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2018-09-26

Lithuania’s industrial real estate market to receive boost with launch of ready-to-use facilities in Klaipėda FEZ

26 Sep 2018

Lithuania’s industrial real estate market will take a big leap forward with the upcoming launch of FlexStart, a new development of customisable industrial premises in Klaipėda FEZ. The project will deliver a much-needed solution to the needs of foreign investors for ready-to-use premises, enabling companies to get up and running in as little as three months.

The new facility will provide a total of 7,440 square metres of space. Units can be tailored to the specific needs of tenants, making the project an attractive option for innovative and high-tech manufacturers.

Much of Lithuania’s estimated 1 million square metres of existing warehouses and logistics real estate consists of old buildings, up to 20 per cent of which are unoccupied. For most businesses, investing in these buildings is not cost-effective – and while some choose to build their own premises, many are attracted by the prospect of ready-made facilities that can be customised to suit their needs.

“Business in general tends to invest in equipment, human resources, talents, research and innovations,” explains Mindaugas Kulbokas, Head of Research and Analytics at Newsec Property Management. “It’s an exception for it to invest in ‘bricks’ (buildings) or land without infrastructure.”

“It is going to be ever more important to offer custom-suited infrastructure: the more innovative and higher added-value the manufacturer, the more specific premises they are looking for,” adds Kulbokas.

By supplying premises that can be quickly modified to meet tenants’ needs, FlexStart addresses a key challenge – enabling investors to begin operating quickly to meet the needs of a fast-paced market.

“Every month spent waiting for permissions or building facilities is a loss of business,” says Vaidas Velykis, business development manager at Klaipeda FEZ. “Nowadays, investors are looking for flexibility and easy setup. The manufacturing/administrative premises [at FlexStart] are custom-suited, and operations can begin in as little as three months. Premises can be adapted to a new client‘s needs in a matter of weeks.”

Enthusiasm for the pioneering project among investors has been remarkable, notes Velykis: “Today, even though the construction is not yet finished, the first tenants are already in the building and only 1000 sq.m. are available at the moment.”

FlexStart marks an important turning point in Lithuania‘s industrial real estate market, which has lagged behind some competitors in Europe. According to figures from investment promotion agency Invest Lithuania, the provision of suitable premises could have brought an estimated 110 million EUR in additional investment and up to 2,880 jobs into the country.

The successful uptake of Flex Start’s premises means the project may become a template for further developments in Lithuania. Welcoming the project, Elina Chodzkaitė-Barauskienė, head of the manufacturing team at Invest Lithuania, urges further action to cater for industry’s needs in the future:

“For Lithuania, in order to meet the demand for industrial real estate, it is important to consistently invest in industrial zones and other territories designated for industrial activity. Setting up infrastructure takes up to two or three years of construction, therefore Lithuania has to start getting ready to meet the needs and opportunities of tomorrow.”

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