Development of commercial property market: analysis and economic assessment

For Eastern European countries, after reestablished independence, commercial property market has become one of the major influences on economic development, as it generates a wide range of economic activities. However, its development remains an ambiguous process and there is gap of clear understanding of how this market emerged, evolved, grows and operates, and which processes and factors affect its development. The development of commercial property market in Eastern Europe has not been analyzed systematically and considered unsufficiently explored. Commercial property market in these countries stands out by: - its operational characteristics; - data fragmentation. On one hand, the nature of commercial property market in Eastern European countries differs from the developed countries by its foundation and operation logic due to the historical facts that occurred within the frames of the command system. On the other hand, fragmented data and / or lack of reliable data for time series, which offer such countries, complicates any empirical research, analysis, evaluation, and especially any forecast. The theorethical and scientific contribution of this research offers: • commercial property market development model adopted for above mentioned markets, allowing to assess the evolution of the markets; • the expert evaluation helps assessing the Lithuanian commercial property market’s evolution; • while the extreme values theory allows predicting the probability values of vacancy and yield factors under the review of a certain range over the long-term period. The results of the expert evaluation revealed that Lithuanian market, regardless of its obvious development, has certain risks and limitations. Meanwhile, the extreme values theory application does not provide an unambiguous answer for commercial property market development trends, however, leads to the conclusion that the shopping center segment in Lithuania is generally more reliable during both recession and growth periods, i.e. less risky comparing to the office segment