Building by the Baltic

We take a glance at a few shopping centre projects currently under development in our neighbour to the north-east

 When Poland finally became a member of the EU in on May 1st 2004, the floodgates were opened for investment in the country’s real estate sectors, with each successive year seeing record sums invested in projects throughout the land. This has been especially true in retail, as companies perceived this to be a particularly good investment, considering the lack of modern shopping centres and the demand from an increasingly affluent population. Whilst market analysts now believe that Poland’s larger cities have become saturated with modern retail space, the same cannot yet be said of Lithuania, one of the countries that acceded to the EU on the same day. According to a recent report from Colliers International in Vilnius, the Lithuanian retail market is “not yet overfilled... in spite of the realization of many new projects.” One of the reasons for this outlined in the report is a problem that is also common to Poland, the loss of skilled construction labour to western Europe, thus delaying the completion of projects.

View from the Akropolis

So what are the major retail projects that are under development in Lithuania at the moment? In 2007, the largest amount of retail space coming on to the market will occur in the second city of Kaunas in the middle of the country, with the opening of the Akropolis shopping centre from the developer of the same name. The 81,586 sqm shopping and entertainment centre, being constructed by general contractors Mitnija, is due to open in the middle of February. The estimated cost of this investment amounts to LTL 275 mln (EUR 79.65 mln), and the centre is likely to employ more than 1,000 workers. As well as more than 180 stores, the mall will be anchored by a Hyper Maxima supermarket and will contain a 7-screen multiplex, a bowling alley, catering and a car park with 2,659 spaces. The centre is situated on a 4.5-ha plot in the heart of Kaunas next to the main boulevards of the city: Laisves and Karaliaus Mindaugo. This is a happy location for Akropolis, as it is not only in the very city centre, but is opposite the future Nemunas Island amusement park. However, it seems to be already having a detrimental effect on the high street retail in the vicinity, as Laisves avenue has already lost major chains such as Bona, Chester and Dolita, having relocated to Akropolis.

Historic loan

 The company is also planning to open another shopping centre on the outskirts of Kaunas in 2008, which will add another 63,000 sqm of retail space to the local market. But they have an even bigger project in the pipeline – a massive multi-functional centre in the capital, Vilnius. This app. LTL 900 mln (EUR 260 mln) investment will be the second from the developer in the capital, after Akropolis Vilnius in the city centre, which since its opening in 2004 has doubled in size from a retail area of 54,000 sqm to 109,971 sqm, with 9,121 sqm of office facilities, and now has 13 mln visitors a year. The new centre is to be built on post-industrial land on the 13-ha site of the former Velga factory in the south-west of the city – a location chosen due to its easy access to the Via Baltica motorway and the Minskas road leading out of the city towards Kaunas and Klaipeda. According to information published by the firm, along with the 100,000 sqm of retail and entertainment facilities, the Akropolis Velga project also involves the construction of 100,000 sqm of apartments and 30,000 sqm of offices. Construction work is due to begin this year, with the entire mammoth project expected to be ready in 2015. In 2005, in order to finance the projects mentioned above as well as another now completed shopping centre in Klaipeda, Akropolis was granted the largest ever bank loan in Lithuanian history – LTL 640 mln (EUR 185.35 mln). Revenue from sales in Akropolis Vilnius and Akropolis Klaipeda exceeded LTL 884 mln (EUR 256 mln) in the first 10 months of 2006.

 Promenading in the capital

Whereas this year it is Kaunas that will see the biggest growth in retail space, the start of work on Akropolis Velga, together with several other projects in the capital, mean that 2008 will be Vilnius’s year. One of these – originally scheduled to open in the autumn of this year, but now put back until 2008 – is the 65,000 sqm Promenada shopping centre. This LTL 230 mln (EUR 66.5 mln) investment is located near the city centre close to the old town on T. Narbuto street, and on the site of a former milk factory. The 3-storey mall will contain 52,000 sqm of rentable space, 6,500 sqm of cafes and restaurants, 5,400 sqm of leisure facilities and a 6,000 sqm supermarket. The developer is E.L.L. Nekilnojamas, which is also engaged in office and hotel projects and has plans to develop industrial buildings. This year, the company intends to invest LTL 228 mln (EUR 64 mln) in a variety of such projects. Also due to be completed in 2008 is the Ozas shopping centre from yet another Lithuanian developer, the Rubicon Group, but in partnership with ECE Projektmanagement of Germany. The location for this centre is the Vilnius Entertainment Park, 4km north from the city centre, which will feature – amongst other attractions – a water park. The Ozas centre itself will be a 3-storey building, measuring in total 93,000 sqm, of which 62,300 sqm will be the retail area containing 150 shops. The remainder of the centre will be taken up by restaurants, cafes, a bowling alley a casino, and a rock climbing wall, amongst other attractions.

 Building boom to come

Lithuania’s third city, Klaipeda, will see only a couple of smaller shopping centres finished this year, from developers Eika (5,100 sqm) and Siauliu Titanas (9,195 sqm). However, around 60,000 sqm should be completed in 2008 and 2009, by developers such as Baltijos Investicijiu Grupe (20,000 sqm in 2008), Verdispar Project Development (10,000 sqm in 2008–9) and Edfermus Projektai (30,000 sqm – 2009). In fact, looking at the future growth of the sector in Klaipeda and the other major cities, it is clear that over the next few years, Lithuania is about to experience a major expansion in the amount of modern retail. Nathan North