exceeded the 3.6 million m2 2 VILNIUS out of which 3.0 million m is speculative stock.

MINSK The total market vacancy rate reached a record-low BELARUS level of 6.3%. The speculative vacancy rate is currently 7.6%, with class A office vacancy rate of 5.0%, and class B rate of 13.6%. BUDAPEST POLAND OFFICE MARKET H1 2019 WARSAW KYIV The market remained landlord driven in 2019, and TOTAL STOCK: 3,654,200 m2 this trend is expected to continue at least through PRAGUE UKRAINE 2020 unless there is a major change in the overall 2 NEW SUPPLY: 31,700 m economic environment. CZECHIA VACANCY RATE: 6.3% SLOVAKIA BRATISLAVA The largest deals are usually closed by tenants active TAKE-UP: 243,400 m2 in the IT, financial and pharmaceutical sectors and by state related occupiers. Among large international SPACE UNDER BUDAPEST 464,000 m2 tenants, we continue to see the dominance Promenade Gardens, developer: Horizon Development CONSTRUCTION: HUNGARY of SSC/BPO related occupiers. ZAGREB ROMANIA RENTAL RATES Class A: 13.00-25.00 (EUR/M2/MONTH): CROATIA The speculative office pipeline under construction Class B: 10.00-17.00 BUCHAREST and planned for delivery by 2021 totals 404,000 m2, BELGRADEBELGRADE 2 HB Reavis, GTC, Skanska, SERBIA out of which 95,000 m office space is expected to MAIN DEVELOPERS: Atenor, Futureal, Codic, Wing, be handed over by the end of 2019. Property Market MONTENEGRO SOFIA BULGARIA PODGORICA The Váci Corridor submarket remained the most OTHER MARKETS: Debrecen sought-after location in H1 2019 period, both

TIRANA in terms of leasing activity (33% of the TLA in H1 2019 period) and the development pipeline ALBANIA (50% of the Budapest’s development pipeline will LARGEST PROJECTS be handed over in this submarket). UNDER CONSTRUCTION

PROJECT DEVELOPER Mill Park, developer: Skanska Agora Tower and Hub HB Reavis Váci Greens (building E&F) ATENOR Millenium Gardens TriGranit

MARKET DATA The existing class

Total office stock 2(m ) evolution Take-up (m2) in Budapest (2015-2021) A office stock and vacancy rate (%) in Budapest (2015-2021) is expected to expand 600,000 5,000,000 14% 12.1% 12% 500,000 4,000,000 9.5% by at least 20% 10% 8% 7.5% 7.5% 8% 3,000,000 7.3% 7% 400,000 6.3% 6% until the end of 2,000,000 4% 300,000 2% 1,000,000 0% 200,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 2021, due to the rich forecast forecast forecast Total stock Vacancy rate forecast forecast forecast

development pipeline. Telekom building, developer: Wing

20 COLLIERS INTERNATIONAL | H1 2019 21 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA For several years the development of the Riga office LATVIA LITHUANIA market has been slow. Slow development volumes VILNIUS have led to the situation that around 73% of the

MINSK professional office stock is older than 10 years. However, as of now several projects are under BELARUS construction and a number of projects have been announced. Also, interest from new developers has been observed. RIGA POLAND WARSAW OFFICE MARKET H1 2019 KYIV This year already 42,200 m2 have been delivered and currently 73,900 m2 are under construction. TOTAL STOCK: 719,550 m2 PRAGUE UKRAINE An additional 16 projects with a total area of more NEW SUPPLY: 2 than 275,000 m2 are in the planning stages with 42,200 m CZECHIA a high probability of being transferred to active SLOVAKIA VACANCY RATE: 7.4% BRATISLAVA construction stages in the next 2 years. Riga still does not have a CBD, but most of the development Origo One, developer: Linstow TAKE-UP: 20,050 m2 is currently planned for the Kipsala, Skanste and BUDAPEST SPACE UNDER VEF/Teika business districts. 73,900 m2 HUNGARY CONSTRUCTION: ROMANIA ZAGREB Take-up activity in the recent year has been lower RENTAL RATES Class A: 14.00-16.00 CROATIA than anticipated and we can expect that vacancy BUCHAREST (EUR/M2/MONTH): Class B: 10.00-13.50 levels will increase once the new projects enter the BELGRADEBELGRADE SERBIA market as the amount of office space pre-leased Hanner, Vastint, Linstow, during the construction stages is relatively low. MAIN DEVELOPERS: LNK, Kapitel, M.M.M. projektai, Currently, vacancy levels vary between 4-10% MONTENEGRO SOFIA BULGARIA Eastnine PODGORICA depending on the office class while the market rent rates remain stable. The highest demand for office OTHER MARKETS: - TIRANA space for the last 3 years remains from professional service companies (GBS, including SSC and BPO ALBANIA companies), however mostly through expansions LARGEST PROJECTS as only a few new companies enter the market UNDER CONSTRUCTION every year. PROJECT DEVELOPER Jaunā Teika, developer: Hanner Z-Towers Towers Construction Management Jaunā Teika 4th stage Henrihs Hanner The Pine – the first Origo One Linstow office building in Riga to be constructed out MARKET DATA of wood and the first Total office stock 2(m ) evolution Take-up (m2) in Riga (2015-2021) and vacancy rate (%) in Riga (2015-2021) in the Baltics to qualify 1,000,000 12% for WELL Building 10.5% 10% 50,000 800,000 8% 8% 7.5% 40,000 5.7% 7.4% Standard, additional 600,000 6% 4.5% 4.9% 30,000 4.2% 4% 400,000 20,000 2% to LEED Platinum,

200,000 0% 10,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 is currently in planning forecast forecast forecast forecast forecast forecast Total stock Vacancy rate phase by Eastnine. The Pine, developer: Eastnine

22 COLLIERS INTERNATIONAL | H1 2019 23 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA The Vilnius office market observes active LITHUANIA LITHUANIA development of new projects – 26,450 m2 of new VILNIUS office space was completed in H1 2019, while 2 MINSK a pipeline amounting to as much as 225,140 m is under construction. BELARUS New modern supply is further raising quality standards as well as bringing greater emphasis VILNIUS POLAND OFFICE MARKET H1 2019 WARSAW on sustainability and innovation. This is in line with KYIV the needs and expectations of tenants and today’s TOTAL STOCK: 702,020 m2 workforce, resulting in the entry of new international PRAGUE UKRAINE players. NEW SUPPLY: 26,450 m2 CZECHIA Although demand for office space is strong, rapid VACANCY RATE: 5.3% SLOVAKIA BRATISLAVA expansion is expected to affect vacancy levels in the TAKE-UP: 35,800 m2 market, with the greatest impact on older business centres. SPACE UNDER BUDAPEST 225,140 m2 Business Stadium West BC, developer: Hanner CONSTRUCTION: HUNGARY

ZAGREB ROMANIA RENTAL RATES Class A: 14.70-16.50 CROATIA (EUR/M2/MONTH): Class B: 6.60-13.50 BUCHAREST BELGRADEBELGRADE SERBIA Technopolis, M.M.M. projektai, MAIN DEVELOPERS: Hanner, Darnu Group, Vastint MONTENEGRO SOFIA BULGARIA PODGORICA OTHER MARKETS: Kaunas, Klaipeda

TIRANA

ALBANIA LARGEST PROJECTS UNDER CONSTRUCTION PROJECT DEVELOPER Quadrum BC, developer: Schage Real Estate S7 BC (stage I), developer: M.M.M. projektai Business Garden Vilnius (stage I) Vastint Nova BC Technopolis Business Stadium North BC Hanner 41% of the stock

MARKET DATA in Vilnius is BREEAM

Total office stock 2(m ) evolution Take-up (m2) in Vilnius (2015-2021) or LEED certified. and vacancy rate (%) in Vilnius (2015-2021) Quadrum BC is 1,200,000 8% 7.5% 100,000 1,000,000 6.3% 6.5% 6% 5.3% 80,000 the first building in 5.3% 800,000 4.3% 4.3% 5% 4% 600,000 60,000 Lithuania to achieve 2% 400,000 40,000

200,000 0% 20,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 a BREEAM New forecast forecast forecast Total stock Vacancy rate forecast forecast forecast Construction certificate. Quadrum BC, developer: Schage Real Estate

24 COLLIERS INTERNATIONAL | H1 2019 25 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA In the past decade Montenegro has shown MONTENEGRO LITHUANIA considerable growth, and many consider the country VILNIUS to be one of the fastest rising tourism markets in the

MINSK world. With its stable economic growth over the past few years, it is sure to continue to attract foreign BELARUS investments in the foreseeable future.

Modern class A office buildings include PODGORICA POLAND OFFICE MARKET H1 2019 WARSAW Europoint, Normal Tower, Capital Plaza, Cijevna KYIV Komerc/Societe General headquarter, Millennium TOTAL STOCK: 69,010 m2 Center and Celebic Business Center. PRAGUE UKRAINE 2 NEW SUPPLY: 0 m Demand for office space in Podgorica significantly CZECHIA increased in 2019 compared to the previous years. VACANCY RATE: 10% SLOVAKIA BRATISLAVA The vacancy rate in Podgorica is around 10%, with TAKE-UP: 62,110 m2 expectation of stabilization below 10% by the end of 2019 when the new developments are properly SPACE UNDER BUDAPEST 15,000 m2 absorbed. Čelebić City Center, developer: Čelebić CONSTRUCTION: HUNGARY

ZAGREB ROMANIA RENTAL RATES Class A: 16.50 Rental levels for modern office space in Podgorica (EUR/M2/MONTH): CROATIA range between EUR 14.00 – 22.00 m²/month. Class B: 12.50 BUCHAREST BELGRADE Class A office buildings in good locations can be MAIN DEVELOPERS: Zeta Gradnja BELGRADE SERBIA rented at EUR 17.00 m²/month. Lower quality office space varies between EUR 10.00 – 14.00 m²/month. OTHER MARKETS: -

MONTENEGRO SOFIA BULGARIA PODGORICA The most interesting

TIRANA structure is the Europoint ALBANIA building, located close to LARGEST PROJECTS UNDER CONSTRUCTION the Morača river. What sets PROJECT DEVELOPER the office building apart Capital Plaza, developer: Abu Dhabi Capital Investment Business Center Čelebić Office building Zeta Gradnja from others is its energy Office building Normal Company efficiency. The building has 8,890 m2 of available MARKET DATA office space, and has heat pumps installed to utilize the Total office stock 2(m ) evolution Take-up (m2) in Podgorica (2015-2021) and vacancy rate (%) in Podgorica (2015-2021) ground water of the River

15% 120,000 15% 15% 16% 80,000 Morača as a heat source. 105,000 12% 60,000 This helps to reduce the 90,000 10% 10% 10% 10% 10% 8% 75,000 energy required for heating, 40,000 4% 60,000 ventilation, air conditioning 45,000 0% 20,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 forecast forecast forecast forecast forecast forecast and water heating. Total stock Vacancy rate Europoint, developer: Proinvest

26 COLLIERS INTERNATIONAL | H1 2019 27 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA

POLAND LITHUANIA High demand and lower new supply compared VILNIUS to H1 2018 caused a growing deficit of office space

MINSK in Warsaw. The supply gap is visible especially in central zones, where the vacancy rate at the BELARUS end of H1 2019 was 5.6%. We predict that rental rates for office projects in these zones will gradually increase. WARSAW POLAND OFFICE MARKET H1 2019 WARSAW KYIV Currently, there are approximately 40 office buildings TOTAL STOCK: 5,543,680 m2 under construction in Warsaw with a total area PRAGUE UKRAINE of over 832,700 m2, which will gradually fill the supply 2 NEW SUPPLY: 80,540 m gap in the next 24 months. The largest projects CZECHIA include Varso Place, The Warsaw HUB and Mennica VACANCY RATE: 8.5% SLOVAKIA BRATISLAVA Legacy Tower. TAKE-UP: 405,950 m2 The office supply in regional cities is growing faster SPACE UNDER BUDAPEST 832,730 m2 than in Warsaw. In H1 2019, developers delivered CONSTRUCTION: HUNGARY 241,300 m2 of modern office space, and 844,1002 m ROMANIA RENTAL RATES Class A: 14.00-24.00 ZAGREB is under construction. (EUR/M2/MONTH): Class B: 12.00-18.00 CROATIA BUCHAREST In H1 2019, there was also rapid growth in the flexible Skanska Property Poland, BELGRADEBELGRADE SERBIA and coworking space market, which offers Warsaw Spire, developer: Ghelamco MAIN DEVELOPERS: Ghelamco, HB Reavis, an alternative to long-term lease for young Cavatina, PHN, entrepreneurs, start-ups, freelancers and increasingly MONTENEGRO SOFIA BULGARIA PODGORICA often for corporations. International coworking Kraków, Wrocław, Trójmiasto, operators will continue their expansion outside the OTHER MARKETS: Katowice, Łódź, Poznań, capital, targeting the largest office markets in Poland. Szczecin, Lublin TIRANA ALBANIA LARGEST PROJECTS UNDER CONSTRUCTION PROJECT DEVELOPER Varso Place HB Reavis Varso Place - the The Warsaw HUB Ghelamco Mennica Legacy Tower Mennica Poland/Golub Gethouse highest project in the

MARKET DATA European Union is

Total office stock 2(m ) evolution Take-up (m2) in Warsaw (2015-2021) under construction and vacancy rate (%) in Warsaw (2015-2021)

7,000,000 16% 14.2% 900,000 in Warsaw (310 m). 12.3% 860,000 11.7% 12% 12% 5,000,000 9% 10% 820,000 8.7% The complex is 8% 8% 780,000 3,000,000 4% 740,000 planned to be 1,000,000 0% 700,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 forecast forecast forecast forecast forecast forecast Total stock Vacancy rate completed in 2021. Varso Place, developer: HB Reavis

28 COLLIERS INTERNATIONAL | H1 2019 29 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA With a modern office stock of around 2.6 million m2 ROMANIA LITHUANIA in mid-2019 (excluding significant surfaces of VILNIUS owner-occupied buildings), Bucharest is arguably

MINSK one of the most dynamic markets in the CEE region. Of course, this is closely related to the labour force, BELARUS which offers a nice mix of good skills (including sought-after foreign languages) as well as much lower costs than in Western Europe. But this might BUCHAREST POLAND OFFICE MARKET H1 2019 WARSAW be true for a lot of other cities in the region, but KYIV Romania and Bucharest do have a couple of things TOTAL STOCK: 2,603,500 m2 that set it apart from other peers and even other PRAGUE UKRAINE more developed markets in Europe: a very strong 2 NEW SUPPLY: 185,000 m IT&C community. CZECHIA VACANCY RATE: 10% SLOVAKIA BRATISLAVA The Bucharest office market is currently enjoying TAKE-UP: 188,300 m2 a growth spurt in terms of supply, with the leasable area of buildings coming online in 2019 and 2020 SPACE UNDER BUDAPEST 358,400 m2 representing a quarter of the existing market. While Oregon Park, developer: Portland Trust CONSTRUCTION: HUNGARY this process is likely to pressure the vacancy rate ZAGREB ROMANIA RENTAL RATES Class A: 18.00 a bit, it is worth underscoring that Bucharest still (EUR/M2/MONTH): Class B: 11.00 CROATIA has quite a lot of stock built about a decade ago and BUCHAREST part of it would not meet today’s qualitative/technical Globalworth, AFI Europe, BELGRADEBELGRADE SERBIA standards. Skanska, Portland Trust, MAIN DEVELOPERS: Vastint, Forte Partners, One Consequently, vacancy tends to vary quite a lot from MONTENEGRO SOFIA BULGARIA United PODGORICA submarket to submarket and even between projects in the same submarket. Furthermore, on a relative OTHER MARKETS: Cluj-Napoca, Timisoara, Iasi TIRANA (per capita) basis, Bucharest’s office surface is still some 30% below Warsaw’s, which is also ALBANIA significantly below other Western European markets, LARGEST PROJECTS so there might still be quite a lot of room to grow. UNDER CONSTRUCTION PROJECT DEVELOPER AFI Park, developer: AFI Europe Campus Globalworth Campus 6 Skanska Expo Business Park Portland Trust

MARKET DATA The Bucharest office

Total office stock 2(m ) evolution Take-up (m2) in Bucharest (2015-2021) market is the fastest and vacancy rate (%) in Bucharest (2015-2021)

4,000,000 16% 14% 14% 400,000 growing among the 15% 14% 14% 3,500,000 12% 12% 9.8% 9.5% 3,000,000 300,000 CEE capitals, with the 10% 10% 2,500,000 8% 6% 2,000,000 modern office stock up 200,000 4% 1,500,000 2% by over 10% in the year 1,000,000 0% 100,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 forecast forecast forecast Total stock Vacancy rate forecast forecast forecast ending June 2019. Hermes Business Campus, developer: Atenor

30 COLLIERS INTERNATIONAL | H1 2019 31 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA Demand for high-quality modern business premises SERBIA LITHUANIA remains relatively high when compared to the VILNIUS available space. This has in turn resulted in quick

MINSK absorption of previously delivered projects within the CBD area and has led to favorable market BELARUS conditions for landlords, who still retain precedence in negotiations. A constant high demand during this period has resulted in even lower vacancy rates, BELGRADE POLAND OFFICE MARKET H1 2019 WARSAW reaching levels as low as 2-3% in the prime market. KYIV TOTAL STOCK: 772,000 m2 Office construction is at a historic high and changes PRAGUE UKRAINE in market parameters are expected when all of these 2 NEW SUPPLY: 40,110 m projects are delivered. There is currently over CZECHIA 180,000 m² in the active pipeline, which will result VACANCY RATE: 3.5% SLOVAKIA BRATISLAVA in an increase of prime office stock by ca. 25% until TAKE-UP: 40,000 m2 2021. There has also been a greater focus on Downtown Belgrade, following stronger demand SPACE UNDER BUDAPEST 202,000 m2 from tenants for this part of the city. Usce Tower, developer: MPC Properties CONSTRUCTION: HUNGARY

ZAGREB ROMANIA RENTAL RATES Class A: 14.00-17.00 Headline rents within class A and class B office (EUR/M2/MONTH): CROATIA buildings in Belgrade have remained stable throughout Class B: 11.00-13.00 BUCHAREST BELGRADE 2018 and slight increase is expected in 2019. Service GTC, MPC Properties, Erste BELGRADE MAIN DEVELOPERS: SERBIA charges have remained stable in the previous Group Immorent, AFI Groupl 18 months, and range EUR 4.00- 4.50 m²/month. Rental values are expected to remain stable until the OTHER MARKETS: Novi Sad, Nis MONTENEGRO SOFIA BULGARIA PODGORICA delivery of new office stock, which is currently under construction.

TIRANA

ALBANIA LARGEST PROJECTS UNDER CONSTRUCTION PROJECT DEVELOPER Blue House, developer: Blue Center Green Heart GTC NCR Kampus Merin Holdings Navigator 2 MPC Properties The vacancy rate in

MARKET DATA the Belgrade office

Total office stock 2(m ) evolution Take-up (m2) in Belgrade (2015-2021) market is amongst and vacancy rate (%) in Belgrade (2015-2021) 1,200,000 12% 120,000 10% 10% 10% the lowest in Europe, 1,000,000 8.5% 7% 8% 100,000 800,000 7% 6% currently standing 600,000 4% 5% 4% 80,000 3.5% 400,000 2% at 3.5%. 200,000 0% 60,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 forecast forecast forecast Total stock Vacancy rate forecast forecast forecast

GTC 41,developer: GTC

32 COLLIERS INTERNATIONAL | H1 2019 33 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA The office market in Bratislava is undergoing a rapid SLOVAKIA LITHUANIA expansion with 51,000 m2 being added to the modern 2 VILNIUS office stock in H1 2019 and more than 133,000 m

MINSK currently under active construction waiting to be delivered throughout 2019-2020. Growing BELARUS supply results in a slight increases in vacancy rates, even though the decline in occupancy is rather subtle. BRATISLAVA POLAND OFFICE MARKET H1 2019 WARSAW KYIV Demand remains healthy with most of the take up TOTAL STOCK: 1,826,690 m2 traditionally being attributed to IT and Professsional PRAGUE UKRAINE Services. In terms of the volume by transaction type, 2 NEW SUPPLY: 51,000 m most of the deals include prolongations, new leases CZECHIA and pre-leases. VACANCY RATE: 8.1% SLOVAKIA BRATISLAVA TAKE-UP: 110,590 m2 Rental rates remain stable with quoted rents for prime premises usually being higher than the actual SPACE UNDER BUDAPEST 133,110 m2 contracted rents. Current market trends dictate an Nivy Tower, developer: HB Reavis CONSTRUCTION: HUNGARY increasing focus on tenant’s needs leading to the ZAGREB ROMANIA RENTAL RATES Class A: 14.50 growh in popularity of the flexible offices concept. (EUR/M2/MONTH): CROATIA Class B: 12.50 BUCHAREST BELGRADE MAIN DEVELOPERS: HB Reavis, J&T, Penta BELGRADE SERBIA OTHER MARKETS: Košice There is a current

MONTENEGRO SOFIA BULGARIA PODGORICA market trend towards

TIRANA

ALBANIA the renovation of old LARGEST PROJECTS UNDER CONSTRUCTION industrial properties PROJECT DEVELOPER into modern and Part of Bratislava’s new CBD, source: JTRE Sky Park Phase I Penta Investments Nivy Tower HB Reavis vibrant office spaces. Tower 5 (NFŠ) NFŠ, a.s. One example of that

MARKET DATA is the mixed use

Total office stock 2(m ) evolution Take-up (m2) in Bratislava (2015-2021) project Pradiareň and vacancy rate (%) in Bratislava (2015-2021) 12% 1900, involving the 2,000,000 8.8% 10% 10% 10% 250,000 1,800,000 7% 8.1% 8% 8% 6% 6% refurbishment of the 1,600,000 200,000 6% 150,000 1,400,000 4% former Bratislava 1,200,000 2% 100,000

1,000,000 0% 50,000 2015 2016 2017 2018 H1 2019 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 Thread Factory Source: developer’s website yit.sk forecast forecast forecast forecast forecast forecast Total stock Vacancy rate ("Pradiareň 1900"). Pradiareň 1900, developer: YIT

34 COLLIERS INTERNATIONAL | H1 2019 35 OFFICE MARKET IN 15 CEE COUNTRIES TALLINN ESTONIA

LATVIA MARKET COMMENTARY RIGA There has been a revival in the office rental market, UKRAINE LITHUANIA both from tenants seeking to improve their working VILNIUS conditions by moving from older to newer offices,

MINSK and from developers starting to build or design new business centres. Similarly to Q1 2019, there BELARUS is a lack of office space. Currently, for those considering relocation to a 5,000 m² office in the central business district, the supply is limited to KYIV POLAND OFFICE MARKET H1 2019 WARSAW a few office buildings. KYIV TOTAL STOCK: 1,916,500 m2 The vacancy rate will continue to gradually decline. PRAGUE UKRAINE New office supply commissioned in 2019 will 2 NEW SUPPLY: 18,500 m amount to approximately 88,000 m², which is the CZECHIA largest increase in the last 5 years. However, even VACANCY RATE: 6% SLOVAKIA BRATISLAVA this volume of new supply will not fully satisfy the TAKE-UP: 90,000 m2 existing demand within the office market.

UNDER CONSTRUCTION BUDAPEST 70,000 m2 The trend towards a moderate increase in rental Guliver BC, developer: TRI O LLC AREA: HUNGARY rates will continue in the next 6 months. It should ZAGREB ROMANIA RENTAL RATES Class A: 19.60-26.70 also be noted that the active development of (EUR/M2/MONTH): CROATIA innovation parks (such as: UNIT.City, Innovation Class B: 12.50-18.70 BUCHAREST BELGRADE District IT Park, Manufactura, and LvivTech.City), KAN Development, INOR, BELGRADE SERBIA and the emergence of large co-working centers in MAIN DEVELOPERS: MERX REAL ESTATE, FMG, traditional office buildings demonstrate that the trend UFuture, TRK Engineering towards collaborative office spaces is on the rise. MONTENEGRO SOFIA BULGARIA PODGORICA OTHER MARKETS: Lviv, Dnipro

TIRANA ALBANIA UNIT.City is Ukraine’s first LARGEST PROJECTS innovation park. It is one of UNDER CONSTRUCTION the biggest platforms merging PROJECT DEVELOPER exceptional infrastructure and IQ BC, developer: KAN Development 25 Zhilyanskaya St. INOR 137-139 Velyka Vasylkivska St. Vector an innovation ecosystem for 4 Korolenska St. TRK Engineering IT and technology companies in Central and Eastern Europe MARKET DATA (CEE). Located in Kyiv, UNIT.City sits on 25 ha, just Total office stock 2(m ) evolution Take-up (m2) in Kyiv (2015-2019*) and vacancy rate (%) in Kyiv (2015-2020*) 220,000 6 km from the city center and forms an entire city block of 180,000 2,500,000 17.5% 20% mixed-use real estate: offices, 14.4% 2,000,000 15% 140,000 residential properties, innovative 1,500,000 10% 7.6% 100,000 6.5% 6% educational institutions, R&D 1,000,000 5.5% 5% 5%*

500,000 0% 60,000 centers, VR and AR laboratories, 2015 2016 2017 2018 H1 2019 2019 2020 2015 2016 2017 2018 2019 forecast forecast Total stock Vacancy rate forecast and 3D-printing and additive * latest available data *latest available data manufacturing facilities. UNIT.City, developer: UDP

36 COLLIERS INTERNATIONAL | H1 2019 37 OFFICE MARKET IN 15 CEE COUNTRIES CONTACTS CEE EMEA LATVIA Luke Dawson Damian Harrington Deniss Kairans Toms Andersons Managing Director Director | Head of EMEA Research Partner I Managing Director Director I Research and Advisory and Head of Capital Markets | CEE Phone +44 7867 360489 Phone +371 6778 33 33 Phone +371 677 833 33 Phone +420 739 571 597 [email protected] [email protected] [email protected] [email protected]

ALBANIA LITHUANIA Stela Dhami Manjola Çondi Ramune Askiniene Diana Lebedenko Managing Partner Senior Associate Partner | Managing Director Senior Market Analyst | Consultancy Phone +355 69 20 22 575 Valuation | Advisory Services Phone +370 5 249 1212 Department [email protected] Phone +355 69 22 11 578 [email protected] Phone +370 5 249 1212 [email protected] [email protected]

BELARUS MONTENEGRO Denis Chetverikov Darya Lapitskaya Milovan Novaković Nikola Kostić Partner | Managing Director Associate Director of Research Managing Director MRICS Manager I Commercial Agency Phone +375 172 569 569 and Advisory Department Phone +38 26 938 8814 Phone +38 26 938 8813 [email protected] Phone +375 172 569 569 [email protected] [email protected] [email protected]

BULGARIA POLAND Verka Petkova Adriana Toncheva Monika Rajska-Wolińska MBA, MRICS Paweł Skałba Partner I Director I Business Senior Consultant | Managing Partner | EMEA Board Senior Partner Development Research and Marketing Member Director of Office Agency Phone +359 896 777 614 Phone +359 896 777 686 Phone +48 668 139 759 Phone +48 602 258 435 [email protected] [email protected] [email protected] [email protected]

CZECHIA ROMANIA Tewfik Sabongui Ondrej Vlk Laurentiu Lazar MRICS Silviu Pop Managing Partner Head of Research Managing Partner Head of Research Phone +420 777 150 669 Phone +420 602 940 066 Phone +40 722 308 309 Phone +40 721 176 701 [email protected] [email protected] [email protected] [email protected]

CROATIA SERBIA Vedrana Likan Nuccia Kos Ana Vukovic Ilija Samardzija Managing Partner Senior Consultant Managing Director Key Account Phone +385 99 3117 364 Real Estate Advisory and Agency Services Phone +381 11 313 99 55 and Operations Manager [email protected] Phone +385 95 593 0136 [email protected] Phone +381 63 10 77 849 [email protected] [email protected]

ESTONIA SLOVAKIA Avo Rõõmussaar Maksim Golovko Richard Urvay Tamila Nussupbekova Partner I Managing Director Analyst | Head of Research Managing Director Associate | Research Phone +372 52 79 638 Phone +372 56 951 250 Phone +421 918 802 865 Phone +421915143383 [email protected] [email protected] [email protected] [email protected]

HUNGARY UKRAINE Tim Hulzebos Tamás Steinfeld MBA, MRICS Alexander Nosachenko Aleksey Lanko Managing Director Associate Director Managing Director Director I Office Department Phone +36 30 986 6093 Phone +36 70 286 2505 Phone +38 067 2301777 Phone +38 067 2452787 [email protected] [email protected] [email protected] [email protected]

38 COLLIERS INTERNATIONAL | H1 2019 39 EX DING BORDERS

OFFICE MARKET IN 15 CEE COUNTRIES