Commercial Real Estate: Wind of Changes

27 Dec, 2021
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  • In Q3 2021, weighted average rent was 13.3% lower in Tbilisi compared to the same period of 2019
  • Vacancy rates in Tbilisi street retail increased from 9.3% in 2019 to 12.8% in 2020
  • Rents and vacancies will recover towards the end of 2023
  • New trends emerged during the pandemic, specifically, share of turnover-based models and Larization of lease agreements is slowly but steadily increasing
  • Large retailer chains started to focus more on the regional development. At the same time, some high streets in Tbilisi are losing their attractiveness for retailers and shoppers
  • Rents in Tbilisi shopping malls were 19% lower compared to 2019’s level in Q3 2021. We project rents to recover in 2022
  • Vacancy rates in Tbilisi shopping malls remained stable in past two years and are expected to increase only marginally in 2022, while returning to pre-pandemic level in 2023
  • Pandemic will have a lasting impact on office demand in Georgia, as increasing share of employees work from home and will continue doing so in the future
  • Co-working spaces, which provide a greater flexibility for their tenants, now attract not only individual remote workers or startups, but increasing number of medium and large companies
  • Vacancy rates in Tbilisi business centers increased by notable 11.3 pp in 2020 and constituted 24%
  • The increasing stock of office space in combination with the lasting impact of COVID-19 on office demand will drive vacancy rates beyond 25% in 2022 and 2023
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