Tbilisi is turning into a tenant-focused city. The addition of King David to the modern office stock began Tbilisi’s shift to a more tenant-oriented market and Axis Towers will only increase competition in the sector, improving the city’s quality-to-price value, reads the market research prepared by the global real estate service company’s local representation Colliers International Georgia together with Enterprise Georgia. Meanwhile, according to the report, excess supply resulted in lower rents, a trend likely to continue.
In 2017, the King David BC opened in Tbilisi, adding another 12,000 sq m to the city’s A class portfolio and representing a 32% increase in the class. Axis Towers, another prominent BC project scheduled to open by the end of 2018, will add 15,000 sq m to the city’s A class stock. While the addition of King David and Axis Towers will increase the city’s A class business center area by 72%, Tbilisi’s total stock will remain low as compared to major Eastern European cities. Share of international companies, both in numbers and total area leased, is the highest in A class business centers. 70% of tenants in the class are international and they occupy 78% of total area leased in A class offices. Currently 35,000 sq m of business center space is under development, meaning increased competition and improved tenant conditions.
With regional office markets still largely undeveloped, Tbilisi provides 94% of the country’s total office space. Outside of the capital, office spaces are primarily low-quality commercial properties and residential units. No major changes occurred during the past few years. As the report says, nor there are modern centers even in Batumi and Kutaisi - Georgia’s two largest cities.