NEW OFFICE SEARCH.MEASURE THRICE & CUT ONCEPREPARED FOR NEKUSTAMAIS ĪPAŠUMS UN BŪVNIECĪBA

OLGA KOZINA, MANAGING DIRECTOR, NEWSEC LATVIA

20.04.2012.

TENANTS’ MARKET. TENANTS’ HEAVEN?

23-04-202

  2006-2007 2008-2010 2011 2012Domination in

LeasingLandlords' market Tenants' market Tenants' market

?

Tenants behaviorExpanding. Increasing

demandShrinking.

Optimizing costs.Relocations.

Slight expansion

Availability of space Lack of space High vacancyImproving

occupancies

Rents Growing Decreasing Stabilizing

Lease structures

Institutional. Long leases, minimum

breaks, indexation, security mechanisms

Weak.Short leases. Discounts.

Improving

Average tenants solvency

Good Deteriorating. LowSlightly

improving

REASONS TO MOVE. UNSATISFACTION?

• Location not suitable for the business profile• Accessibility insufficient for clients or employees• Obsolete premises • Absence of necessary infrastructure • Willingness to improve working environment for employees• Inappropriate costs burden• Expansion planned• New office as a motivator for a longstanding company• Current office was a temporary solution in terms of strict time

constraints• Ownership change for existing premises• Lease contract close to expiring, new lease conditions• Centralization, merge

23-04-203

DECISION TO MOVE. SET, READY, GO!

• Target: 600 m²

• Who’s in charge: - Shareholder, CFO, MD, secretary?- In-house Facility Manager?- RE professional?

23-04-204

• Actions:- Checking web pages.- Calling.- Visiting.

• Results: - Comparing apples with pears.

PROCESS. PROBLEMS FACED.

• Availability of space.

• Timing.

• Compliance of space to the needs.

• Compliance of costs to the budget.

23-04-205

PROBLEMS FACED. AVAILABILITY OF SPACE

total office stock 0,5 mio sq m

ca 80th sq m vacant

criteria 1

criteria 2 - criteria n

1-2 options

23-04-207

PROBLEMS FACED. TIMING

DESIRED – YESTERDAY

REALITY – UP TO FEW MONTHS AHEAD

Decision

Definition of

needs & prio

rities

Analysis of o

pportunities

Signing

Negotiation of lease

Selecting options

Preparation of premise

s

Move in

xx.yy.zz

xx.yy.zz

xx.yy.zz

xx.yy.zz

xx.yy.zzxx.yy.zz

xx.yy.zz

xx.yy.zz

PROBLEMS FACED. COMPLIANCE OF SPACE TO THE NEEDS

• Useful space vs paid areas (inefficient planning, corners, corridors, etc).

• Floor layout - open space vs cabinet structure (depending on the business profile)

• Size – sq m vs working stations• Availability of infrastructure (engineering and social, business

infrastructure)• Technical requirements (availability, lack of capacities, etc)• Availability of parking• Availability of public transport access• Existing/possible internal finishing• Investments coverage

23-04-208

PROBLEMS FACED. BUDGET

• Accordance to financial capabilities (sales/rent)

• Not only rental costs but also property management, maintenance and utilities budget

• Maintenance costs allocation/calculations

• Clear rent review mechanisms

• Parking costs, any additional costs

• Guarantees asked by the Landlord

23-04-209

Office Rent rates, Riga, EUR/sqm Turnover/rent ratio

RESULT. DO I REALLY NEED IT?!

• Wasted time

• Wasted money and resources

• Deadlock

23-04-2010

BACK TO BASICS. REAL ESTATE FOR OCCUPIERS

avoid wasting your resources

Identification of both current and future bbusiness needs

realistic timetable, accountable milestones, clear targets

23-04-2011

An integral part of the overall Company’s business strategy

1. Clear reasons to move

2. Clear definition of needs & priorities

3. Setting up the plan

should be planned thoroughly

BACK TO BASICS. DEFINITION OF NEEDS & PRIORITIES

23-04-2012

• Business profile – proximity to clients, resources, magistral roads, business infrastructure etc

• Number of working places / specifics of daily work – necessity for meeting areas, private and public areas, social areas, archives, server rooms, etc

• Layout - open space vs cabinet system• Necessity for infrastructure/engineering – not only availability but also

capacities• Parking and public transport accessibility• Requirements to working environment – global guidelines for international

companies, local legislation, opening windows, healthy climat (moisturising system), daylight etc

• Budget – costs & investments• Flexibility – major lease covenants • Image • Forecasted need for expansion

BACK TO BASICS. LIAISING WITH PROFESSIONALS

• Assistance in defining the needs and setting priorities (through interviews, employee surveys,

etc.)

• Assistance in understanding the market

• Ensuring the best solution (in-depth analysis of options, comparing apples with apples, incl.

planned or theoretical vacancies)

• Predicting underwater stones and assistance in mitigating risks

• Assistance in negotiations

• Saving money

• Saving time

23-04-2013

BACK TO BASICS. CONCLUSIONS

• No uniform solution - a tailored approach is necessary in each case

• Get well prepared – most of problems faced are not about the

Landlords or the market, but about structured approach

• Riga office market is small – any solution is a synergy of

compromises

• Change from Tenants’ to Landlords’ market might happen very fast –

same as it was vise-versa

23-04-2014

23-04-2015

NEWSEC GROUP IN BRIEF

• Newsec Advice– A leading property advisor in Northern Europe with 70 professionals and access to

more information than any player– Valuation value over 50 MEUR last 12 months

• Newsec Asset Management– The leading asset manager in Northern Europe with about 400 professionals and

offices throughout the region – Manage over 1 000 properties representing over 7 million sq m

• Newsec Transactions– Transaction team of 30 professionals specializing in investment and corporate

finance – Offering tailor-made property-related financial and strategic advisory services– A leading advisor within wind power

• Lease volume of over 350 000 sq m last 12 months

23-04-2016

TRACK RECORD - AGENCYAgency Team, Latvia – Major letting deals 2010 - 1011

Client / project: Type: Size (sq. m):

Tieto Office 7 000

Transcom Office 1 700

Inspecta Office 900

Microsoft Office 900

Mepha Office 500

ERGO Office 2000

Karcher Retail 550

Selected reference projects, Latvia

Agency Team, Latvia – Major clients 2010 - 1011

Microsoft

23-04-2017

OLGA KOZINAMANAGING DIRECTOR, LATVIA

Direct + 371 675 08405, Cell + 371 296 97989O.Kozina@newsec.lv

NEWSEC LatviaZaļā iela 1Rīga, LV-1010Tel: +371 6750 8400Fax: +371 6750 8401