During 2016, the Latvian industrial market experienced additional speculative construction from 4 local developers: Balt Cargo Solutions, Piche, Elipse BLC and UA Investor as well as one international player, VGP.
Balt Cargo Solutions located in Dreiliņi entered the market by delivering 24 000 sqm of fully leased warehouse space in 2014. Their second stage building with GLA of 15 000 sqm was delivered in Q3, 2016. In addition, the 3rd stage with GLA of 2 500 sqm is currently under construction and fully leased and Balt Cargo Solutions 4th phase with GLA of 4 000 sqm is under planning and waiting for their tenant. During the construction process it is possible to adjust the required space according to tenant’s requirements. 4th stage building is planned to be delivered in Q3, 2017.
Piche started their development in Mārupe by delivering a speculative warehouse unit on Plienciema street in 2016. Now, their second project P5 or Ulmaņa Gatve industrial park consisting of two buildings of 7 000 sqm each is under construction and should be delivered in the second half of 2017. P5 is located in Mārupe near Riga international airport next to Kārļa Ulmaņa gatve (A10 Riga – Ventspils)
“These days increase in demand in industrial lease market can be observed. I consider that this boost in demand is not in the whole lease market but mainly result of customers needs for new and energy-efficient premises, though current supply in this segment is relatively small. This is the main reason why construction of P5 Industrial park was started.” Says Piche managing director, Pēteris Senkāns.
Another project in Mārupe is Elipse BLC. Elipse BLC is a logistics center in Riga international airport territory with total GLA of 2 7000 sqm. The second stage of the industrial park is currently under construction where ca. 10 000 sqm of warehouse and production spaces will be provided to tenants.
Closest upcoming addition to the market will be UA Investor 2nd phase. The project entered the market in 2014 with its 1st phase warehouse building, GLA 5 826 sqm. Currently ca. 3 700 sqm of industrial space is in the final construction stage and should be delivered at the beginning of 2017. The Industrial park is vacant and spaces are available for lease.
VGP is an international developer with industrial projects in Central and Eastern Europe. During 2015 and 2016 VGP has built close to 90 000 sqm in Tallinn and this summer launched their industrial project in Ķekava. VGP park Ķekava is an industrial park with a total size of 60 000 sqm. The first phase consisting of 20 000 sqm of industrial space is planned to be delivered in the middle of 2017.
“This year surprised me with new and good quality speculative industrial projects. If till now superb quality built-to-suit premises were scoped where end user knows his requirements than this years trend shows that developers of speculative projects are more oriented on tenant as an end user ensuring layout flexibility and other tailor made solutions. As our experience shows, there is always demand for the project if it is entirely end user oriented. All industrial and office premises in our project are designed and constructed according to tenants needs (built-to-suit). Fact, that this year total lettable area for VGP group exceeded 500 000 sqm proves that our tenants values VGP concept.” Says VGP Baltic states managing director Andrejs Konstantins
Looking at total space under construction – 72 200 sqm in 2016 and industrial space supplementation by 110 000 sqm in 2015, we can observe that market has seen the largest space increase since 2009. However, is there a difference in development comparing to 2007 – 2009? We are witnessing that almost all developers provide tailor made solutions to their industrial spaces and hardly anyone is willing to start standard speculative construction without any guaranties from future tenants. We can say that the industrial market has developed to a state where quality and custom made solutions are the key to successful project implementation.