Real estate advisor Colliers International expects office space in the Lithuanian capital Vilnius to double in the next few years, as economic growth drives up demand for modern office space.

Real estate advisor Colliers International expects office space in the Lithuanian capital Vilnius to double in the next few years, as economic growth drives up demand for modern office space.

The supply of modern office space in Vilnius stood at 153,400 m2 at the end of the first half of 2007. Around 36% or 55,000 m2 of this consisted of class A office space. This is expected to change significantly in 2007, with more than 59,000 m2 of new offices projected to enter the market, and 70,000 m2 and 150,000 m2 of new construction expected in 2008 and 2009 respectively.

Demand is currently outstripping supply in Vilnius, Colliers noted, but demand will be soon met by an abundance of new projects, which could drive up vacancy rates and drive down rents. 'We forecast that when the market reaches saturation stage in the next 2-3 years, vacancies will rise to 9-12% with a possible rent rate correction,' Colliers said, noting that rents had increased by 10-15% in recent years due to 100% occupancy rates.