TBC Capital || Georgia’s commercial real estate market sees rising demand, shifting vacancy trends
Rental market for office spaces in Georgia
Georgia’s business and office space providers continue to operate in a largely unregulated market, lacking standardized practices, notes TBC Capital’s Office Real Estate Market in Georgia 2024 report. With many providers operating independently, there is considerable variation in service quality, pricing, and tenant experience—ranging from offices in business centers to those in multi-functional spaces or standalone buildings.
Tbilisi trends
Georgia’s business and office space providers continue to operate in a largely unregulated market, lacking standardized practices, notes TBC Capital’s Office Real Estate Market in Georgia 2024 report. With many providers operating independently, there is considerable variation in service quality, pricing, and tenant experience—ranging from offices in business centers to those in multi-functional spaces or standalone buildings.
Rental prices are typically denominated in USD, and lease agreements are predominantly structured with fixed rental prices. In 2024, the average rental price for office space in Tbilisi reached $23.4 per square meter, reflecting a 5.9% YoY increase. Class A office spaces averaged $28 per square meter, nearly double the average price of Class B properties at $15.1 per square meter.
TBC Capital Senior Analyst Salome Deisadze notes that despite this disparity in pricing, demand for Class A properties remained strong in 2024. “Due to the inconsistency in quality and management standard among Class B properties, many businesses in Tbilisi prefer newly renovated and well-managed Class A offices,” she explains. “Some operators even have a waiting list for clients in Class B properties who want to upgrade to Class A offices when space becomes available.”
Trends in vacancy rates further support this demand shift. Between 2019 and 2021, Class A business centers experienced high vacancy rates, attributed to increased supply, renovations along Vake’s Chavchavadze Avenue – where many centers are located and, most notably, the pandemic. However, from 2022 to 2024, vacancies in Class A properties steadily declined, dropping from 52% in 2021 to just 10% in 2024. In contrast, Class B property vacancies increased from 16% in 2021 to 19% in 2023, before slight-ly decreasing to 17% in 2024.
Office real estate in other major cities
Outside of Tbilisi, office space markets in Batumi, Kutaisi, Zugdidi, and Telavi remain underdeveloped, with few organized office space providers. In these cities, most office facilities are located on the ground floors of residential buildings, limiting the availability of dedicated business centers.
In Batumi, rental prices are more closely aligned with Tbilisi, averaging $16.2 per square meter. This reflects Batumi’s status as a major tourist and economic hub, attracting businesses in need of office space. In contrast, rental prices in Kutaisi, Zugdidi, and Telavi are significantly lower, averaging $11.8 per square meter in Kutaisi, $9.1 per square meter in Zugdidi, and $8 per square meter in Telavi.
Retail real estate market
Georgia’s five largest cities—Tbilisi, Batumi, Kutaisi, Zugdidi, and Telavi—collectively host 34 shopping centers, with a total retail space of 593,494 square meters, says TBC Capital’s Retail Real Estate Market in Georgia 2024 report. Tbilisi alone accounts for 56% of this space, housing 19 shopping centers.
Following pandemic-related closures and restrictions, the average weighted rent per square meter in Tbilisi shopping centers dropped by 28.9% in 2020. However, rents rebounded with an annual increase of 13% in 2021, followed by a 31.2% YoY rise in 2022, driven by economic growth and an influx of migrants. Growth continued in 2023 (+8.7%) and 2024 (+7.4%) – albeit at a slower pace.
The pandemic also led to higher vacancy rates in shopping centers, prompting some to restructure retail spaces. However, post-pandemic recovery has driven vacancy rates down from 14.8% in 2021 to just 4.7% in 2024.
Looking ahead, TBC Capital’s Deisadze expects continued, albeit rather moderate, growth in the retail real estate sector.