Prime rents have increased in the Helsinki CBD area
In the Helsinki Central Business District (CBD) the office rent levels of new lease agreements increased last year. The renovation of old office premises pushed up the supply of good quality office space in the Kamppi district and CBD area. In addition, the demand for good quality office premises located around transport nodes has risen due to the economic upturn. These drivers lie behind the increased prime rents of the CBD area. Moreover, new offices are seeing increased prime rents in some other submarkets such as in the Pitäjänmäki district. As a consequence, the gap between the rental levels of prime and secondary office properties has widened in the Helsinki Metropolitan Area (HMA).
Six office properties that comprise a total of 40,000 m² of new space will be constructed in the HMA during this year. For example, Technopolis Plc is expanding its campuses in the Aviapolis area and in the Salmisaari district. NCC’s Fredriksberg’s first phase is also set to be completed this spring in the Vallila district of Helsinki. Therefore the supply for modern office space will increase in the HMA area.
The rising demand for prime properties is seeing decrease in office yields
Prime office yields declined again last year with Helsinki CBD properties now below 4%. In the autumn, many transactions made for core properties in the city centre were bought by foreign investors. It is the rising demand for prime properties among the international investors that has lowered yields in the prime areas. One of the major office transactions made in the Helsinki CBD area came when the refurbished office at Kasarmikatu 21 was sold to CNP Assurances. In addition, yield levels have decreased in the prime office submarkets such as Keilaniemi district in Espoo. Again overseas investors lay behind key transaction deals in Espoo. A fund managed by Deutsche Asset Management in Germany bought from Exilion two of the three office buildings and a parking facility in the Keilaniemi district, a property known to the public as Nokia’s former head office. The transaction price was €164 million (€5,290/m2), making the initial yield approximately 4.65%.