Estonia : Tallinn office market

2015 Overview
  • 2016 will see the largest volume of office space deliveries since 2010



LOM Q3 2014

Tenant shift towards new offices

At the beginning of 2016, modern office stock in Tallinn equalled 654,000 m². New office deliveries in Tallinn totalled 44,000 m² in 2015) and caused active movement of tenants from older to new premises. In 2016, slightly over 55,000 m² of new offices are expected to be delivered, which will be the largest construction volume recorded since 2010. Office development activity in Tallinn has started to move from the outskirts back to CBD and the city centre. Moreover, the CBD area is shifting from the beginning of Narva and Tartu Roads towards the sea. Being developed in this location is the Rotermanni Quarter plus Navigator and Explorer buildings, as well as Porto Franco.

Downward pressure on rents expected in 2016

The majority of tenants search for office premises below 100 m². A new trend emerged recently where occupiers looking for modern offices located centrally have been searching for acquisitions rather than lettings. Recently, many potential tenants have started to show interest towards so- called stock-office premises, where tenants can use office, warehouse and retail premises in one building.
The top rent for grade A+ premises is estimated at around €16 to €17.5/m²/month and grade A– in the range of €13.4 to €17.5/ m²/month. Average rent in grade B offices stands €8 to €12.5/m²/month. A downward pressure on rents is expected in 2016 as vacant space is increasing and the majority of tenants are not willing to pay over €15/m²/month.

Record breaking year for investment

In 2015, Estonia was the most active investment market in the Baltics with record high investment volume of €400 million.  Tallinn covered 97% of all investment in Estonia with the office segment accounting for 25%. Average yields for prime office assets in Tallinn stood at around 7.00%. 2016 should see the stabilisation of yields as well as a slowdown of the market activity.

Votre contact

Robion Vincent

Vincent Robion
Head of Research for Alliances



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