The supply of coworking facilities is increasing
New construction projects tend to be near the railway, and the properties directly adjacent to the transport links are usually fully leased even before construction begins. New office space will be completed in Tripla, Pasila in 2019 — 2020, in Kesko’s K-kampus in Kalasatama in spring 2019, and in the city of Helsinki’s Urban Environment House in Kalasatama in early 2020. In addition, there are a few new and redevelopment office property projects under construction in Keilaniemi and Otaniemi districts. All of these projects are located near the West Metro railway which is where letting demand is now concentrating. Helsinki is seeing growth in the flexible office segment with approximately 20 different coworking offices now operational. In addition, start-up campuses are also gaining in popularity. For example, Maria 01 Start-up Campus located in Kamppi is planned to expand to more than 4,000 jobs and a 50,000 sq m business hub in the future.
Prime office yields are historically low
Investment demand is focused in the Helsinki city centre where letting and rents are the strongest. Töölönlahti is an attractive area in the centre and has recorded some of the top prices in the market. Ilmarinen Mutual Pension Insurance Company made two transactions in the Töölönlahti area. At the end of 2018 it sold an office at Alvar Aallon katu 3 for €116m to M&G European Property Fund and in the spring another office at Töölönlahdenkatu 3 for €190m to fund managed by Deka Immobilien. In the beginning of 2019, BlackRock Eurozone Core Property Fund acquired a 12,200 sq m retail and office property in the CBD of Helsinki. Over the past 12 months, direct property investments have made record prices in the market. Consequently yields of the best properties have fallen to levels similar to that seen in Stockholm and some of Europe’s largest markets. It is the new properties just built that attract most demand and achieve the highest prices.