More robust development of larger shopping and entertainment centres only in the country’s capital city

In the first half of 2018, the trends of the previous year continued to prevail in the retail premises sector – retailers in Lithuania continued to expand and to invest in the renovation of the premises and buildings. Construction of new larger traditional shopping centres in the nearest future is planned only in the country’s capital.

Depo, the Latvian retail chain of construction materials and household goods, continues active expansion and in April 2018 opened its third shopping centre in Lithuania, this time in Vilnius. The shopping centre of about 30,000 sqm is located in the western part of Vilnius, between Lazdynai residential district and Gariūnai market. The first two shopping centres of this DIY operator were opened in 2016 (in Klaipėda) and in 2017 (in Panevėžys). Construction of two more Depo shopping centres is in progress with the possible opening at the end of this year or early next year. One shopping centre is being built in Ukmergės Street in the northern part of Vilnius and the other – next to the western bypass in Kaunas. The construction of the Depo shopping centre is also planned in Šiauliai.

In March 2018, the new Žali shopping centre was opened in Balsiai residential area in Vilnius. Baltisches Haus, a real estate development and management company, invested about EUR 6.5 million in this A+ energy class building, infrastructure and landscaping. Over 3,800 sqm of the building is occupied by the retail chain Iki and the rest is leased by 15 smaller tenants. The development of this shopping centre was strongly supported by the local community, which has long been waiting for a new and high quality shopping, services and entertainment space.

The construction of a 5,000 sqm retail building is in progress on the site developed by VNO Business & Retail Park located in the southern part of Vilnius, next to IKEA and Nordika shopping centres. It is planned that the French sports and leisure goods retailer, Decathlon, will open here by the end of this year and it will be the first shop of this retailer in the Baltic countries.

A shopping and entertainment centre of a larger size is planned close to Pilaitė residential district, next to the western bypass in Vilnius. It has been announced that a company of the Ogmios Group is planning to build a four-storey 60,000 sqm building, of which over 30,000 sqm will accommodate the largest outlet centre in Lithuania, a grocer, a sports club, a cinema, cafes and other tenants. The shopping centre could be opened at the end of next year. If this project is implemented as planned, it will be a larger traditional shopping centre in Vilnius opened after more than a three-year gap since the opening of the last large shopping centre in mid-2016 (second stage of the Nordika shopping centre).

A larger shopping centre is also scheduled for construction in Klaipėda. A company managed by the real estate development company VPH plans to build a 20,000 sqm retail trade building next to the intersection of Šiaurės Avenue and Liepų Street. However, a more detailed concept and development schedule of the project has not yet been publicly announced.

Managers of shopping centres actively invest in upgrade of existing projects

It has been about 20 years since the first larger shopping centres opened in Lithuania, therefore  opening of new retail spaces encourages owners of old buildings to undertake major renovation and to invest a great deal of money. This year, Senukai has upgraded its first DIY shopping centre in Vilnius. After an upgrade of EUR 5.5 million, the shopping centre which has operated since 2002, was reopened in April this year. In August 2017, a shopping centre of the Maxima retail chain on Mindaugo Street reopened after renovation.  The shopping centre of almost 10,000 sqm opened in 1999 and was among the first larger shopping centres in the country’s capital city. A total of EUR 6.7 million was invested in the reconstruction of the building and the new equipment. The shopping centre accommodates the grocery store Maxima, which works 24/7, and over 20 other tenants.

Managers of the largest shopping and entertainment centres also actively invest in the renovation of their retail premises or even plan further expansion of shopping centres. In mid-2017, the Panorama shopping and entertainment centre in Vilnius opened a 1,500 sqm People Fitness Club instead of part of its office premises and in June this year it opened a gourmet food zone instead of the former premises occupied by the Apranga Group shop. The gourmet food zone accommodates 20 new retailers. In the parcels of land located next to Panorama site, an extension is planned which may accommodate a cinema. Considerable investments are planned in the Akropolis shopping and entertainment centre, one of the largest such centres in Kaunas. Renovation of an area of 10,000 sqm has been announced and the investment will amount to EUR 10 million. This year, it has been announced about the planned EUR 14 million renovation of Akropolis shopping and entertainment centre in Vilnius, which is scheduled for next year.

If popular shopping centres get expensive facelifts, there are also cases in the market where the entire concept and use of the project changes. One such example is the Saturnas shopping centre in Klaipėda, which was opened after reconstruction in 2005. After the failure to revive the centre following the economic recession (in 2010, bankruptcy of the manager of the centre was initiated), apartments were fitted out in the second and third levels of the building (Saturno Namai) which are currently being sold. If in the past this 5,600 sqm project was considered as a larger shopping centre where the residents of Klaipėda could purchase various goods and services, today it is a residential building with commercial premises on the ground floor.

Total area of the largest shopping centres in Lithuania – over 1.1 million sqm

The total retail space in larger traditional shopping centres (counting those over 5,000 sqm GLA with over 10 tenants) in Lithuania in mid-2018 amounted to slightly over 1.1 million sqm, 392 sqm/1,000 population of the country. In view of the fact that the retail space in such shopping centres in the past 4-5 years has slightly increased, but the population of the country has decreased, statistically the retail space per capita indicator has increased. For example, at the end of 2013 the indicator was 342 sqm per 1,000 capita, i.e. today there is 14.5% more space per capita.

A total of 93% of large shopping centres are based in five major cities of the country. In mid-2018, the usable retail space in Vilnius amounted to 453,000 sqm (827 sqm/1,000 population), in Kaunas – 248,000 sqm (860 sqm/1,000 population), in Klaipėda – 158,300 sqm (1.063 sqm/1,000 population), in Šiauliai – 109,700 sqm (1.091 sqm/1,000 population), and in Panevėžys – 55,600 sqm (627 sqm/1,000 population).

Retail rents remained stable in H1 2018

In spite of the growing retail trade volumes in the country (according to Statistics Lithuania, in the first half of 2018 the retail trade turnover in Lithuania [except for trade of motor vehicles and motorcycles], compared with the first half of 2017, increased by 9.0%) and very low vacancy rates both in the main shopping centres and in the most popular shopping streets of the major cities, rents have remained stable. For example, in the main shopping streets of Vilnius (Gedimino Avenue, Pilies Street, Didžioji Street and Vokiečių Street) where it is hard to find any vacant premises, the price level in the past six months has not changed and the price interval has remained sufficiently broad. The rents for medium size (about 100–300 sqm) retail premises stand at 17.0–45.0 EUR/sqm. Rents in other major cities of the country have also remained at the same level as at the end of 2017: in Kaunas – 11.0–19.0 EUR/sqm, in Klaipėda – 9.0–15.0 EUR/sqm, and in Šiauliai and Panevėžys – 6.0–11.0 EUR/sqm.

Lithuania Commercial Market Commentary H1 2018 (PDF)