Tampere Region

Summary Starting points Travel and Service Centre

The master planning for the Travel and Service Centre and the making of the local detailed plan no. 8640 have been started in 2016.

In addition, project planning for an underground parking facility and the preparations for the related local detailed plan no. 8670 began in 2017.

3 The report on the comparison options at the master planning phase proposed an option to function as a basis for further planning.

On 6 April 2017, the project steering group approved the option. The option and its scope data are the starting point for the estimates regarding the economic impacts.

The planning and immediate impact area for local detailed plan no. 8640 Starting point for the estimates

6 April 2017 Study design Scenarios for the estimates — The basic scenario until 2040: moderate growth until 2030 and from there onwards, accelerating growth — The international airport scenario, the passenger terminal at the Travel and Service Centre Levels in the study of the traffic system — Tampere Central Region — National level — International level Levels in the study of the

ecosystem . . Inc.

— Network level

Images : :

— Organisation level Source Method

Assessment of the ecosystem effects as a method

The conventional unit of measurement in urban development is the gross floor square metre.

The value of a gross floor square metre often becomes simplified into the price of land, construction costs and the profits expected from a property investment.

The final value of a gross floor square metre is created by the activities of the residents and the enterprises using the premises: i.e., by the ecosystem effects.

The ecosystem effects deal with the income effect caused by a change that will take place in the mobility of people. Method In the ecosystem theory, value is created at the network level and appropriated at the organisation level

Network level Organisation level

Features of an ecosystem

Value creation Value appropriation

Means for value appropriation Results Foreign tourism income in the Tampere Region

Current state — 210,000 overnight stays by foreign travellers (Visit Finland’s statistics) — Income flow 31 million euros Basic scenario 2040

— Assumption: Annual growth of 4% in tourism (Visit Finland) Source: Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012 — 525,000 overnight stays by foreign travellers — Income flow 79 million euros Overnight stays by foreign travelers in the Tampere Region in 2040 International airport scenario 2040 1 400 000 1 200 000 8 — Assumption: The annual number of passengers travelling 1 000 000 via Tampere-Pirkkala Airport will be 4 million higher than in 800 000 the basic scenario 2040 600 000 — 25% of the air passengers will be foreigners 400 000 200 000 — 44% of the foreign visitors will stay overnight in the 0 Tampere Region and the rest in other Finnish regions CurrentNykytilastate 2040 perusbasic 20402040 airportlento — 1,330,000 overnight stays by foreign travellers Income flow from the overnight stays by — Income flow 199 million euros foreign travelers (€ million per year) 250 200 150 100 50 0 CurrentCurrentNykytilastatestate 20402040 basic basicperus 204020402040 airport airportlento Results Domestic tourism income in the Tampere Region

Current state — 1.24 million overnight stays by domestic travellers (Visit Finland’s statistics)

— Assumption: 150 euros / person / day Source: Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012 — Income flow 186 million euros Overnight stays by domestic travelers in the Basic scenario 2040 Tampere Region (million travelers per year) — Assumption: An annual growth of 4% in tourism (Visit 3,50 Finland) 3,00 9 2,50 — 3.1 million overnight stays by domestic travellers 2,00 — Income flow 466 million euros 1,50 1,00 International airport scenario 2040 0,50 0,00 — Assumption: The growth in domestic travel will comply with CurrentNykytilastate 20402040 basicperus 20402040 airportlento the basic scenario 2040 Income flow from the overnight stays by domestic travelers (€ million per year) 500

400

300

200

100

0 CurrentNykytilastate 20402040 perus basic 2040 airportlento Results Income gained from daily shopping

Current state — During the peak hour, 1,880 long-distance train passengers (10% of the number of daily passengers) — They spend 16 euros on daily shopping on their trip — 200 long-distance bus passengers — They spend 12 euros on daily shopping on their trip — The annual income flow: 16 million euros Basic scenario 2040 10 — During the peak hour, 2,000 long-distance train passengers — During the peak hour, 1,580 commuter train passengers Tampere Travel and Service Centre – Spending by visitors €/day — 200 long-distance bus passengers €/day — Income flow in 2040: 26 million euros Regional travellers 11,86 daily consumer goods 5,05 International airport scenario 2040 specialty shops 3,86 restaurants/cafés 2,95 — For the part of daily shopping, the increase in Train travellers 16,08 the income flow will comply with the basic daily consumer goods 3,37 scenario 2040 specialty shops 3,86 restaurants/cafés 8,85

The spending by the visitors has been calculated as shopping during one day. i.e., their consumption at the Travel and Service Centre during their trips. Average value of daily consumer goods 21,90

Source: Santasalo, PTY The ecosystem perspective describes the long-term economic impacts of urban development

The ecosystem effects of the Travel and Service Centre project can be estimated in two ways:

Housing Housing Retail Retail Offices Offices

Value creation in the ecosystem Value appropriation in the ecosystem describes the potential of the economic describes the result of the economic activities activities Value creation: companies’ turnovers and residents’ income

Housing • Offices: 5,100 million euros Retail Offices • Retail: 1,100 million euros • Housing: 2,300 million euros • As for the offices, for example, 200 times higher than the value of the land and 31 times higher than the value of the property investment

Desribes the potential of the economic activities enabled by property type Value appropriation: the operating profit and the savings

• Value appropriation in the ecosystem consists, for the part of offices and retail premises, of the combined turnover of the enterprises and shops that occupy the premises and, for the part of housing, of the combined income of the residents • Based on a cash flow statement • The turnovers and the income have been discounted to the current value and summed for the cash flow Housing statement period of the property Retail Offices • Offices: 700 million euros • Retail: 50 million euros • Housing: 300 million euros • As for the offices, for example, 28 times higher than the value of the land and 4.4 times higher than the value of the property investment

Describes the result of the economic activities enabled by property type Comparison of the ecosystem effects in the two scenarios

Housing Housing Retail Retail Offices Offices

Basic scenario

Value creation Value appropriation

Airport scenario

8000 1000

6000 800 600

4000 M€ M€ HousingAsuminen 400 AsuminenHousing Liiketilat 2000 RetailLiiketilat 200 Retail Toimistot OfficesToimistot 0 Offices 0 Results Ecosystem effects in the airport scenario

Offices The changes in the ecosystem effects for the part of retail premises, taking into account the increased traffic flows and demand due to the •Value creation + 29% Tampere international airport •Value appropriation + 34% •Value creation will increase by 18% (a total of 1,303 million euros) Retail • The share of services out of the retail premises will increase to 45% and the average rent level will increase by 20% •Value creation + 18% •Value appropriation + 488% •Value appropriation will increase by 488% (a total of 294 million euros) • The growing traffic flows will considerably increase the profit Housing margins of the service entrepreneurs operating at the retail •Value creation + 9% premises •Value appropriation + 33%

The changes in the ecosystem effects for the part of offices when more international companies are located in the area (the rent and The changes in the ecosystem effects when the residents’ average yield levels in Ruoholahti, Helsinki, Catella 2017) income is 33% higher (Statistics Finland) •A 29% increase in value creation (a total of 6,603 million euros) •Value creation will increase by 9% (a total of 2,507 million euros) • The yield will decrease by 1.25 percentage points • Imputed rent will be the same as in the basic scenario • The rent will increase by 4.5% • The occupancy rate will improve by one third • The share of the rent out of the turnover will decrease by 0.25 • Less people will move to the area percentage points •Value appropriation will increase by 33% (a total of 500 million euros) •Value appropriation will increase by 34% (a total of 929 million euros) Results Ecosystem effects in the basic scenario / year

OFFICES € 325 MILLION HOUSING € 64 MILLION

RETAIL € 72 MILLION

The ecosystem effects are partly overlapping Results

OFFICES € 325 MILLION HOUSING € 64 MILLION DAILY SHOPPING € 10 MILLION RETAIL € 72 MILLION

FOREIGN TOURISM The ecosystem effects during the first INCOME year of use, compared with the increase € 47 MILLION in the tourism income and daily shopping with respect to the current DOMESTIC TOURISM INCOME state € 280 MILLION Results Ecosystem effects in the international airport scenario / year

HOUSING OFFICES € 69 € 362 MILLION MILLION

RETAIL € 85 MILLION

The ecosystem effects in the international airport scenario Results

OFFICES € 362 MILLION HOUSING € 69 MILLION DAILY SHOPPING € 10 MILLION RETAIL € 85 MILLION

FOREIGN TOURISM INCOME € 168 MILLION In the international airport scenario, the foreign tourism income will increase vigorously DOMESTIC TOURISM INCOME € 280 MILLION Results Impact on jobs Separate study (in addition to the economic impacts created by the activities at the premises and the income effect of the flows of people)

Construction Use of the premises •Direct effect: 3,388 person-years •Offices: 2,600 jobs •Indirect effect: 7,260 person-years •Retail: 1,100 jobs

•The increase in employment created by a •The calculation criterion used for offices is 18 one-million-euro investment is directly 7 m2/employee and 20 m2/employee for retail person-years and indirectly 15 person-years premises (Source: Deloitte 2010) (Source: Statistics Finland) Results Key conclusions and recommendations

Conclusions •The value of the economic ecosystem effects of the implementation of the Travel and Service Centre will be large, compared with the investments required by the implementation of the project. •The implementation of the other projects in the nearby areas will catalyse and bring synergies for value creation. •In the international airport scenario, the foreign tourism income can be more than tripled and the value creation of the activities at the premises would be approximately 10-15% higher. Recommendations for planning and project development •Development of a unified commercial or shopping centre concept – the focus will be on the Travel Centre and the surrounding area will be included in the study. •Ensuring the functionality of the Travel and Service Centre by modelling flows of people. •Proactive adaptation of the services to the peak hours (the commercial supply, the Travel Centre services, public transport and other transport services). •Development of the services of a sharing economy – ensuring the purchasing power. •Increased value creation in tourism by developing the Travel and Service Centre and the travel chains – a need for organising. •The visibility of internationality, the local technology and scientific community and the conference activities at the Travel and Service Centre - preparations in the room programme. •Preparations for the development of the airport and for more extensive terminal facilities – adaptability in the Travel and Service Centre’s room programme. Recommendations for the management •Development of the Travel Centre as a private project in the lifecycle. •Focus on the optimisation of value creation in the ecosystem, instead of on the maximisation of the price of the land. •Organising the management of value creation in the ecocystem – a need for organising. Background report CONTENTS

1 ECONOMIC ECOSYSTEM AND A CHANGE IN MOBILITY 1.1 Basic idea of the ecosystem effects 1.2 The current state of and development prospects for the traffic system

2 TRAVEL AND SERVICE CENTRE PROJECT 2.1 Gross floor areas and uses 2.2 Planning phase

3 STARTING POINTS FOR THE ESTIMATES 3.1 Assumptions and calculation criteria 3.2 Scenarios and methods

4 RESULTS 4.1 Impact on jobs 4.2 Value creation based on the mobility of people 4.3 Value creation (based on the premises) in the ecosystem

5 CONCLUSIONS AND RECOMMENDATIONS 1. Economic ecosystem and a change in mobility 1.1 Ecosystem perspective on urban development Basic idea of the ecosystem effects

The conventional unit of measurement in urban development is the gross floor square metre.

The value of a gross floor square metre often becomes simplified into the price of land, construction costs and the profits expected from a property investment.

The final value of a gross floor square metre is created by the activities of the residents and the enterprises using the premises: i.e., by the ecosystem effects.

The ecosystem effects deal with the income effect caused by a change that will take place in the mobility of people. The ecosystem perspective describes the long-term economic impacts of urban development

The ecosystem effects of the Travel and Service Centre project can be estimated in two ways:

Housing Housing Retail Retail Offices Offices

• Value creation in the ecosystem consists, for the part of offices and retail premises, of the combined turnover of the enterprises and shops that occupy the premises and, for the part of housing, of the combined income of the residents • Based on a cash flow statement • The turnovers and the income have been discounted to the current value and summed for the cash flow statement period of the property Housing • Offices: 5,100 million euros Retail Offices • Retail: 1,100 million euros • Housing: 2,300 million euros • As for the offices, for example, 200 times higher than the value of the land and 31 times higher than the value of the property investment Desribes the potential of the economic activities enabled by property type Value appropriation: the operating profit and the savings

Value creation Value appropriation •A city’s focus is often on the value of •Enterprises cannot operate in the area the land, which forms a small part of all if their operations are unprofitable, i.e. economic activities value appropriation is more important to enterprises •Describes the amount of the activities: ”Vibrancy of the area” •Describes the sustainability of the activities: ”Vitality of the area” •The citizens pay taxes on their income •The enterprises pay taxes on their profits In the ecosystem theory, value is created at the network level and appropriated at the organisation level

Network level Organisation level

Features of an ecosystem

Value Value creation appropriation

Means for value appropriation 1. Economic ecosystem and a change in mobility 1.2 Mobility as an enabler of the ecosystem Tampere

300 000

250 000

200 000

The growing population 150 000

100 000

The population in the Tampere Region is 50 000

increasing and has vigorously focused on the 0 Tampere Central Region, attracting a highly 2016 2025 2040 educated labour force and a wide range of business activities. Tampere region 600 000 Tampere Region remains as an attractive, strongly growing area in the middle of the 500 000 growth zone that is located between the 400 000 Helsinki Metropolitan Area and 300 000

32 Ostrobothnia. Tampere Region has good 200 000 preconditions for this position, as it 100 000 represents Finland in a miniature size. 0 Besides the Tampere Central Region, 2016 2025 2040 Tampere Region boasts several vital sub- Pirkanmaa regions, as well as rural resources and natural features. 700 000 600 000

500 000

400 000

300 000

200 000

100 000

0 2016 2025 2040 Source: Tampere Region land use plan 2040 At a glance Accessibility is a competitive asset

The Tampere region is an area from where a number of cities can be reached in a couple of hours. In the future, along with increased train speeds, several cities could be reached in an hour. As regards the current train speeds, shorter travel times would be possible but the capacity of the railway network is not large enough. Tampere Region is a hub for national traffic. Fast connections to the Helsinki Metropolitan Area and to other centres are important.

33 The traffic connections within Tampere Region and the development of the traffic in the Tampere Central Region are important shorter- distance objects of development. The flight connections from Tampere-Pirkkala Airport and Helsinki Airport are a precondition for communication between Tampere Region and the rest of the world. The direct flight connections from Tampere-Pirkkala Airport to European destinations are particularly important.

0.5 – 5 – 50 – 500 – 5,000 km Traffic development projects

The first phase of the tramway from the city centre to Hervanta and to Tampere University Hospital is being built and will start operating in 2021. During the second phase, the tramway will extend from the city centre to Lentävänniemi. The Tampere Region land use plan has made preparations for extending the tramway to Linnainmaa, Pirkkala and Ylöjärvi.

34 Along with the growing Tampere Central Region, there will be more demand for commuter train transport. The railway network will extend towards Kangasala, Lempäälä, Nokia and Ylöjärvi. Thanks to the ribbon-like land use, it will be possible to locate housing and jobs along the railway lines, ensuring sufficient passenger flows. There is a reservation for a new rail link Source: Tampere Region land use plan 2040 from the Travel and Service Centre to Tampere-Pirkkala Airport in the plan. Commuting and shopping in Tampere Region

The location of Tampere Region

in the strongest one fourth of the Needs for travelling between the municipalities Needs for travelling between the municipalities in the ELY Centre’s area of competence Finnish economy, in the inland of in the ELY Centre’s area of competence Shopping trips southern and western Finland, Commuting (100-200) makes it a significant area of Commuting (over 200) trade, production and services. Most of the commuter traffic runs to Tampere, but shopping trips are also made between

35 other municipalities. The growing population in the Tampere Central Region, the export industries and international communication require good traffic connections.

Source: Tampere Region land use plan 2040 Railway traffic as an accelerator of growth Passenger transport in 2016 Long-distance transport 12,047 million trips Tampere is the most significant

railway traffic hub in Finland with Number of trips per railway section connections to Helsinki, Seinäjoki, Under 0,1 million 0,1 – 0,5 million Jyväskylä, Turku and Pori. 0,5 – 1 million 1 – 2 million

2 – 3 million

3 – 5 million The number of passengers on the 5 million

The figures per railway section indicate the annual number of trips (1,000 trips). main railway line and the Due to the changes made in the compilation of statistics, the figures are not fully comparable to the ones from previous Ostrobothnia line are the largest in years. Finland and will continue to increase Source: Finnish Transport Agency, VR vigorously. 36 Tampere’s central location and good traffic connections also create preconditions for the economic growth of the surrounding regions. Growth forecast for railway traffic 2035

Under 0,1 million

It is predicted that the 0,1 – 0,5 million

0,5 – 1 million largest increase will take 1 – 2 million 2 – 3 million place on the Helsinki-Oulu 3 – 5 million 5 million railway line and on the line Increasing passenger numbers Decreasing passenger numbers running from Helsinki to the Change eastern State border. According to estimates, there will be about 6 million 37 passengers along the Tampere-Helsinki line and about 3 million along the Tampere-Seinäjoki line in 2035. Thanks to the Helsinki - Turku shortcut, the annual number of passengers will increase to about 2.5 million.

Source: Finnish Transport Agency, Liikenneolosuhteet 2035. Rautateiden henkilöliikenteen ennustetarkasteluja (Transport Conditions 2035: Forecasting Surveys on Rail Passenger Transport, English summary) At a glance Railway connects the growing

central regions The most vigorously growing central regions in Finland until 2030 (growth rate 2015‒2030)

• Tampere Central Region 12.9% In Finland, urbanisation will • Helsinki Central Region 12.0% continue and most of the • Porvoo Central Region 8.8% • Kuopio Central Region 7.5% population growth will take place • Oulu Central Region 7.4% along the railways. • Turku Central Region 5.2% • Jakobstad Central Region 5.1% • Jyväskylä Central Region 4.7% According to estimates, the • Vaasa Central Region 3.7% • Riihimäki Central Region 2.6% Tampere Central Region will grow • Hämeenlinna Central Region 2.6% proportionally the most by 2030. • Seinäjoki Central Region 1.9% The implementation of shorter 38 travel times requires more rail track capacity towards Helsinki and Seinäjoki. Fast trains and the opening up of the passenger transport for competition will increase passenger numbers between the central regions.

Asukasluku 2015 = Population 2015 Kasvu vuoteen 2030 = Increase by 2030 Source: Statistics Finland Accessibility of Tampere (million residents) Tampere, by far the most 4,50

4,00 3,93 accessible city 3,79 3,50 3,49 3,36 Thanks to the higher speeds in railway 3,00 2,77 2,88 traffic in the future, the accessibility of 2,50 2,00 Tampere will significantly improve for 1,67 1,75 trips that take more than one hour: 1,50 1,00 1,05 0,73 0,96 0,84 0,48 0,58 0,67 — The population that can be reached within 1 h 30 0,50 0,34 0,42 0,49 0,56 min will almost triple (~1 million => ~3 million) 0,09 0,30 0,36 0,43 0,00 0,08 — Within two hours of travelling, almost four million 10 min 20 min 30 min 40 min 50 min 1 h 1 h 10 1 h 20 1 h 30 1 h 40 1 h 50 2 h inhabitants (about 70% of Finland’s population min min min min min in 2030) VuosiYear 20162016 Skenaario 2030 2016 2030 CALCULATION CRITERIA FOR ACCESSIBILITY Saavutettavuus = 9 accessibility • Accessibility has been calculated by using the shortest travel time (car, train or their combination) • For train travels, 10 minutes for park-and-ride activities have been included in the calculations

Year 2016

• The current speeds of motor and railway traffic • Population data from 2016 Basic scenario 2030 • The travel times for railway traffic will be 30% shorter • The motor traffic speeds will remain unchanged • The population will grow as estimated by a projection by Statistics Finland Long-distance traffic between Tampere Region and the other regions All modes of travel

Out of the trips made between Finnish regions that are longer than 100 km, the largest volume is between Tampere Region and Uusimaa Region (7.6 million trips per year). Amongst other important directions for Tampere Region are Southwest Finland, 40 Satakunta Region, Central Finland and Southern Ostrobothnia.

Trips longer than 100 km / million trips (2012) Uusimaa 7,571 Varsinais-Suomi 2,551 Satakunta 2,046 Keski-Suomi 1,696 Etelä-Pohjanmaa 1,570 Päijät-Häme 1,324 Pirkanmaa 1,320 ABROAD 0,798 Kanta-Häme 0,524 Pohjois-Pohjanmaa 0,508 Current state of Finnish air traffic

Passenger flows at Helsinki Airport in 2016 Out of the total volume of Helsinki Airport, by far the strongest passenger flow is between Finland and Europe (11.9 million). A total of 2.7 million trips per year are Domestic 2.7 million made between Helsinki and the Rest of the Asia domestic destinations. world 1.9 million 440,000 A total of 1.9 million trips are made between Helsinki and Asia. In Finland, the traffic at the regional airports is quite modest compared with Other parts the other Nordic Countries. However, of Europe they would have a significant effect on 1.5 million the growth potential of the regional economies. EU 10.4 million A trip means a person’s one-way journey. Share (%) of the overnight stays by foreign International travelers in the Finnish regions in 2016 tourism by region

A total of 5.8 million The parts of Finland that are overnight stays located between Uusimaa by foreign Region and Lapland are clearly travellers were behind in international tourism. registered in Finland in 2016 The share of foreign visitors to the Tampere Region (14%) can be increased considerably. 42 It requires the development of the tourism product of the Tampere Region, as well as the development of marketing, international flight connections and travel chains. The Travel and Service Centre will be an important hub for flows of travellers. Tourism income (comparable to export income) Share of the overnight stays by foreign travelers out of all overnight stays per region in 2016 3.9 billion euros - has doubled since the year 2000 - more than twice as big as the health sector export - bigger than the total of the high tech export from Finland

Spending per visit 1. China 940€ Russia 2. Australia 807€ 3. Switzerland 623€ Other China 4. Canada 596€ 5. Spain 582€ Sweden 6. France 560€ Japan Germany 7. USA 554€ 8. India 551€ 43 Estonia Growth target? Global tourism grows at an Growth target? annual rate of 4% Growth target?

By 2040, 10 billion euros of tourism income in Growth target? Finland

Growth target? Source: http://www.visitfinland.fi/tutkimukset-ja-tilastot/matkailun-taloudelliset-vaikutukset/ Ministry of Economic Affairs and Employment of Finland and Visit Finland: Finnish Tourism in Numbers 2016 Source: Visit Finland, Statistics Service Rudolf YöpymisetOvernight stays All travelers 1 400 000 Overnight stays in 1 200 000 the Tampere Sub- 1 000 000 region 2000 - 2016 800 000

600 000

400 000 • Even though the number of foreign 200 000 travellers in the Tampere Region 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 has decreased, the number of domestic travellers has increased. Tampere MuutOther kunnat municipalities • Travel in the Tampere region has OvernightYöpymiset stays Foreign travelers 44 250 000 currently focused on the domestic market. 200 000 • However, Tampere has a large potential for increasing international 150 000 travel.

100 000

50 000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Tampere MuutOther kunnat municipalities Geographic boundaries in 2017 Source: Statistics Finland Making Tampere-Pirkkala Airport an international hub for Inland Finland

Tampere is a hub in Inland Finland that is very easily accessible by road and rail. The good national accessibility and the large population potential create the preconditions for Tampere for becoming a hub for international air transport serving Inland Finland. More international flight connections and a fast connection from the Tampere Travel and Service 45 Centre to the airport are required in order to attract international companies and increase international travel. Source: AiRRport report

2014 2030 (forecast) Passengers at Tampere-Pirkkala Airport 0.4 million 0.5‒1.2 million

Helsinki Airport passengers who shift to 0.8 million 1.0‒1.4 million using Tampere-Pirkkala Airport (based on the current total number of passengers)

Total 1.2 million 1.5‒2.6 million

Unimplemented potential 2.4‒2.9 million 3.0‒4.9 million

Total 3.6‒4.1 million 4.5‒7.5 million Image 66: An estimate for each region regarding the shares of the current international passengers of Helsinki Airport (excluding the international transit passengers) who will shift to flying via Tampere AiRRport, along with improved Table 7: Passenger potential of Tampere Airport, along with significant land and flight connections. improvements in land and flight connections. Potential flight connections from Tampere

Category Potential destinations

The most important economic centres in London, Franfurt, Paris, Amsterdam, Europe => transit connections to North Brussels America

City holiday destinations Prague, Vienna, Milan, Berlin Mediterranean destinations Barcelona, Malaga, Rome, Athens, Antalya‒Alanya (seasonal variation) Core business region Main airports in Northern Europe => Copenhagen, Stockholm, Oslo, Riga in Europe & the city transit connections further to Europe Table 14: The most important flight connections from Tampere, holiday destinations grouped by nature of destination.

Sun belt

Source: AiRRport report 2. Travel and Service Centre project

2.1 Planning phase 2.2 Gross floor areas and uses Planning phase

The master planning for the Travel and Service Centre and the making of the local detailed plan no. 8640 have been started in 2016.

In addition, project planning for an underground parking facility and the preparations for the related local detailed plan no. 8670 began in 2017.

48 The final report on the comparison options at the master planning phase proposed an option to function as a basis for further planning. The option and its scope data are the starting point for the estimates regarding the economic impacts.

On 6 April 2017, the project steering group approved the proposition in the final report to

function as the basic solution and total volume The planning and immediate impact area for local detailed plan no. 8640 for the Travel and Service Centre. Gross floor areas and uses

Premises (phase 1 + phase 2) •Offices: 56,500 gross floor m2 (30,255 + 26,245) •Retail: 27,308 gross floor m2 (15,000 + 12,308) •Housing: 115,073 gross floor m2 (67,278 + 47,795) •Total: 198,881 gross floor m2 6 April 2017 3. Starting points for the estimates 3.1 Assumptions and calculation criteria Development areas in the city centre of Tampere

— The station area is the most important development object FIVE-STAR CITY CENTRE in the Tampere City Centre DEVELOPMENT CONCEPT TAMPERE CITY CENTRE DEVELOPMENT PROGRAMME 2017‒2030 Development Programme. CITY BOARD OF TAMPERE, 2017 — According to calculations, there will be about 6,000 new jobs and 3,400 residents in the station area. It will also boast a large amount of accommodation capacity. 51 — After the completion of the Travel and Service Centre, it is expected that more than 20 million passengers per year will travel via it. Destinations close to the Travel and Service Centre

ANNUAL NUMBER OF VISITORS TO EVENTS — Tampere Hall AND EVENT VENUES — 335,000 visitors per year — The target is 420,000 — 700 events per year

— Tampere University and Technopolis Museums — University: 2,100 jobs, 15,000 students Cinemas 52 Football — Deck and the Arena Ice Hockey — A large number of events, ice hockey Theaters in the Finnish Elite League — Expectation: More than one million Tamper Hall

visitors per year Tampere Region Festivals (Pirfest) — 2,400 jobs Traffic flows at the Travel and Service Centre

— At the Travel and Service — Number of train passengers per year Centre — 4.3 million (2015) — Train passengers — 4.9 million (the 2040 forecast, an annual increase — Residents of 0.5%) — If an annual increase of 1% => 5.5 million passengers in — The shopping centre’s 2040 customers — If an annual increase of 1.5% => 6.2 million passengers in — The hotels’ customers 2040 — If an annual increase of 2% => 7 million passengers in — Office workers 2040

53 — Arriving and departing — Peak-hour (4 pm - 5 pm) passenger — Trams and buses numbers — Coaches — City transport — 2,200 passengers (2015, by bus) — Trains — 3,000 passengers (the 2040 forecast, 65% by tram) — Cars — Long-distance buses — Pedestrians — 200 passengers (the 2040 forecast) — Cyclists — Commuter trains — 1,580 passengers (the 2040 forecast) — Long-distance trains — 1,800 passengers (2015) — 2,000 passengers (the 2040 forecast) — Cyclists and pedestrians —Source:2,000 people EP (the Logistics, 2040 forecast) 2015 Traffic flows at the Tampere Travel and Service Centre

According to an estimate by EP Logistics, the flow of people during the peak hour would be divided as depicted on the 54 adjacent image and it would be approximately 10,500 persons per hour. According to the estimate, the flow of people would increase by about 20% from the current situation.

http://www.tampere.fi/tiedostot/t/qd6xyuljf/tampereasemakeskus_newsecanalyysi61115.pdf Spending by travellers

Source: Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012 Tampere Travel and Service Centre – spending by visitors

Tampere Travel and Service Centre – Spending by visitors €/day €/day Regional travellers 11,86 daily consumer goods 5,05 specialty shops 3,86 restaurants/cafés 2,95 Train travellers 16,08 daily consumer goods 3,37 56 specialty shops 3,86 restaurants/cafés 8,85

The spending by the visitors has been calculated as shopping during one day. i.e., their consumption at the Travel and Service Centre during their trips. Average value of daily consumer goods 21,90

Source: Santasalo, PTY Value of land and the construction costs

• Value of the building rights / gross floor m2 (total) • Offices: € 450/gross floor m2 (€ 25,425,000) • Retail: € 550/gross floor m2 (€ 15,019,400) • Housing: € 800/gross floor m2 (€ 92,058,400) • Total: € 132,502,800 • Source: Newsec 2015 • Construction costs / gross floor m2 (total) Offices Business spaces Apartments • Offices: € 1,700/gross floor m2 (€ 96,050,000) Land Cost of construction 2 value • Retail: € 2,000/gross floor m (€ 54,616,000) • Housing: € 2,900/gross floor m2 (€ 333,711,700) The amount of building rights, grouped by • Total: € 484,377,700 property type (phase 1 + phase 2) • Source: Newsec 2015 •Offices: 56,500 gross floor m2 (30,255 + 26,245) • The construction costs for the deck, 3,000 2 •Retail: 27,308 gross floor m2 (15,000 + 12,308) euros/m (Newsec 2015), have not been taken into account in the calculation •Housing: 115,073 gross floor m2 (67,278 + 47,795)

•Total: 198,881 gross floor m2 Property investment value – offices

• Yield: 6.75% • The estimate varies between 6.75 - 8% (Catella 2017) • Vacant premises: 0–4.5% • Inflation: 1% • Rentable area: 49,226 m2 • Relation to the gross floor area: 87% (Haahtela) • Gross rent: € 22/m2/month (a total of € 1,082,977/month) • The estimate varies between € 16–23/m2/month (Catella 2017) • Maintenance costs: € 3/m2/month (€ 147,679/month) Cash Discounted Discounted residual • Renovation costs: € 0.30/m2/month (€ 177,214/month) flow cash flow value • The property investment value is calculated by summing • Cash flow in the first year: € 11 million the discounted cash flows for the period of ten years and the discounted residual value • Discounted residual value: € 81 million • Property investment value: € 157 million Property investment value – retail

• Yield: 6.75% • The estimate varies between 6.75 - 8% (Catella 2017) • Vacant premises: 0–1.5% • Inflation: 1% • Rentable area: 19,116 m2 • Relation to the gross floor area: 70% (estimate) • Gross rent: € 25/m2/month (a total of € 477,890 /month) • The estimate varies between € 15–35/m2/month (Catella 2017) • Maintenance costs: € 3.5/m2/month (€ 147,679/month) Cash Discounted Discounted residual flow cash flow value • Renovation costs: € 0.30/m2/month (€ 177,214/month) • The property investment value is calculated by summing • Cash flow in the first year: € 5 million the discounted cash flows for the period of ten years and the discounted residual value • Discounted residual value: € 37 million • Property investment value: € 71 million Property investment value – housing

• Yield: 3% • The estimate is based on expert interviews • Vacant premises: 0–4.5% • Inflation: 1% • Rentable area: 49,226 m2 • Relation to the gross floor area: 87% (Haahtela) • Gross rent: € 18/m2/month (a total of € 1,585,189/month) • The estimate is based on expert interviews • Maintenance costs: € 3/m2/month (€ 147,679/month) Cash Discounted Discounted residual • Renovation costs: € 0.30/m2/month (€ flow cash flow value 177,214/month) • The property investment value is calculated by • Cash flow in the first year: € 16 million summing the discounted cash flows for the period of ten years and the discounted residual • Discounted residual value: € 377 million value • Property investment value: € 507 million 3. Starting points for the estimates 3.2 Scenarios and methods Scenarios — The basic scenario until 2040: moderate growth until 2030 and from there onwards, accelerating growth — The international airport scenario

Levels in the study of the traffic system — Tampere Central Region — National level — International level

Levels in the study of the ecosystem — Network level

— Organisation level Inc. Images. Kuva: General description of methods

The main method that has been used in this work is The income generated by the increasing traffic, enabled by the ecosystem approach (ecosystem and platform the Travel and Service Centre, is estimated based on studies business models) that estimates the preconditions for regarding the average purchase of different groups of people. the development of the business and industrial sector. The domestic and foreign travellers and daily visitors are studied separately. The overall development of the traffic The method for creating ecosystems estimates how system is in the background. the master plan draft for the planning area will support the companies’ ability to create new value The effects of the Travel and Service Centre project on the together (i.e. the draft will act as a platform for the future potential of Tampere Airport are estimated separately, companies) and enable profitable business activities. assuming that the Travel and Service Centre would function as a national supply point for the airport. The ecosystem theory defines the boundary conditions with the help of which the preconditions When estimating the change in the attraction of the for the creation, development and vitality of an investments, real option thinking for the investments is used, ecosystem can be estimated. The ecosystem theory is in addition to the conventional return value based method. suitable for analysing both current and developing The conventional return value based method is suitable for networks. estimating investments in a situation where it is easy to predict the future. Real option thinking has guided the The volumes of international and domestic tourism assessment regarding the ecosystem effects in the alternative and commuting are estimated on the basis of scenarios. accessibility and the development forecasts in the field. This deals with what functions the regenerated Due to the long time span for development and the general station area will attract and how actively the functions fast rate of change, the estimated area has several attractive will be promoted. Objectives at various levels are uses that will change over the course of time. By means of real estimated, using the scenario technique. option thinking, it can be perceived how the value of the investments can be increased if the original uses of the area change along with the development of the area and how it should steer the planning. Calculation method for the ecosystem effects

Offices Retail Housing •The share of the rent is 4% of the •The share of the rent is 8% of the •The share of the housing costs is turnover turnover 29% of the income •The combined turnover of the •The combined turnover of the •The combined income of the enterprises operating at the premises enterprises operating at the premises residents in the area are estimated is estimated by calculating the rent per is estimated in the same way as for the by calculating the imputed rent per square metre € / 0.04 * the rentable offices square metre € / 0.29 * the square square metres metres for housing •Personnel costs 9% and the other •Variable costs 80% and fixed costs 5% costs 86% of the turnover •Other consumption 63% and the of the turnover housing costs 22% of all •Operating profit is calculated by consumption expenditure •Operating profit is calculated by subtracting the costs from the turnover subtracting the costs from the turnover •Savings are calculated by subtracting the consumption expenditure from the income 4. Results

4.1 Impact on jobs during the construction and use of the premises Results Impact on jobs Separate study (in addition to the economic impacts created by the activities at the premises and the income effect of the flows of people)

Construction Use of the premises •Direct effect: 3,388 person-years •Offices: 2,600 jobs •Indirect effect: 7,260 person-years •Retail: 1,100 jobs

— Consists of three sources of income — Foreign tourism income — According to estimates, the spending by travellers complies with the figures given in the report Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012 (~150 euros/person/day) — According to the Visit Finland’s Visitor Survey 2016, travellers stay the average of 3.7 days

68 — Domestic tourism income — Spending by domestic travellers has been assessed in the same way as for the foreign tourism income — The number of overnight stays and their development forecast are based on the estimates by Visit Finland — Income gained from daily shopping — The number of daily passengers is based on the report Tampere Travel and Service Centre, Flows of People 2040, by EP Logistics — Spending on daily shopping has been calculated on the basis of the reports by Tuomas Santasalo Results Foreign tourism income in the Tampere Region Current state — 210,000 overnight stays by foreign travellers (Visit Finland’s statistics) — Income flow 31 million euros Basic scenario 2040

— Assumption: Annual growth of 4% in tourism (Visit Finland) Source: Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012 — 525,000 overnight stays by foreign travellers — Income flow 79 million euros Overnight stays by foreign travellers in the Tampere Region in 2040 International airport scenario 2040 1 400 000 1 200 000 69 — Assumption: The annual number of passengers travelling 1 000 000 via Tampere-Pirkkala Airport will be 4 million higher than in 800 000 the basic scenario 2040 600 000 — 25% of the air passengers will be foreigners 400 000 200 000 — 44% of the foreign visitors will stay overnight in the 0 Tampere Region and the rest in other Finnish regions CurrentNykytilastate 2040 perusbasic 20402040 airportlento — 1,330,000 overnight stays by foreign travellers Income flow from the overnight stays by — Income flow 199 million euros foreign travellers (€ million per year) 250 200 150 100 50 0 CurrentCurrentNykytilastatestate 20402040 basic basicperus 204020402040 airport airportlento Results Domestic tourism income in the Tampere Region

Current state - 1.24 million overnight stays by domestic travellers (Visit Finland’s statistics) - Assumption: 150 euros / person / day Source: Matkailu ja työllisyys Tampereen seutukunnassa vuonna 2012

- Income flow 186 million euros Overnight stays by domestic travellers in the Tampere Region (million travellers per year) 3,50 Basic scenario 2040 3,00 70 - Assumption: An annual growth of 4% in tourism 2,50 2,00 (Visit Finland) 1,50 1,00 - 3.1 million overnight stays by domestic 0,50 travellers 0,00 CurrentNykytilastate 20402040 basicperus 20402040 airportlento - Income flow 466 million euros Income flow from the overnight stays by domestic travelers (€ million per year) International airport scenario 2040 500 - Assumption: The growth in domestic travel will 400 comply with the basic scenario 2040 300 200

100

0 CurrentNykytilastate 20402040 perus basic 2040 airportlento Results Income gained from daily shopping

Current state - During the peak hour, 1,880 long-distance train passengers (10% of the number of daily passengers) - They spend 16 euros on daily shopping on their trip - 200 long-distance bus passengers - They spend 12 euros on daily shopping on their trip - The annual income flow: 16 million euros 71 Basic scenario 2040 - During the peak hour, 2,000 long-distance train passengers Tampere Travel and Service Centre – Spending by visitors €/day - During the peak hour, 1,580 commuter train €/day passengers Regional travellers 11,86 - 200 long-distance bus passengers daily consumer goods 5,05 - Income flow in 2040: 26 million euros specialty shops 3,86 restaurants/cafés 2,95 Train travellers 16,08 International airport scenario 2040 daily consumer goods 3,37 specialty shops 3,86 - For the part of daily shopping, the increase in the restaurants/cafés 8,85 income flow will comply with the basic scenario The spending by the visitors has been calculated as shopping during one day. i.e., 2040 their consumption at the Travel and Service Centre during their trips. Average value of daily consumer goods 21,90

Source: Santasalo, PTY 4.3 Ecosystem effects in the basic and airport scenarios Comparison of the ecosystem effects in the two scenarios

Housing Housing Retail Retail Offices Offices

Basic scenario

Value creation Value appropriation

Airport scenario

8000 1000

6000 800 600

4000 M€ M€ HousingAsuminen 400 AsuminenHousing Liiketilat 2000 RetailLiiketilat 200 Retail Toimistot OfficesToimistot 0 Offices 0 Ecosystem effects in the airport scenario

OFFICES € 325 MILLION HOUSING € 64 MILLION

RETAIL € 72 MILLION

The ecosystem effects are partly overlapping OFFICES € 325 MILLION HOUSING € 64 MILLION DAILY SHOPPING € 10 MILLION RETAIL € 72 MILLION

FOREIGN The ecosystem effects during the TOURISM first year of use, compared with the INCOME € 47 MILLION increase in the tourism income and daily shopping with respect to the DOMESTIC TOURISM INCOME € current state 280 MILLION Ecosystem effects in the international airport scenario /year

OFFICES HOUSING € 362 MILLION € 69 MILLION

RETAIL € 85 MILLION

Ecosystem effects in the airport scenario OFFICES € 362 MILLION HOUSING € 69 MILLION DAILY SHOPPING € 10 MILLION RETAIL € 85 MILLION

FOREIGN TOURISM INCOME In the airport scenario, the € 168 MILLION foreign tourism income will increase vigorously DOMESTIC TOURISM INCOME € 280 MILLION 5. Conclusions and recommendations Management of the economic impacts caused by flows of people

• Superior geographical location • Unused potential • Along with the higher speeds in the railway traffic, the population that can be reached within 1 h 30 min will almost triple (~1 million => ~3 million) • Almost 4 million inhabitants within a 2-hour travel time (about 70% of Finland’s population in 2030) • Tampere may function as an engine for a larger geographic area than today • Tampere will benefit the most due to its location at the hub of the increasing traffic flows • Tampere Airport is a great opportunity • Tampere Airport may significantly increase the interest of international companies and passengers in the area • Connecting the airport’s terminal services to the Travel and Service Centre’s room programme is a great opportunity for the project • Increasing the economic value of tourism • Tourism is a multi-billion business. In 2016, foreign tourists brought 3.9 billion euros to Finland. The better accessibility, service product and communication, the larger share of international tourism for the Tampere region and Inland Finland • Along with direct flights, Tampere could be a gateway to the Tampere Region, Southern Ostrobothnia, Central Finland, Satakunta Region and to the Kanta-Häme Region and make long weekends in Europe possible Making the Travel and Service Centre part of the international travel chain In the future, a significant share of the Tampere Airport passengers could arrive and depart by train via the Tampere Travel and Service Centre. Current airport terminal functions could be carried out at the Travel and Service Centre, which will also provide a wide range of commercial services. A fast connection to the airport would provide a seamless travel chain. Compared with the current operating method, a considerable amount of time would be saved and the travel chain would comply with sustainable development. It is recommended that the airport terminal be made a stronger part of the concept and room programme of the Travel and Service Centre, incorporating internationality into its image.

City centre of Tampere = AiRRport City

Cathedral Tammelantori market pace

Tammela Stadium Banks of the rapids Department store

Square Theater

Hotel Tampere Hall Hotel Shopping center Stadium = Shopping centre = University Deck and Central Arena =

Fairs/APM Management of the ecosystem effects

• A vibrant city: a larger part of the residents’ purchasing power will remain in the area and the area will be attractive • Development of a unified commercial or shopping centre concept – focus on the Travel Centre • What combination of services (private and public) and shops will support the lives of the residents and the travellers? • Development of the services of a sharing economy • A larger part of the income will no more be spent on housing, but it will be consumed locally • A possible effect on the occupancy rate and the number of residents • Preparations for the development of the airport • Will it attract better companies? • Will it attract residents from outside Tampere and from abroad? • Development of the Travel Centre as a private project Management of the ecosystem effects

• The price of the land and the requirements set by construction are important tools for the City of Tampere • Is the intention to optimise the price of the building rights or the functionality of the ecosystem? • Business Tampere is a central actor in the management of the ecosystem (a lifecycle manager) • Are there clear targets in the management of the ecosystem – the preparations and the lifecycle? 83 • Identifying and activating the interested parties (cf. business improvement districts in England) • The ecosystem approach emphasises the area’s ability to adapt to the requirements of the future: adaptability • Not all effects are new • Tampere - Tampere Region - Finland - the rest of the world Sources Sources

Interviewee Subject

Kusti Kajander, Boost Brothers Development of construction costs

Matti Sivunen, Boost Brothers Alternative implementation methods

Janne Mäkelä, Newsec Investors’ interest

Antti Louko, Catella Investors’ interest

Ken Dooley, Granlund New services of a sharing economy

Karoliina Rajakallio, Helsinki City Transport HKL Development of stations

Wisa Majamaa, ICECAPITAL Attractiveness of the area for housing investors

Miro Ristimäki, Skanska Investment calculation, urban development

Kalle Jokela, Skanska The concept of retail premises

Matti Christersson, CBRE Investors’ interest Sources (others than those mentioned in the context)

• Realprojekti (10 September 2015) ”Tampere Travel and Service Centre. Commercial Analysis” • Newsec (9 October 2015) ”Tampere Travel and Service Centre. Assessment of the financial conditions for implementation and the commercial concept” • Deloitte (9/2015) ”Kansi- ja areenahankkeen yhteiskuntataloudellinen vaikutusanalyysi” • Catella (spring 2017) ”Catella Market Indicator Finland” • Newsec (spring 2017) ”Newsec Property Outlook Finland” • Cobe Architects (4/2017) ”Tampere Travel and Service Centre: Development scenarios” • Statistics Finland (2017) ”Household Budget Survey” Workgroup: Jorma Mäntynen, Professor, WSP Seppo Junnila, Professor, Aalto University Lauri Pulkka, D.Sc. (Tech.), Aalto University Pasi Metsäpuro, M.Sc. (Tech.), WSP Tuomas Santasalo, M.Sc. (Econ.), WSP Terhi Tikkanen-Lindström, Architect, WSP Translation by Translatinki Oy