NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 NEWSEC IN FINLAND: HELSINKI | TAMPERE | OULU | TURKU | OTHER CITIES

THE FULL SERVICE PROPERTY HOUSE

CONTENTS

CONTENTS 3–4

EXECUTIVE SUMMARY

5–6

FINNISH ECONOMY IN STRUCTURAL CHANGE TURMOIL

7–19

REAL ESTATE MARKETS

20–21 OFFICE SPACE USERS AND DEMAND ARE CHANGING

– WILL SUPPLY CHANGE TOO?

21–22 INFORMATION ABOUT NEWSEC 23

NEWSEC IN FINLAND

Copyright Newsec © 2015 This report is intended for general information and is based upon material in our possession or supplied to us that we believe to be reliable. Whilst every effort has been made to ensure its accuracy and completeness, we cannot offer any warranty that factual errors may not have occurred. Newsec takes no responsibility for any damage or loss suffered by reason of the inaccuracy of this report. You may use the information in the Newsec Property Update but acknowledgement must be made for all quotations and use of data/graphics. www.newsec.fi

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

2

EXECUTIVE SUMMARY

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

EXECUTIVE SUMMARY PROPERTY MARKET ACTIVE DESPITE UNCERTAIN NATIONAL ECONOMY In 2014, economic indicators were negative in Finland and compared to the rest of Europe, Finland was no longer the model student. Prognoses derived from the basic economic indicators varied and there were no high hopes for a growth of the gross domestic product. Economic indicators usually positively correlate with property transaction volume. However, last year showed that this is not always the case. The poor supply of good investment properties as well as low yield levels drove investors to seek higher yields and to spread the risk to Scandinavia and Finland. The year 2014 will go down in property market history due to its interesting transaction volume. Low interest rates, the central banks’ easing measures and the investors’ faith in the future were evident in Finland, and so

international investors returned. The common problem throughout Europe appeared to be the shortage of suitable investment properties. For example, the equity flowing into funds and the relatively inexpensive loans forced investors to actively seek new properties. In 2014 the property transaction volume in Finland was ca. EUR 4.26 billion, which is a total of almost EUR 1.75 billion or 70 % more than in the year before. The total investment volume of international operators doubled compared to the previous year, thus amounting to approximately EUR 1.5 billion. Almost 35 % of all significant property transactions can therefore be attributed to international operators, and if the Certeum arrangement is excluded from the transaction volume, the foreign operators’ share amounted to approximately 45 %. The increasing international demand has not, however, rendered the basic criteria of prop-

3

EXECUTIVE SUMMARY erty investment obsolete. The location, lease maturity and other economic and technical aspects still had to meet expectations in order for the property to appear interesting and lowrisk. Once these criteria were met, the competition was tough and yield levels remained low, whereas in weaker properties, the number of potential investors was smaller and the pricing reflected the elements of uncertainty. However, arrangements in which the portfolios’ weak properties changed hands together with good properties, as seen in 2006–2008, were not seen in the Finnish market. The increased international investment demand and the low yield levels in prime properties did not reach all property segments. There was a clear trend of division between geographical regions as well as between building and space types within regions. The geographical differences were clear. In particular, the majority of the demand for office property was still directed towards the Helsinki metropolitan area. Retail property transactions were also conducted by international investors elsewhere in Finland.

TENANTS ON THE UPPER HAND IN THE OFFICE MARKET Two particularly interesting office space transactions were carried out at the end of 2013, when Brondankulma and part of the former Nokia head office changed owners. According to the released information, the yield levels in both properties were the lowest in their submarket. This seems to indicate that there is demand for good, low-risk properties and willingness to pay a relatively high price.

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 Meanwhile, there are still more than a million square metres of vacant office space in the Helsinki metropolitan area. It is difficult to obtain tenants for older spaces in more challenging locations. The increased risk of vacancy has strengthened the tenants’ position in agreement negotiations. Even investments do not always provide a solution to the problem, in which case various large-scale development measures may be the key. If the location and the official regulations permit the demolition of the property or rebuilding, conversion into a residential property might be a tempting alternative. The profitability of such a project is significantly affected by the price level of residential properties as well as sales times of new properties in the area. This is supported in particular by the recent public discussion regarding the conversion of old office spaces into residential properties and the acknowledged demand for residential properties in the Helsinki metropolitan area.

ACTIVITY IN RETAIL PREMISES DESPITE UNCERTAINTY In 2014, it became clear that the safe haven status of retail premises is a thing of the past. Increased online trading, especially in specialised consumer products, changes in the consumer purchasing power and weakening trends in car sales, for example, have played a significant role in the decreasing interest in retail property investments and occupancy rate of retail properties. Although the retail industry is still facing various challenges and elements of uncertainty, investors still consider retail properties to be attractive. Recent examples include Trevian, Cording Real Estate Group, H.I.G. Capital and Redito AB.

POSSIBILITY FOR GROWTH IN LOGISTICS Demand for logistics property has increased in Sweden in recent years and if, in time, the demand intensifies in Finland, the current year may open an interesting window for logistics property investments preceding the potential upward movement in the economy. Contract maturity will play a key role in logistics property value generation. Long contracts and good locations are often important factors in the investors’ decision-making processes. For the tenant, accessibility via arterial roads is more significant.

DEMAND FOR SMALLER APARTMENTS STILL HIGH

4

in particular, will maintain the demand of small apartments suitable for rental purposes. For a consumer whose personal finances are in order and who has the ability to pay, attractive possibilities may open up in the large apartment market.

FACING THE NEW YEAR TOGETHER The year 2015 is bringing both uncertainties and possibilities. With our Full Service Property House concept, Newsec offers a wide range of real estate services from minor reports to large-scale projects, all under the same roof. We can assist you with property transactions and assessments, change analyses, company space services as well as property management. Contact us to find out how we can help you.

In recent years, the trend in the residential property market has been strong regional segregation, and last year was no different. The growing regional differences manifest themselves primarily in the demand for studios and one-bedroom apartments in the Helsinki metropolitan area and in growth centres. In the same housing company, studios and one-bedroom apartments changed owners quickly whereas the sales periods of larger family apartments grew longer and there was ample room for negotiation in the asking prices. There was also room for negotiation in the asking prices of detached family houses in more expensive residential areas. Although the price levels of apartments have generally gone down, a turning point may be near. If the economy experiences an upward turn in the coming years, the residential property market may follow suit. Until then, funds,

Heikki Kangas Vice President Newsec Valuation Oy Tel. +358 50 320 9136 [email protected]

FINNISH ECONOMY IN STRUCTURAL CHANGE TURMOIL

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

The development of the Finnish economy has fallen from its former track

FINNISH ECONOMY IN STRUCTURAL CHANGE TURMOIL

Index 120 Trend (2000/1-2008/1)

115 110 105 100 95 90 85 80 75 70

The share of exported goods and services of the GNP has varied in the 21st century but has remained close to 40 %. It is no surprise that the major economic downturn in winter 2007–2008 proved pivotal for a country so strongly dependent on export. When the global economy hit the emergency brake,

Finnish exports were hit hard and the country fell deep into recession. This recession revealed problems in demand in the electricity and mobile phone industries as well as forestry. Exports for these sectors dropped permanently to create a lower trend. This caused a significant decrease in export income, retardation of domestic demand and rapidly deteriorating deficit of the state and public entities. The substantial surplus of the entire public sector turned to deficit and dropped close to the three percent limit set by the Maastricht criteria, despite the considerable social security fund surplus.

FINLAND’S ECONOMIC DEVELOPMENT WEAK IN INTERNATIONAL COMPARISON Only a few developed countries, such as the USA, Great Britain, Germany and Sweden, have been able to rise above the level preceding the recession. In the third quarter last year, the Eurozone was on average two per-

2000/1

2002/1

2004/1

2006/1

2008/1

2010/1

2012/1

2014/1

ETLA The Research Institute of the Finnish Economy: Memo for the new government. January 2015.

Unit costs of the national economy in some countries

Index 150

140

130 index, 2000=100

Finland is a small and open economy whose well-being is strongly linked to foreign trade. Export pays for the import that is crucial to the national economy. Being a small country, Finland has been able to benefit from international trade and to make its way among the most affluent countries in the world. The first decade of the 21st century was economically strong in Finland. In 2000–2008, exports went up by as much as 54 % or 5.5 % per year, due to the rapid growth of the global economy. In 2008–2013, on the other hand, exports dropped by 14.5 % and in 2014 they stagnated.

120

110

100

90 2000/1 Greece

2002/1 Italy

2004/1 Finland

2006/1 Sweden

2008/1 Germany

2010/1

2012/1

2014/1

5

FINNISH ECONOMY IN STRUCTURAL CHANGE TURMOIL cent below peak production, whereas Finland’s GDP was 6.3 % smaller. If there had not been a recession and the production trend had remained on the same level as at the start of the millennium, production would have been 20 % greater (see Figure). Worse still, the decline in production is mainly due to the retardation in the growth of work productivity, which itself is a reflection of dwindling investments since the end of 2011. In the third quarter last year, there were 20 % fewer investments made than before the recession. Finland’s poor economic development following the recession is based on the weak western export market, the expensive euro and Finland’s cost development, which is significantly faster than in other Eurozone countries (see Figure). Unit costs have gone up at the same rate as in Italy which is deep in recession, and the development no longer mirrors that of Germany, which has a central role in the market. Russia’s economic development depends on oil and is particularly interesting from the Finnish perspective. The Russian economy flourished at the beginning of the millennium, when the price of oil soared. Economic growth began to wane when the oil price index stabilised, and since the oil price crash following the summer of 2014 the economy has suffered further still. Finland’s exports to Russia have mirrored this curve; exports to Russia increased rapidly as the price of oil rose and started to plummet last year, crippled by the fall in oil price (as well as the crisis in Ukraine). In winter 2013–2014, Finland fell into the third

recession since 2008. Compared to previous recessions, this was not nearly as severe, and total production rose by 0.4 % rise in the second quarter of 2014. The rise slowed down to 0.2 % in the third quarter. Based on the latest data, the GNP growth of 2014 remained close to the previous year’s level.

CHEAPER OIL AND WEAKER EURO TO EASE THE PROLONGED STRUGGLE The crude oil global market price fell from USD 110 per barrel in June 2014 to approximately USD 50 at the beginning of January 2015, and according to model calculations this drop will give a strong push to the demand in Finland’s western export market in 2015–2016. However, the weakening of the euro from over USD 1.3 to USD 1.2 at the beginning of this year will somewhat reduce the change in the crude oil euro price compared to the dollar price. Due to strict fuel taxes the change in the euro price will hardly be evident in the fuel price. In some Eurozone countries such as Germany and Finland, fuel tax is approximately 60 % of the price, whereas in the USA it is only 15 %. In Finland, inflation has been markedly faster than elsewhere in the Eurozone. The Eurozone’s harmonised inflation stood at 0.3 % in November, and according to preliminary data, in December, prices decreased by 0.2 %. Cheaper energy has started to curb the rise of consumer prices in Finland as well. In November, prices went up by only 1.1 % and in the coming months the decrease in the price of energy will slow the rise in prices down rapidly. In 2015–2016, inflation in Finland will slow down significantly compared to the current

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 rate and the gap to other Eurozone countries will shrink due to weak demand. The fall in the crude oil euro price will affect the Finnish economy by improving the household purchasing power and lowering business expenses. Cheaper fuel will reduce the expenses of car owners, businesses and those dependent on oil heating. The state’s VAT revenue will decrease but will be somewhat compensated for by increasing private car use. The trade balance and current account will improve.

OIL PRICE FALL AND ECB ACTIONS SUPPORTING THE TURN FOR THE BETTER

6

to the base curve. The Finnish economy benefits from the decrease in oil price less than other Eurozone countries. The effect on Finland’s economic growth will be approximately 0.5 percentage points smaller than in the Eurozone in 2015–2016, but greater than in Sweden, for example. However, the reviving effect on Finnish and export market demand clearly surpasses the suppressing effect of Russian exports, despite still being exacerbated by the crisis in Ukraine. In 2014, Finland’s exports to Russia decreased by 10–15 % and will remain stagnant in the coming years. Despite the reviving effect of the fall in crude oil price and the expected measures of the ECB, strong growth is not on the horizon as the starting point is very weak.

The European Central Bank’s monetary policy faces great challenges. The increase of consumer prices in the Eurozone hit negative numbers in December, far from the ECB’s inflation target of “below but close to 2 %”. Ways to speed it up are scarce when the interest rate is already set close to zero. However, this is not yet deflation, as the oil price fall has not caused a general decrease in prices. Starting from January, the ECB is expected to resort to a massive bond-buying plan, quantitative easing, which it is hoped will not only raise inflation but will also increase economic activity. Despite this new plan, short-term Euribors are expected to remain at their current level until the end of next year. According to ETLA’s simulations, the oil price drop will raise Finland’s GNP by approximately 0.5 % in 2015 and 1.5 % in 2016, compared

Paavo Suni Researcher ETLA

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

FOR MORE INFORMATION

LOGIC BEHIND THE NEWSEC PROPERTY FIGURES

Olli-Pekka Mustonen Head of Research Newsec Valuation Oy Tel. +358 44 522 2693 [email protected]

Newsec continues to provide its own view of the Finnish real estate market to enhance transparency. In uncertain economic times transparency and professionalism stand out in the real estate market. We hope that this outlook gives you useful information. We are happy also to help you with any questions. We have studied several cities in Finland and estimated the real estate parameters for the central areas in each city. The market parameters describe Newsec´s view of the average range of the parameters. Depending on the submarket areas, the rent-, vacancyand yield levels can differ from what we have shown.

DEFINITIONS:

OULU

Yield Yield means percentage of the return on investment in the submarket. Parameters are based on the information gathered by Newsec.

KUOPIO

VAASA

Rent (gross rent) In this report rent is considered to be gross rent. Gross rent is the rent which covers the expenses of the real estate. Vacancy % Vacancy in this report means the vacancy rate. Vacancy rate indicates the percentage of the free spaces to whole space stock in certain submarket.

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JYVÄSKYLÄ

PORI

TAMPERE LAPPEENRANTA

HÄMEENLINNA

LAHTI

HELSINKI TURKU

REAL ESTATE MARKETS

HELSINKI METROPOLITAN AREA Helsinki metropolitan area remained the most active property market in Finland, although the large transaction volume was more spread out elsewhere in the country than before. The rental market remained relatively quiet and only a few large leases were arranged.

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 The rent development of office spaces varies considerably from one area to the next in the metropolitan area while for the most part remaining modest. Lessor incentives, such as rent-free periods and reductions in rent, have become nearly standard practice in certain areas to secure tenants. High vacancy rates and a difficult rental market affect the yield of the older and weaker properties. The best properties in terms of location, occupancy rate and quality remain the most sought-after investments. The largest individual transaction in the metropolitan area was carried out in March 2014, when Sanoma sold its head office Sanomatalo to an investment fund owned by the German

company Deka Immobilien and at the same time signed a long-term lease for the property. Several similar arrangements were made in the metropolitan area. Especially user-owners’ sale-and-lease-back arrangements were frequent in 2014. Sanoma, for example, sold some of its production facilities and office spaces located in Vantaa to the Swedish company AB Sagax and stayed in some of the premises on a long-term lease. The sale of the Nokia head office in 2013 created some turmoil and the saga continued at the beginning of last December, when a fund managed by AXA Real Estate purchased a part of the head office complex. The rental area of the sold property measures approximately

8

17,000 sqm and includes the right to more than 400 parking spaces. The office complex is let on a long-term lease to Microsoft Mobile Oy. Two office buildings and the multistorey car park will remain in the ownership of a fund managed by Exilion Capital Oy. The relatively new Business Park Derby was sold in Espoo. The tenants include Siemens and SRV. The occupancy rate is nearly 100 % and it is the first office property in Finland to use geothermal heating. Tenant demand has waned in retail properties. In Helsinki city centre, for example, small retail spaces have become vacant and are not being occupied as quickly as in previous years. The

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

surge in online trade has made some of the investors cautious especially with regard to premises in the consumer goods trade. On the outskirts of the metropolitan area and beyond, however, there has still been investment demand for retail properties. At the end of last year, Quorum Kehitysrahasto I Ky, a property fund specialising in property development, bought six retail properties, most of which are located in the metropolitan area, from a fund owned by Citycon. The Swedish property investment company Redito bought a consumer goods portfolio of approximately 10,000 sqm from Helsingin Osuuskauppa Elanto. The transaction included five stores located in the metropolitan area, two of which are adjacent to a petrol station.

HOK-Elanto continues trading in all of these premises. NREP Nordic Strategies Fund bought the office and retail centre Dixi to be erected in Vantaa from the construction company YIT. The second phase of the three-level shopping centre is set to be completed at the end of next year. The Viinikkala logistics area in Vantaa will have a new operator in the future, when Volvo builds its car sale and service facilities. The value of the investment is nearly EUR 40 million.

9

to pay, although the residential rent increase has somewhat stabilised. The most significant residential property transaction took place in the summer of last year when OP-Pohjola’s special investment fund OP-Vuokratuotto acquired a property portfolio from Probus Holding. The portfolio featured 20 residential properties in their entirety, together comprising more than 800 apartments, half of which are located in the metropolitan area.

The prices of rental residential properties and care properties went up as a result of high demand. In the metropolitan area, the rental prices of smaller apartments in particular are reaching the limit in relation to tenants’ ability

AIRPORT / AVIAPOLIS

RENT Office

PITÄJÄNMÄKI LEPPÄVAARA

TÖÖLÖ/MEILAHTI TAPIOLA WESTERN HIGHWAY ROADSIDE

KEILANIEMI

SÖRNÄINEN VUOSAARI

Retail

VACANCY Logistics

Office

Retail

YIELD Logistics

Office

TÖÖLÖ/MEILAHTI

15 – 22

7.0 - 11.0

7.0 - 9.0

SÖRNÄINEN

13 – 20

7.0 - 11.0

6.5 - 9.0

PITÄJÄNMÄKI

13 – 17

10.0 - 17.0

7.5 - 10.0

KEILANIEMI

16 – 25

5.0 - 10.0

6.0 - 8.0

TAPIOLA

11 – 20

15 – 45

WESTERN HIGHWAY ROADSIDE

11 – 15

10 – 35

LEPPÄVAARA

16 – 21

20 – 60

AIRPORT/AVIAPOLIS

16 – 21

8 – 21

VUOSAARI

6-9

6,5 – 12 9 - 11

10.0 - 17.0

2.0 - 6.0

5.0 - 15.0

2.0 - 6.0

5.0 - 15.0

1.0 - 3.0

4.0 – 10.0

2.0 – 5.0

3.0 - 10.0

1.0 - 7.0 10.0 - 20.0

Retail

7.0 - 9.5

6,0 - 7.5

7.5 - 9.0

6.5 - 8.5

6.5 - 8.5

5.0 - 6.0

7.0 - 9.0

7.0 - 9.5

Logistics

8.5 - 10.0

7.0 - 8.5 7.0 - 8.5

REAL ESTATE MARKETS

HELSINKI CITY CENTRE

Helsinki city centre remains the most desirable property market area in Finland. Transaction activity increased during 2014 as several transactions were closed in central locations of Helsinki and the central business district. Transactions revealed at least in office properties a relatively low yield level compared to other market areas. One of the most significant property transactions in 2014 was published when CBRE Global Investors sold the Brondankulma office property located in Helsinki CBD to AFIAA, a foundation owned by 36 Swiss pension funds. This transaction was significant because the pricing was higher than during the peak year 2007 in CBD. The yield level was below 5 %, which is a result of the high cross border demand and scarce supply of prime properties.

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

10

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

Senaatti-kiinteistöt signed a preliminary agreement regarding the sale of the period property, previously serving as administrative offices at Korkeavuorenkatu 21, to property development company Roomy Oy. The plan is to develop the building known as “Ohranan talo” for residential use in the form of luxury apartments. Around the city centre, a fund managed by Pohjola Kiinteistösijoitus Oy sold the Finland head office of McDonald’s on Paciuksenkatu street to the special investment fund Fennica Toimitilat I, and Aberdeen Real Estate Fund Finland (AREFF) sold the multi-user office property at Porkkalankatu 5, Ruoholahti, to a fund managed by AXA Real Estate. The largest transaction by price was, however, the transaction of Sanomatalo at the beginning of 2014.

EM Group and Sewatek acquired the property at Yrjönkatu 17, functioning as part of the Scandic Marski hotel, from CapMan Real Estate. The property features 67 hotel rooms and 40 parking spaces, and the hotel has a long-term lease on it. Several other large residential property transactions took place in the centre, and some development property transactions took place just outside the centre. Although the retail property rental market is experiencing a lull, a few major leases were signed by new operators. Retail property construction consisted mainly of renovations to existing properties, but new spaces were created as well. At the beginning of 2014, a new K-Supermarket store opened in the Postitalo building and some new international opera-

tors emerged in the centre, such as Starbucks coffee house and several Burger King restaurants. Sporting goods retailer XXL opened in the Kluuvi shopping centre, occupying nearly the entire upper floor and part of the second floor, and towards the end of the year, household appliance retailer Gigantti opened in the Forum shopping centre. In 2015–2016, approximately 100,000 sqm of office space will be completed in Helsinki, if schedules are adhered to. Approximately 80,000 sqm of gross floor area of office space will be completed in the Ilmala, Käpylä and Vallila areas, for example. Last year, approximately 60,000 sqm of new or renovated office spaces were completed. The Kampin Huippu property, for example, was renovated

11

and extended to create a modern office space, of which 1,500 sqm is new space. To the east of the centre, the international head office and sales company of the public company Amer Sports moved to the Vallila Paja quarters. Nearly 5,300 sqm of new office space was generated during the renovations. Ilmarinen and Kämp Group came into agreement concerning the construction of a new hotel on Kluuvikatu street in the centre. The hotel will occupy a property formerly known as the traditional Maxim cinema. Maxim 2 will stay intact and will operate as usual.

TÖÖLÖNLAHTI

KAMPPI CBD CENTER RUOHOLAHTI

RENT

VACANCY Logistics

Office

Retail

30 – 120

4.0 - 7.0

35 – 125

4.5 - 7.5

YIELD

Office

Retail

Logistics

Office

Retail

CBD

24- 33

1.0 - 4.0

4.7 - 6.5

4.5 - 6.0

KAMPPI

18 - 26

1.0 - 4.0

5.0 - 6.8

5.0 - 6.0

TÖÖLÖNLAHTI

29 – 35

CENTER

18 – 25

20 – 35

6.0 - 8.5

1.0 - 7.0

6.0 - 7.5

5.5 - 10.0

RUOHOLAHTI

17 – 23

15 – 30

8.0 - 15.0

1.0 - 5.0

6.1 - 9.0

6.5 - 7.5

4.8 - 5.5

3.0 - 6.0

Logistics

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

TAMPERE The investment and rental markets remained quiet and there were no significant changes in development in Tampere last year. In the investment market, interest is still focused on prime properties but the supply is sparse. The rental market remains optimistic. Tampere continues to attract the largest amount of attention from investors after the metropolitan area due to moderate risk and better return expectations. However, high investment criteria keep transaction numbers down.

In industrial properties, Mutual Pension Company Varma sold some of its properties to the newly founded Certeum Oy. The transaction included in Tampere an industrial property in the Sarankulma area. In a transaction completed at the beginning of October, special investment fund OP-Vuokratuotto acquired retail properties with a total value of EUR 35 million in Nekala, Tampere, and Tammisto, Vantaa. The buildings are less than ten years old and are leased to several users.

The Tampere property market had a promising start in early 2015, when Senaatti-kiinteistöt sold the property known as Hippostalo to the Tampere Student Housing Foundation ( TOAS). The transac tion value is approximately EUR 12.1 million and entails 19,000 sqm of office space and 10,000 sqm of building rights. The investment market remained quiet at the end of 2014 even though the total volume exceeded that of the previous year. The most noteworthy transaction was the sale of the Tulli Business Park from a German property fund managed by UBS to Sponda Oyj.

The city of Tampere contributes to the activity of the local property market; in the autumn, the city board approved the decision to proceed with the sale of the city’s real property. The list comprises dozens of properties to be sold and developed. The properties to be sold include residential properties, former libraries, schools and day care centres and at least one health care centre. In the office sector, Technopolis announced the last phase of extension of the Yliopistonrinne office complex near the city centre. The total area of the extension is 11,900 sqm,

12

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

bringing the total area of the office complex to approximately 30,000 sqm. The investment is worth EUR 39 million. The extension has a 25-percent pre-rental rate. On the Technical University campus, Kampusarena, a new building will be erected in 2015 to connect the existing university buildings. The rental market is still quiet and is expected to remain so at least for the beginning of 2015. The trend of slow decision-making regarding leasing is expected to continue. Seeking savings through the careful planning of space-efficiency is likely to prevail in 2015 in Tampere, just as elsewhere in the country. Moving into smaller premises is becoming

more and more common and is a trend that has come to stay. The most noteworthy new retail operator is the Norwegian sporting goods chain XXL Sports & Outdoor, which opened its first store in Tampere at the Prisma department store in the Kaleva area. Another store is set to open later this year in Lielahti, in the old S-Market property. Burger King fast food restaurant, which landed first in Helsinki, opened in Tampere late last year. In terms of projects completed in 2014, the Solo Sokos Hotel Torni Tampere by the railway station, owned by Fennia, opened on schedule and the building has become a city landmark.

13

The Lielahti centre also opened according to plan, and the Asko and Byggmax stores in the Partola area opened their doors in properties owned by Varma. Tokmanni also opened a new store in Partola in 2014. The Tampere Central Arena project has been delayed. In the spring, the city and NCC decided not to continue exclusive negotiations with Tampere Central Arena Ltd and launched a public procurement process and negotiations with potential contractors. The aim is still to break ground in 2016 thus making it possible for the first part to be completed in 2017 and the entire arena in 2019.

Markku Turunen Tampere Regional Director Newsec Advice Oy Tel. +358 40 845 3482 [email protected]

LIELAHTI RENT

KAUPPI MYLLYPURO CBD/CENTER

MESSUKYLÄ

NEKALA SARANKULMAPARTOLA

Office

Retail

CBD

11 – 20

CENTER

11 – 19

NEKALA

Office

Retail

30 - 75

4.5 – 6.0

15 – 35

5.5 - 7.0

7 – 18

SARANKULMA-PARTOLA

6 – 13

HERVANTA

9 – 19

14 – 50

MESSUKYLÄ

Retail

1.0 - 4.0

6.5 - 7.5

6.0 - 6.5

1.0 - 4.0

7.0 - 8.5

7.0 - 8.5

2.0 - 6.0 6.5 – 8.5 6.0 – 7.5

YIELD Office

Logistics

2.0 - 4.0 3.0 - 4.0

1.0 - 4.0

4–8

LIELAHTI KAUPPI

4–8 4–8

MYLLYPURO

HERVANTA

VACANCY Logistics

7.5 - 9.5 7.5 – 10.0 7.0 - 8.0

7.0 - 8.5

4.0 - 6.0 4–8

7.5 - 8.5 9.0 - 12.0

3.0 – 10.0

10 – 18

8.5 - 10.0 8.0 - 10.0

3.5 - 5.0

8 – 30

Logistics

7.0 - 8.5 3.0 – 4.0

9.0 - 12.0

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

TURKU The Turku property transaction market was quiet last year. There are few ongoing projects compared to other major Finnish cities. Residential property construction still stands out. One significant property transaction has already taken place this year in Raisio, just outside Turku, where BASF, operating in the chemicals industry, sold a modern office building with an area of 4,700 sqm to a private investor. In the three significant property transactions last year, the buyers were

local operators. At the beginning of the year, the Raisio Regional Education and Training Consortium bought just under 3,500 sqm of office space near the surgical hospital from RandH Kiinteistöt II Oy. In late June, Isku Invest Oy sold 7,400 sqm of retail space in the Pläkkikaupunki area to Kiinteistönpaikka Oy for EUR 5.3 million. In the latest transaction, completed in September, Turun Teknologiakiinteistöt bought the Trivium office building in the Turku Science Park, Kupittaa, from the international asset management company The Carlyle Group. The building, completed in 2002, features 8,700 sqm of office space. Construction in the Turku area decreased from the previous year and a significant portion of new construction projects involved residential properties. Other noteworthy projects completed last year were the Nereis

Business Garden in Pitkämäki, with shipbuilding industry consulting company Deltamarin as the main tenant, and the Skanssi Retail Park with Asko and Sotka furniture retailers as the main users. Significant retail property projects in the pipeline include the extension of the Mylly shopping centre in Raisio and the new Koy Skanssikatu adjacent to the Skanssi shopping centre, with the sporting goods retailer XXL Sports & Outdoor as a tenant. In the office property sector, the Logomo Konttori project is under way and once completed will nearly double its space to 9,000 sqm. NREP is conducting extension and alteration work in the logistics property which it rents to Itella in the Lieto area. Several new projects are in the planning

14

stages but there are considerably fewer ongoing than in other major Finnish cities. In the office sector, the High Tech Centre IV on Lemminkäisenkatu street, the third phase of Intelligate in the Kupittaa area and the Satamakolmio office project at the harbour are among the projects waiting to be launched. Future projects in the retail sector include the first phase of the Kaarina Retail Park, the Kaarinanportti shopping centre and the Kuninkoja Retail Park. In industrial property construction, the first phase of the Koy Turun Vaskikatu 1 is waiting to be started. The ownership arrangement of the Turku shipyard, announced last summer, and recent ship orders boost the local consumer and investor confidence and may therefore become evident in a slight upward turn in the property investment market.

MYLLY AIRPORT

RENT

ORIKETOMETSÄMÄKI

Office

Retail

CBD

10 - 18

CENTER

9 - 13

Office

Retail

30 - 75

3.0 - 7.0

12 - 30

6.0 - 10.0

AIRPORT

CBD/CENTER

ORIKETO-METSÄMÄKI

KUPITTAA

13 - 17

SKANSSI

PANSIO KUPITTAA

SKANSSI

HARBOUR MYLLY

Office

Retail

2.0 - 3.5

7.0 - 8.0

6.0 - 7.0

2.5 - 8.0

7.5 - 9.0

7.0 - 10.0 9.0 - 12.0

4-7

8.0 - 11.0

9.0 - 12.0

4.0 - 6.0

1.0 - 8.0

7.0 - 9.0

6 – 10

7.0 - 10.0 6.5 - 7.5

3.0 - 5.0 6 – 10

12 - 30

Logistics

2.0 - 4.0

20 - 45

7 – 13

YIELD Logistics

5 - 9.5

9 - 20

PANSIO

HARBOUR

VACANCY Logistics

1.0 - 4.0 8.0 - 15.0

1.0 - 4.0 1.0 - 4.0

8.5 - 12.0 8.5 - 12.0

9.0 - 12.0 6.0 - 7.5

REAL ESTATE MARKETS

OULU The property transaction market in the Oulu region was relatively modest in 2014 and there were few transactions. Technopolis sold its office and production facility of 22,000 sqm on Lentokentäntie road to Polarvi Oy for EUR 6.7 million. The Oulu re-

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 gion properties are still attracting primarily local investor and domestic institution interest. Foreign investor demand remains low in all of northern Finland. The much hoped-for turn in the economic situation of the Oulu region, comprising seven municipalities and a total of 238,700 inhabitants (end of 2013), did not happen in 2014. However, the downward trend of turnover has ceased, and the turnover development has stabilised due to the positive development in exports. The region’s exports remained slightly below the level of the recession year 2009. The overall turnover of all sectors in the Oulu region was on average 10 % higher

than in 2009. Across the entire country, turnover has increased by approximately 16 % from 2009. The number of personnel in all sectors in the region decreased considerably in 2014. The population of the region, however, went up by approximately 1.5 %, and 193,800 people live in the city itself. The city has a positive net migration rate which also plays a part in bringing the residential property market to a turning point. The market is weakened by the uncertain economy of the city and the consequent uncertainty in the employment market. This, in turn, increases the demand of rental properties as a temporary solution. Ap-

15

proximately 37 % of the households in Oulu currently live in rental apartments. In rental property projects launched in 2014, investor demand remained in the heart of the city where small apartments have been very popular. On the outskirts, the demand for investment apartments and large family apartments has stalled. The increase in the number of apartments within the centre’s retail blocks is a growing trend. As Oy Oulun Pajarinkulma is an example of the tower block trend in the Oulu city centre. It will be built on top of the Valkea shopping centre which stands on its own plot. The contractor Skanska has announced that it

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

has already sold all the apartments, which are estimated to be completed in June 2016.

accessed from the Kivisydän underground car park.

The Kallioparkki Kivisydän car park, which is on schedule, is likely to add to the attraction of the city centre. The underground car park to be built 30 metres below the surface of the city is set to open in summer 2015. This solution to city parking will also support the development of the travel centre, which is currently delayed. The construction of the Valkea shopping centre, owned by Osuuskauppa Arina, on the other hand, is well on schedule. The construction of the new hospital on Kauppurienkatu street, owned by Ilmarinen and to be leased to Mehiläinen, is in its final stages. Both large properties can easily be

The Ideapark shopping centre in the Ritaharju area housing more than 50 stores has had a successful start since its opening in late October. The young population of the area had long hoped for a shopping centre on the northern side of Oulu. The total area of the centre is approximately 24,000 sqm and it is located about six kilometres from the city centre. Some of the businesses are new to Oulu. The quick launch of the Ideapark shopping centre may delay or at least significantly slow down the construction of Varma’s shopping centre, which is set to be erected on the other side of the crossroads.

LINNANMAA / UNIVERSITY

In the office and retail property rental market, the second half of 2014 was more active than the first, but the market is heavily polarised. Leases have mainly been signed by large companies, and the increased number of start-ups is already visible on the streets. The average indicators of companies’ turnover and personnel hide the fact that there are considerable differences in the direction and magnitude of changes. More than half of the businesses in the Oulu region grew in terms of number of personnel between 2011 and June 2014 and less than half downsized. The Oulu business sector is undergoing a change and a much-needed diversification.

Mia Runtti-Manninen Service Manager Newsec Asset Management Oy Tel. +358 50 466 5623 [email protected]

RUSKO RENT

ALPPILA

CBD/CENTER KONTINKANGAS

NUOTTASAARI AND HARBOUR AIRPORT

16

LIMINGANTULLI

Office

Retail

CBD

10 - 18

CENTER

9 - 13

KONTINKANGAS

9 - 14

Office

Retail

35 - 80

2.0 - 8.0

10 - 25

5.0 - 9.0

Office

Retail

2.0 - 4.0

7.5 - 9.5

6.5 - 8.5

2.0 - 8.5

8.0 - 11.0

8.0 - 10.5

7 - 13

RUSKO

8 - 13

4.0 - 9.0

LIMINGANTULLI

7 - 12

HARBOUR/NUOTTASAARI

6.0 - 25.0

8 - 15

4–8

4.0 - 10.0

4-7

4.0 - 10.0

5–8 6 - 12

4-8

9.5 - 12.5 8.5 - 12.0

5.0 - 8.5

1.0 - 9.0

8.5 - 11.0

2.0 - 8.0

8.5 - 11.0

1.0 - 5.0 6.0 - 10.0

Logistics

8.5 - 10.5

4-8

LINNANMAA/UNIVERSITY

YIELD Logistics

2.0 - 6.0

ALPPILA

AIRPORT

VACANCY Logistics

3.0 - 6.0

8.0 - 10.0 8.0 - 10.5

9.5 - 11.0 9.0 - 10.0

9.0 - 12.0

9.5 - 13.0

REAL ESTATE MARKETS

OTHER CITIES JYVÄSKYLÄ Properties completed in Jyväskylä in 2014 were mainly residential. There have been few new construction projects of other property types, although the Kangas area will acquire new premises when the annex to the old papermill is converted into conference and office spaces. In addition, the retail chain Lidl extended its central warehouse and Posti its logistics facilities. New retail properties in the Seppälä area are in the pipeline but the projects have not yet been launched.

LAHTI There were few new construction projects in Lahti in 2014 and no significant completed projects. The construction of the new travel centre began, however, towards the end of the year and is expected to be completed by the end of this year. The Renkomäki retail property projects, on the other hand, will not be completed in 2015. Renor Oy purchased a former stove factory in the Asko area in early 2014. The building that had served as a production facility will be converted for logistics use. In addition, some portfolio transactions involved Lahti; in the transaction of LähiTapiola’s 509 apartments,

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 one property was located in Lahti, and some of the properties that property investment company Sagax purchased from Volvo were situated there.

are located in Vaasa, one in Rovaniemi. The Vaasa properties are GW Galleria, furniture store Isku’s retail space, and the Byggmax retail property in the Kivihaka area.

KUOPIO

HÄMEENLINNA

The most significant new construction projects completed last year were mainly residential. The extension of the KUH Puijo Hospital is under way and the new hospital building is set to open later this year, after which the property will face extensive renovations. The Technopolis tower block on the eastern side of the Kuopio Science Park as well as several retail property projects are in their planning stages.

New construction in Hämeenlinna is focused on residential properties. However, the commercial centre shifted west from the city centre when the shopping centre Goodman opened at the end of the year. Owned by Keva and constructed by NCC, the property’s rental area is approximately 26,000 sqm.

Retail and wholesale chain Carlson sold the entertainment centre IsoCee to Keva and the property changed hands at the beginning of June last year. Keva already owned the neighbouring shopping centre Minna. This property transaction between Carlson and Keva further supports the development of services in Kuopio city centre.

VAASA There have been very few new construction projects in Vaasa recently. However, the construction of the fourth Futura building has been completed. The new building has a total area of approximately 5,000 sqm. There are no plans for further significant projects. The Swedish company Nordika made its first acquisition in the Finnish property market by buying a retail property portfolio from PG Scandinavian Invest. Three of the properties

The NREP Nordic Strategies Fund managed by Nordic Real Estate Partners purchased a logistics facility of approximately 52,000 sqm from Huhtamäki Oyj in the Käikälä area. Huhtamäki stayed in the premises as the tenant. The transaction was the fund’s first acquisition in Finland. Care properties also changed ownership in Hämeenlinna as parts of portfolios. The latest transaction was a retail property owned by the Fennica Toimitilat I fund. The tenants include Motonet, Isku, Sportia, Musti ja Mirri, Tekniset, TV-Sävel and Teboil.

PORI The shopping centre Puuvilla opened late last year. The development and extension project jointly owned by Renor Oy and Ilmarinen was implemented by Skanska. The property features a total of 55.000 sqm of rental area including retail and office spaces. Properties located in Pori were involved in various portfolio transactions. The property

17

REAL ESTATE MARKETS

investment company Sagax bought truck and bus service facilities from Volvo in Finland and Denmark and some of these properties are located in Pori. Sveafastigheter sold the old Electrolux warehouse in the Isosanta industrial park to SR-kiinteistöt Oy in the second quarter of 2014. In addition, care properties changed ownership in Pori.

LAPPEENRANTA The shopping centre IsoKristiina’s development and extension project is under way and is expected to be completed before the end of the year. The investors are Citycon, Ilmarinen and the City of Lappeenranta and the contractor is Skanska. Upon completion, the rental area will measure a total of approximately 34,000 sqm. New retail spaces

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

have also been planned in the Myllymäki and Leiri areas but IKEA has repeatedly postponed its decision to build a new department store in the Mustola area. Construction of the Etelä-Karjalan Osuuspankki bank head office is expected to commence early this year in the city centre. Sanoma sold its printing house in Lappeenranta to Länsi-Savo Oy. The new tenant is media company Kaakon Viestintä, formed on 1 January 2015 when Sanoma Lehtimedia and Etelä-Savon Viestintä, owned by LänsiSavo, merged.

HELSINKI SATELLITE MUNICIPALITIES Helsinki satellite municipalities include Hyvinkää, Järvenpää, Kerava, Kirkkonummi,

Nurmijärvi, Sipoo, Tuusula, Vihti, Mäntsälä and Pornainen. In Kerava, the logistics centre GCC Kerca II was completed. It complements the existing logistics properties in the area. In Mäntsälä, the first phase of Russian search engine Yandex’s data centre was completed late last year. Logistics properties are being constructed in the Maantiekylä area of Tuusula, where the Stockmann logistics centre is expected to be completed at the end of this year, and in the Bastukärr area in Sipoo, where the first phase of construction of a new logistics centre is under way. The construction of the Focus logistics area in Tuusula will not begin this year. There are also plans to build a specialised commerce centre in the Inkilä area in Kirkkonummi.

18

Individual property transactions in the satellite municipalities were primarily logistics property transactions. Retail property transactions took place as part of portfolio transactions, and residential properties were in demand. The largest individual property transaction was the sale of the Tokmanni logistics centre in Mäntsälä by Capman Real Estate to ARC Global, a new operator in Finland. The total area of the logistics centre is approximately 74,000 sqm. SRV sold the fully rented logistics property in the Kerca area to Julius Tallberg Kiinteistöt Oyj, Capman Real Estate II bought a minority share in the shopping centre Willa in Hyvinkää, and Trevian Care II Ky extended its care property stock by buying four day-care properties in Kirkkonummi, Kerava, Hyvinkää and Oulu.

REAL ESTATE MARKETS

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

19

OTHER CITIES

ONGOING PROJECTS 14

METROPOLITAN AREA

13 12

16

11

VANTAA

15

OULU

8-10

7 1

6

8 9

5 10

ESPOO

4

4 TAMPERE

HELSINKI

3 2

RAISIO

TURKU

PROPERTY TYPE

RENTABLE AREA

ESTIMATED COMPLETION

1. ALBERGA BUSINESS PARK

office

5,300

2015 / Q4

2. ISO OMENA EXTENSION

retail

25,000

3. SUOMENOJA XXL

retail

4. SHOPPING CENTER AINOA

retail

NAME

PROPERTY TYPE

RENTABLE AREA

ESTIMATED COMPLETION

9. THL’S PREMISES

office

9,000*

2015 / Q2

NAME

2016 / Q3

10. OP-POHJOLA HEADQUARTERS

office

60,000*

2015 / Q2

8,200

2015 / Q2

11. AVIABULEVARDI

office

9,100

20,000

2017 / Q2

12. TECHNOPOLIS HELSINKI-VANTAA

office

5,300

NAME

1-3

14 SIPOO

LAHTI

11-12 LAPPEENRANTA

13

PROPERTY TYPE

RENTABLE AREA

ESTIMATED COMPLETION

NAME

PROPERTY TYPE

RENTABLE AREA

ESTIMATED COMPLETION

1. LOGOMO OFFICE

office

4,000*

2015 / Q2

8. MREC OULUN KAUPPURIENKATU 9

office + retail

5,000* + 2,500*

2015 / Q2

2016 / Q1

2. SHOPPING CENTER MYLLY

retail

17,000

2015 / Q4

9. SHOPPING CENTER VALKEA

retail

20,000

2016 / Q2

2015 / Q2

3. MREC SKANSSINKATU

retail

4,500

2015 / Q2

10. SHOPPING CENTER CUBE

retail+ office

2,000 + 2,200

2015 / Q4

2015 / Q2

11.

ETELÄ-KARJALAN OSUUSPANKKI HEADQUARTERS

office

2015 / Q4

12. SHOPPING CENTER ISOKRISTIINA

2015 / Q4

13. LOGISTICS CENTER

5. ILMALANRINNE

office

15,000

2015 / Q4

13. DB SCHENKER LOGISTICS CENTER

logistic

40,000

2015 / Q2

4. K-RAUTA LAHDESJÄRVI

6. OSMONTIE 38

office

3,300

2015 / Q4

14. GRUNDFOS HEADQUARTERS

logistic

5,500*

2015

5. TRAVEL CENTER LAHTI

7. ESTRADI

office

4,600

2015 / Q2

15. PELICAN-WAREHOUSE

warehouse

5,300

2015

6. BW-TOWER

office

8. ULTIMES BUSINESS GARDEN

office

11,000

2016 / Q2

16. VAK’S PREMISES

Industrial

5,600

2015 / Q3

7. ALEKSI 11

retail + office

Source: KTI, Newsec

5-7

TUUSULA

*Gross area

Source: KTI, Newsec

retail

10,500

7,500

1,300 + 850 2015 / Q2

2016 / Q4

retail

14,200

2015 / Q4

logistic

22,000

2016 / Q2

14. STOCKMANN DISTRIBUTION CENTER warehouse 29,000*

2015 / Q4 *Gross area

OFFICE SPACE USERS AND DEMAND ARE CHANGING – WILL SUPPLY CHANGE TOO?

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

20

FIG 1.

OFFICE SPACE USERS AND DEMAND ARE CHANGING – WILL SUPPLY CHANGE TOO?

The distribution of working time between different spaces PERSONAL WORK STATION

REMOTE WORK AT HOME

60,7 %

9,7 %

REMOTE WORK ELSEWHERE

CONFERENCE ROOM

AT CLIENT PREMISES

BREAK ROOMS

12,2 %

6,1 % 3,5 %

7,9 %

Newsec Workplace Index 2014

Activity-based offices, combi-offices, flexistations and mobile work stations have been commonplace for many global businesses since the early 21st century. The biggest work environment development trends today are not related to work environment innovations but to the fact that space concepts tested by forerunners for several decades are now becoming mainstream.

FROM WORK ENVIRONMENT TRENDS TO MAINSTREAM PRACTICE Last year showed how various companies and organisations regardless of size or field of operation, from collection agencies to marketing companies and small municipal organisations, ventured with an open mind into finding and trying out new and more suitable office space solutions.

Such a change usually arises from three factors: the need to adapt the premises to better support the new ways of operation and work profiles, the attempt to increase efficiency and make cost cuts, and the ease of use of such premises due to good services.

SPACE SUPPORTING WORK Nowadays, the work space is where the worker is. Technology enables flexible working in the various spaces within the office as well as outside the office: at home, in coffee shops, at customer premises and on public transport. Although work is still primarily carried out at personal work stations, the time spent in spaces that enable interaction and mobile work constitutes a significant amount of our total working time (Fig 1). The modern work environment should support

different forms of working in the best way possible. The modern activity-based office offers an appropriate space for every task: quiet work spaces for work that requires concentration, group work facilities and spaces for meetings and situations requiring cooperation. At its best, the work environment is an attractive place in which to work and interact with colleagues. Virtual work tools make cooperation possible even when the team is not physically under the same roof. More mobile and interactive work often means that the worker is away from their desk. This change is evident in the results of Newsec’s occupancy rate study (Fig 2), which show an average occupancy rate of 25–30 % during normal office hours. Many organisations have found that giving up some allocated rooms and work stations frees

up space for other use: conference rooms, team work spaces or casual meeting areas. Unallocated work stations that can be used as and when needed are no longer rare in a modern expert sector business.

FACILITIES OFFERING COST-EFFECTIVENESS Modern activity-based solutions do not only mean more productive work environments but nearly always increased space and costeffectiveness too. More effective solutions may translate to space savings of 20–30 %, which result in significant savings in the companies’ rental costs. The change in the ways of working has also led to the tenants’ attention being drawn more to space cost control as a whole instead of rent per square metre. When signing a new

OFFICE SPACE USERS AND DEMAND ARE CHANGING – WILL SUPPLY CHANGE TOO?

FIG 2.

Typical occupancy rate of an office building during the normal working week 100%

Empty work spaces

90%

Empty break rooms

80%

Empty conference rooms

70%

Break rooms

60%

Conference rooms Work spaces

50%

Occupancy rate

40% 30% 20%

friday

friday

friday

friday

thursday

thursday

wednesday

wednesday

tuesday

wednesday

tuesday

tuesday

tuesday

monday

monday

0%

monday

10%

10:00 11:00 14:00 9:00 12:00 14:00 16:00 9:00 11:00 15:00 12:00 17:00 9:00 11:00 13:00 16:00

lease, it is entirely possible that a company will opt for premises with a higher rent per square metre but less space than before. Last year there were several cases in which the tenant remained in the building but renegotiated the lease to cover only a part of the premises it had occupied previously. A wellexecuted change to the work environment can result in a smaller but more functional space solution.

ACCESSIBILITY AND SERVICES RESULT IN EASE OF USE AND JOB SATISFACTION In addition to a modern work environment and cost-effectiveness, tenants value accessibility and good services.

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015 matter of indifference to companies either. Attention is paid in particular to the quality of restaurant services and the variety of places at which to have lunch near the property. Other services offered to employees, such as gyms, laundry services, car washes and hair salons, are also in growing demand.

DOES SUPPLY MEET DEMAND? Old properties rarely fit current user requirements as they are. Buildings have often been designed to be used by a single body that has made their own arrangements concerning services and designed the work spaces in either booth or open-plan format. Following the departure of a major tenant, the owners face a challenge: how to lure in new tenants when the property no longer meets the demands?

Newsec Workplace Index 2014

The most important criteria with regard to accessibility are the distance from public transport connections and sufficient parking. Easy accessibility by both public transport and personal cars is held in high regard by companies. More and more attention is being paid to easy access and usability for cyclists and pedestrians, such as bicycle shelters and comfortable dressing rooms and shower facilities. Decision-making processes related to work spaces also show that good services and ease of use are held in high regard. Companies’ interest in business park solutions is growing. Business parks are equipped with all necessary services, including reception and restaurant services. The quality of services is not a

The change in demand, however, does not automatically mean that only new and modern spaces will do. An old space with a good location can be transformed into an attractive property by rethinking the concept and by updating the look and spaces to meet modern demands. Business-park-style solutions can be incorporated into almost any property and the most challenging space can offer flexible activity-based office solutions. The biggest remaining challenge may be dividing the buildings into sensible parts, as demand is highest in 200–500 sqm spaces. The market has already seen great input from property investors in the creation of new space concepts and tenant-need-driven investment strategies. It is hoped that the challenging market situation will bring even more new, fresh and brave ways of thinking, space

21

concepts, market launches, and in particular alternatives to the traditional, heterogenic and slightly boring supply that has dominated the market for such a long time.

Newsec Corporate Solutions In 2014, Newsec Corporate Solutions was an advisor in numerous significant tenant representation projects totaling 82,000 sqm and 5,500 employees as well as work environment projects totaling 31,000 sqm and 1,800 employees.

Newsec Workplace Index Newsec Workplace Index is an instrument for evaluating and comparing work environment results. The constantly expanding databank and instrument are based on work environment surveys and questionnaires answered by our clients and studies on occupancy rate as well as the analysis of these results. Currently, the index includes 50 organisations and 12,000 employees. The index concentrates on the functionality of the work environment and how it supports working in addition to work space and working habits.

Anna-Liisa Sarasoja Director Corporate Solutions Tel. +358 40 193 1083 [email protected]

INFORMATION ABOUT NEWSEC

INFORMATION ABOUT NEWSEC

NEWSEC PROPERTY OUTLOOK FINLAND SPRING 2015

NEWSEC OFFICES HELSINKI OFFICE

TURKU OFFICE

Office hours: Klo 8.00-17.00

Shopping Center Hansa, Eerikinkatu 17 C

Postitalo, Mannerheiminaukio 1 A

20100 Turku

PL 52, 00101 Helsinki

Tel. +358 207 420 400

Tel. +358 207 420 400

Tel. +358 40 193 1016

Fax +358 207 420 499

Kai Keituri Tel. +358 400 400 930 [email protected]

Mikko Salla Tel. +358 40 567 4407 [email protected]

Hannu Ridell Tel. +358 50 559 5527 [email protected]

Juhani Reen Tel. +358 50 1696 [email protected]

JYVÄSKYLÄ OFFICE TAMPERE OFFICE

Innova 2, B2a (2nd floor)

Aleksanterinkatu 32 B

Lutakonaukio 7

33100 Tampere

40100 Jyväskylä

Tel. +358 207 420 400

Tel. +358 207 420 400

Fax +358 207 420 439

Tel. +358 40 193 1074

OULU OFFICE

HÄMEENLINNA OFFICE

Pilot Business Park, Lentokatu 2

Innopark, Visa 1

90460 Oulunsalo

Vankanlähde 7

Tel. +358 207 420 400

13100 Hämeenlinna

Fax +358 8 527 0011

Tel. +358 207 420 400

22

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