During the crisis years, vacancy and rent levels where so that many commercial real estate owners found themselves struggling to keep their objects up and running. Many of them were not able to adjust and lost their properties to the banks. At the same time, other put up the fight and have different story to tell.
Back in 2006, a leading professional emerging and frontier market asset manager East Capital bought office centre Zemitana Biroji, which is located at Zemitana street 2B on the border of a central district of Riga. Net leasable area of the office centre is almost 4600 sqm. At its worst, vacancy in the shopping centre was more than 60%, but instead of allowing the situation to deteriorate further, the building was renovated in 2010 and rent rate policy was timely adjusted to meet reduced demand.
Today, Zemitana Biroji is 96% occupied and has a well-diversified tenant mix. East Capital believes that asset is stable enough to be interesting for potential investors at a price that would meet expectations of both parties. As a bonus, a new owner will still have an excellent opportunity to increase rent income in the future by gradually increasing current office rent rates up to the market level.
Maris Smiltenieks, EAST CAPITAL BALTICS AS, Country Manager: “Our feeling is, that the commercial real estate market has recovered, however, it sure has not shown steady signs of growing, but rather remains in a stagnating phase. Nevertheless, we have managed to keep all of our properties highly occupied and as an example, Zemitana Biroji has a vacancy level as low as less than 4% as of today, whereas at the very bottom of the crisis the vacancy was more than 60%. In 2015, the property has shown highest rental revenues in the post-crisis environment and it keeps on improving. Development-wise Latvian market has not enjoyed a full new commercial development cycle in a post-recession period. In simple words, the overall commercial premises supply in the market has ultimately remained almost the same as in the pre-recession period with only minor new developments completed. This drives the overall occupancy level to a fairly high level, however the rent levels have not fully recovered since 2008 and generally remain 20-30% lower than they were before the global economy crisis. We see it as an opportunity for the future owner of Zemitana Biroji”
For additional information on the sales process of Zemitana Biroji you are welcome to visit www.colliers.lv or contact Colliers International consultant Tarass Leocko, address Riga, Kr. Valdemara Street 21, during working hours from 9 a.m. until 6 p.m. (e-mail: email@example.com, phone: +371 6778 3333).
East Capital is a specialist in emerging and frontier markets. The company, founded in 1997, bases its investment strategy on thorough knowledge of the markets, fundamental analysis and frequent company visits by its investment teams. East Capital actively manages EUR 2.1 billion in public equity, private equity and real estate. East Capital is present in Baltic real estate market since 2005 with total of EUR 340 million assets under management in Latvia, Lithuania and Estonia. It is headquartered in Stockholm, with offices in Dubai, Hong Kong, Luxembourg, Moscow, Oslo and Tallinn.