Riga commercial property market in Covid-19 crisis – temporary discounts and search for more advantageous offers / Article / LSM.lv

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            In Riga, a new trend in the commercial property market during the crisis - premises owners offer discounts to tenants. Most rent adjustments are temporary. Migration has also begun, as tenants are looking for better deals.            </p><div>
            <p style="margin-left:0cm; margin-right:0cm"><strong>IN SHORT:</strong>
  • The Covid-19 crisis has affected the commercial property rental market in Riga.
  • Many owners gave a discount of up to 50% on office space, rarely – 100%.
  • Mostly rent discounts – for a limited time. Some owners refuse discounts.
  • Complicated situation for owners of only one or a few objects.
  • Additional work for premises owners – to go into the business indicators of tenants.
  • Tenants change rooms more often because they looked for better deals.
  • Owner of the store “M50”: The owner of the premises himself offered a discount, it was significant.
  • Expert: The center of Riga is getting empty not only because of Covid-19.

Covid-19 crisis in Riga commercial property market – temporary discounts and search for more advantageous offersLinda Zalane

    <p style="margin-left:0cm; margin-right:0cm">The Covid-19 crisis has significantly changed and affected the commercial property rental market. Artūrs Obrickis, the representative of SIA “Immostate” investment and commercial property, said that the owners of large premises and those who own several office centers or commercial property portfolios, during the crisis, try to keep tenants and offer various solutions.</p>

“Most have given up to 50% off office space.

There are some cases where 100%, but these are exceptional cases. If we talk about the area of ​​the store, then the owners gave discounts from 50 to 100%, where the shops or restaurants were closed and logically the owners had to give a discount, ”Obrickis knew.

The situation was more tense for those owners of commercial premises who have only one or a few objects. “Because the owners of Covid-19 [ārkārtējā] due to the situation, the financial situation was not so good and could not react quickly, and the tenants did not want to give discounts. As a result, the relationship between owners and tenants has become hot, ”Obrickis explained.

Consequently, the tenants reviewed and assessed whether it was worthwhile for them to be with the specific owner of the premises. The migration began as tenants looked for better deals.

“Entrepreneurs who have been successful in their field before, after the first two weeks of the crisis in the country, began to look for other places where the price would be advantageous or the premises larger or smaller.

In any case, they were active enough in the commercial market, ”Obrickis pointed out.

Viktors Savins, a member of the Real Estate Association and the head of the real estate fund EfTEN Capital Latvia, also emphasized that the Covid-19 crisis has introduced adjustments in the relationship between landlords and tenants. Mostly rent adjustments are temporary.

“Some have come and given these discounts, but there are some who have stubbornly refused to give any discounts.

Of course, there are also dishonest cases when the tenant’s business has not been disrupted, the turnover has not fallen, even increased, and it also requires a rent discount, because everyone demands it, ”said Savins.

And this creates additional work for the owners of the premises – to go into the business indicators of each tenant.

Elīna Berklava, the owner of the home design store “M50”, has a positive experience with the owner of the premises. The owner of the premises himself offered to reduce the rent by 50% for the duration of the emergency.

“At a time when our revenue was falling dramatically and there was no time at all because the store was closed due to an emergency, it was, of course, a huge reflection of the cost savings. When we had no income at all and only from savings, we lived, ”said Berklava.

Both experts acknowledged that the real estate industry has been waiting for a long time for the adjustment of commercial property prices in the center of Riga and Old Riga. Viktors Savins emphasized that the center of Riga has been getting empty for a long time and this is not due to Covid-19, but due to tax policy.

“When quoting Mr. Ģirts Rungainis, Riga remains like a donut with an empty middle. We see that development is taking place in Pieriga, everywhere in the area, and this is mainly due to tax policy. If we look at Čaka Street, it was already empty before Covid-19. The reason is simple: the landlords are unable to pay taxes and then put it on the landlord’s shoulders. And accordingly the rooms are empty. This trend is spreading throughout the center of Riga. The effect of Covid-19 is like adding a point to the center of Riga, ”said Savins.

In terms of rent, the most expensive streets in Riga are the beginning of Barona Street, Tērbatas Street and the central streets of Old Riga – Audēju, Kaļķu and Vaļņu Streets.

Artūrs Obrickis knew how to say that at least for the time being the crisis has not introduced any adjustments to rents on these streets. He admits that the owners of the premises are optimistic and hopes that the business will return to the tenants and life will go on as usual. In his opinion, rental prices in shopping centers will not fall either, because there is a return to activity, and competition between them is fierce – the existing shopping centers are expanding extensive communication campaigns, and a new shopping center will soon be added to the market.

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