In total, modern office stock is expected to increase by impressive 26% by the end of 2020.
Within the next 2-3 years, due to further market expansion and development, the class A rent of Tbilisi’s modern office stock should continue a stable downward trend.
In 2019, the vacancy rate in class A business centres dropped from 39% (2018) to 25%, mostly as a result of the absorption of vacant spaces in KDBC and GMT Plaza. Overall, the city vacancy rate stands at 14%.
It is expected that tenants will migrate between business centres of different classes. There is a trend relocations and revision of rental prices. We think that bilateral movements are expected:
Tenants who are less affected by this crisis are mainly concentrated in B and lower-class office centers. it is expected that these businesses will migrate to higher classes retaining existing lease terms.
And tenants which are in the exposed zones are expected to relocate to lower classes or to individual spaces.
In the short-term, opportunities
Business centres that are in the pipeline account for 78 K sq m (26% growth). Some of the upcoming projects have already rescheduled their opening and this trend might continue in line with market development.
Co-working spaces are more than offices: they create communities, incubate ideas, and are based on the concept of sharing knowledge - one of the pillars of the modern world. As such, it is clear that co-working spaces are definitely a trend that is going to stick around and judging from some of the biggest players in the industry, it is definitely a profitable venture. The local market is also following the worldwide trend and is growing at a rate that easily meets the local demand.
Regional office markets of Batumi and Kutaisi are yet on their early stage of development, recently opening new leasable office spaces. As for Telavi and Zugdidi, there are no upcoming business centres in these cities, however, attracting international non-governmental organizations or local companies could stimulate their potential for future.
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