Mihails Morozovs, general director of Colliers International in the Baltic states, said the total office space in Riga reached 300,000 m² in late 2008, with free A-class offices accounting for 10.4% and free B-class offices for 25.8% of these premises. "It is a good reflection of the crisis. 10-15% is still within the norm ensuring sufficient choice and rotation. But 25% is not normal," Morozovs said at a news conference.
According to Colliers' data, another 70,000 m² of office space will be built in Riga in 2009-10, bringing the total size of office premises close to 400,000 m². "We expect therefore that the share of free office space might grow to 30% by the end of this year and next year," Morozovs predicted.
He added that the market of office premises was not in a total standstill though. "Transactions are taking place, and companies want to take advantage of the situation to slash their costs, expand offices and remain with the same budget. And there are plenty of such opportunities in comparison with 2007 and early 2008," Morozovs said.
The Colliers representative also revealed that the office segment was showing a decentralization trend, as more and more clients were looking for premises outside downtown Riga, especially after the opening of the new Dienvidu Bridge across the River Daugava.
Commenting on development plans, Morozovs said most project were frozen indefinitely due to the lack of funding. The share of frozen projects in the office segment reached 84%, with only 4% of the projects being in the stage of construction. "All those projects that are still on the paper are likely to remain on the paper, but the projects that are approved or very close to construction are expecting an opportunity to attract financing," Morozovs said.
Both the number of deals and prices have been declining on Latvian property market since mid-2007.
Source: Colliers International