JLL Nordic Outlook
Focus: Living Flexible office space Autumn Spring2019 2019 Property Data Definitions
Prime Office Rent Prime office rent refers to the optimum open-market rent level that can be expected for a notional office unit of the highest quality and specification in the best location in a specific market or submarket on the survey date (normally at the end of each quarterly period). Prime office rent is normally based on prime units of over 500 sq m of lettable floor space and does not include prime rents for smaller floor spaces. Prime rent refers to occupational lease that are standard for the local market. A face rent, on the other hand, does not take the financial impact of tenant incentives into account, and excludes service charges and local taxes. It represents JLL’s view of the market and is calculated on the basis of an analysis/review of actual prime office space transactions, not including any unrepre- sentative deals.
Prime Yield Prime yield refers to the optimum (i.e. lowest) “rack-rented” yield that can be expected for a notional office property of the highest quality and specification in the best location in a specific market or submarket on the survey date (normally at the end of each quar- terly period). The property should have been let at the prevailing market rent to a first-class tenant with an occupational lease that is the standard for the local market. The prime initial net yield, i.e. the initial net income at the date of acquisition, is quoted as a percent- age of the total acquisition price, which includes acquisition costs and transfer taxes. Prime yield represents Jones Lang LaSalle’s view of the market and is based on a combination of market evi- dence, where available, and a survey of expert opinion.
Vacancy Vacancy refers to the complete floor space offered for lease on the open market within a specific market or submarket and available for immediate occupancy on the survey date (normally at the end of each quarterly period). It includes all vacant accommodation and sublet space irrespective of quality or the terms under which the space is offered. Vacancy excludes obsolete or “mothballed” office property, i.e. floor space kept vacant and unavailable for letting, usually pending redevelopment or major refurbishment. Content
Definitions...... 2
Introduction...... 4
Global macroeconomic conditions...... 6
Offices
Office Rents in Europe 2019-2023...... 8
Stockholm...... 10
Gothenburg...... 12
Malmö...... 14
Helsinki...... 16
Oslo...... 18
Copenhagen...... 20
Focus: Living...... 22
Retail
Sweden...... 24
Finland...... 26
Logistics
Sweden...... 28
Finland...... 30
Investment Market Sweden...... 32
Investment Market Finland...... 34
Interest and Credit Markets...... 36
JLL Services...... 38
Nordic Outlook | Autumn 2019 3 Nordic property market set for solid 2019
Despite a global slowdown in economic growth and persistent political uncertainty, the Nordic real estate markets continue to benefit from a strong business cycle and low interest rates. High demand and restricted supply of modern offices in attractive locations are pushing vacancy rates downward while driving a continued rental growth in the Nordic capitals.
On the investment side, transaction activity is still high and sentiment positive, with a preliminary volume of around €11 billion for H1 2019. The market is still driven by investors’ pursuit for stable risk-adjusted returns in light of a low interest rate environment. Interest in property investment remains high from cross-border capital, showing that the Nordic property market is still very liquid and attractive. Structural changes due to digitalisation and an increase in e-commerce demand, among other factors, are increasingly impacting both demand and supply in the retail and logistics segment.
In this edition of the JLL Nordic Outlook, we examine the state of the office markets in the four capital Nordic cities and Swedish metropolitan areas. We also report on Swedish and Finnish logistics and retail markets and review developments on investment and capital markets.
The theme for this edition of the report is Living. The profile and living preferences of an average European household are shifting, which is changing the patterns of demand inside the European residential markets and creating attractive opportunities for investors and developers across the continent’s urban agglomerations.
Cecilia Gunnarsson Head of Research JLL Sweden
4 Nordic Outlook | Autumn 2019 JLL Property Clock H2 2019
Paris CBD Dublin, Helsinki, London City, Stockholm, Malmö, Gothenburg Prague St Petersburg Copenhagen, Edinburgh, Lisbon, London West End, Lyon, Manchester, Stuttgart Rental Growth Rents Brussels, Dusseldorf Avtagande Fallande Budapest, Rome Slowing Falling hyrestillväxt hyror Berlin, Cologne, Frankfurt, Hamburg, Milan Amsterdam, Barcelona, Luxembourg, Madrid, Munich, Oslo Tilltagande Avtagande Athens Rental Growth Rents hyrestillväxtAccelerating hyresnedgångBottoming Out Kiev, Warsaw
Zurich
Moscow Bukarest, Geneva, Istanbul
Nordic Investment Volumes* Nordic Prime Office Yields bn EUR (%)
7.0
6.5 6.0 5.5 5.0 4.5 4.0 3.5
3.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 S e e a Nor a e ar Sweden Finland Norway Denmark *excl. residential
Nordic Outlook | Autumn 2019 5 6 Continued good global economic but increasing activity concern over future developments. Global macroeconomic conditions
rate hasnotchanged. Macroautumn thelabour force participation rate and employment ment hassloweddownoverthepast year, however, since last on thelabourmarket isstillstrong. Thedeclineinunemploy - be 1.8percent in2019and2.1percent in2020.Thesituation a more sluggishhousingmarket. GDPgrowth isforecasted to domestic demandisalsoexpected to belower, partly dueto recent years. Inaddition to lower exportdemand,growth in Swedish economy isexpected to grow more slowlythanin lower growth rates going forward. Overthecoming years, the Sweden isexpected to haveastrong economy, with even market-related riskshavegrown. stimulated domestic growth butatthesametimehousing external trade thatcould ariseahead. Low interest rates have growth butare alsovulnerable to thepossiblerestrictions on havebenefittedof Scandinavia. from They rising global arewhere highlydependentonwhathappensoutside they considerable financialmarkets. Thisputstheminasituation intensive countries withahighshare oftechnology firmsand The Nordic countries foreign are small,well-developed, trade Nordics rest oftheyear. theriskofaglobalAs aresult, recession remains lowfor the eral key countries andrelatively loosemonetary policy. by strong consumer confidence, tightlabour markets- insev should continue to expand in2019albeitmodestly, boosted economic However, developments. mostmajoreconomies calation ofthetrade conflicts could haveanegative effect on concern overfurther limitations to worldtrade. es Asevere between theUnited States andothercountries. Thiscreates the political manoeuvringhasalsocovered trade relations between theUnited States andChinahasescalated and remain lowinmanycountries. Theongoing trade conflict should beenoughmomentum for unemploymentto fall or is expected to bemore moderate intheperiodahead, there average Althoughinternational ofjustover2percent. growth international growth isexpected to becloseto thehistorical entered aphaseoflowergrowth. Overthecoming years, International GDPhasgrown rapidly inrecent years buthas Global - tight labourmarket. constraints to keep anda inmindare highhouseholddebt, rising consumption willunderpintheGDPgrowth. However, percent in2020.Strong labourmarkets, lowinflation,and ment). GDPgrowth isforecast at1.6percent in2019and1.5 slower eurozone growth, anuncertain global trade environ- but thereroment, are some significant downside risks (Brexit, createsloose monetary policy afavourable investmentenvi- the labourmarket remains wages robust, are rising,and The fundamentals ofDenmark’s economy are stillsolid– oilfield 2020-23 asanew comes onstream. prices shouldstart to ease, andweexpectoiloutputto risein ahead, someoftheongoing pains from theearlier fall inoil cast at1.9percent in2019and2.1percent in2020.Looking will supportrobust household spending.GDPgrowth isfore fallen to multi-year lowsresulting instrong wage growth that to drivegrowth inthewidereconomy. Unemployment has In Norway , investmentinthepetroleum sector continues and lowinflation. disposable income together withfalling unemploymentrate expected to rise,contributing to arapid growth inhousehold will continue to fall inthecoming years. Nominalwages are in 2019,meaning adecrease of80-90bpscompared to 2018 The unemploymentrate isexpected to fall to 6.6-6.5percent percent ofFinance) or1.5percent (Ministry (BankofFinland). 2020 thegrowth isexpected to decrease further downto 1.2 GDP forecast fell from anexpected 2percent to 1.6,whilein the decreasing growth inexportsandworldtrade. 2019 FY In Finlandeconomic growth continues to slow, reflecting Nordic Outlook
| Autumn 2019 - CPI Inflation
5 %
4 %
3 %
2 %
1 %
0 %
-1 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 F 2019 F 2020 F 2021 F 2022
Denmark Finland Sweden Eurozone Norway Source: Oxford Economics
GDP growth
8 %
6 %
4 %
2 %
0 %
-2 %
-4 %
-6 %
-8 %
-10 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 F 2019F 2020F 2021F 2022
Denmark Finland Sweden Eurozone Norway Source: Oxford Economics
Unemployment
14 %
12 %
10 %
8 %
6 %
4 %
2 %
0 % 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 F 2019F 2020F 2021F 2022
Denmark Finland Sweden Eurozone Norway Source: Oxford Economics
Nordic Outlook | Autumn 2019 7 Office Rents in Europe 2019-2023
In Europe, the economic outlook is mixed. Economic growth in Germany is expected to slow further, with industrial production still looking weak, impacted by the ongoing decline in global trade volumes. In France, internal pressures on the economy are easing, but external risks continue to loom. In the UK, the recent leadership change further compli- cates the outlook. Nevertheless, we expect office demand in Europe to remain above the long-term trend in the years ahead. Coupled with the prevailing low supply environment across the region, this should continue to support rental levels in most European office markets.
2018 saw approximately 3.9 million sq m of office space added to the European market, down around 30 percent on the 10-year average and reflective of the development drought over the last 5 years. Combined with years of under-development, this has led to the tight- est supply environment in Europe since 2002.
However, 2019-2021 will bring a clear reversal of this trend, with an annual average of around 6.7 million sq m to be added to the European office market. Nevertheless, given the pent-up demand in the market, active pre-letting continues to shape several European office markets, with a significant share of the pipeline often absorbed before practical completion.
This new wave of development has the potential to dampen rental growth, but, the picture varies greatly across the region. Looking ahead, cities with upbeat demand and insufficient supply relief can again expect to see further rental growth.
JLL’s latest property forecasts suggest continued rental growth across the European office market, albeit unlikely to match the rental spikes witnessed in recent years. In Europe, we expect prime office rents to increase by 3.1 percent in 2019, before a slight slowdown in 2020-2023 as new supply is delivered to the market. In 2019, the strongest performers are likely to be Barcelona (+8.3 %), Munich (+6.4 %), Amsterdam (+6.3 %), Berlin (+5.9 %), Lisbon (+5.6 %) and Moscow (+5.6 %). In the Nordics, Oslo (+5.4 %) is expected to comfortably outperform the European average, while Stockholm (+3.0 %), Copenhagen (+1.8 %) and Helsinki (+1.2 %) will see more moderate rental increases.
Looking ahead, we forecast prime office rents in Europe to grow by 1.7 percent per year through to 2023. This predicted slowdown is primarily due to more robust development activity. Once again, Amsterdam (+4.4 %), Oslo (+4.4 %), Barcelona (+4.0 %) and Munich (+3.1 %) are expected to record healthy rental growth on the back of solid demand and tight supply. Stockholm (+2.8 %), Helsinki (+2.4 %), and Copenhagen (+2 %) should also outperform the regional average. On the other hand, we expect slower growth in some markets, including Paris (+0.2 %), Milan (+0.5 %), Brussels (+0.6 %) and Frankfurt (+0.9 %).
8 Nordic Outlook | Autumn 2019 Rental Growth (% pa) 2019-2023
Offices > 2.75 2.0 %–2.75 1.25 %–2.0 % 0.5 %–1.25 % e O o % < 0.5 Sto o % % urg % a go o o u % % ee % o e age % a e ter ter a
r g a otter a % o o tre t t e % % % a urg r to ague % % % o o % % % u e or % We t t er % % % o og e er ru e % War a Par % ra urt % % % Par a % % Stuttgart Prague e e % u e ourg Par % % % u e a % % ur % u a e t e e a o % a % u are t % % % a r % o ar e o a o e
Source: JLL © 2018 Jones Lang LaSalle IP, Inc. All rights reserved.
Yearly percentage rental growth on the office market
uro e o e age e O o Sto o
a erage a erage
Nordic Outlook | Autumn 2019 9 Stockholm Office Market
2019 starts as a confident year for the Stockholm office rental market. Still good economic conditions, robust demand, and limited supply have continued to exert upward pressure on rents. The investment market has remained healthy, active and strong over the past six months, with continued high demand for office from both local and cross border capital.
Rental Market Investment Market The Stockholm office market continues to perform well The Stockholm investment market has remained healthy with high demand, limited supply, low vacancy rates, and over the past six months, with a total transaction volume growing rents. Modern premises in good locations, close to reaching SEK 27.6 billion, equivalent to 32 percent of the total service and rail transportation, are still highly sought-after, for Sweden and a 9 percent increase year-on-year. Stockholm regardless of sub-market. The activity is mainly driven by is a favoured destination for real estate investment with tech companies, and they are currently one of Stockholm’s strong interest from foreign capital in all segments. During H1 most important growth areas/business. Reflecting the robust 2019 transactions with foreign capital accounted for close to underlying market fundamentals, and as new supply in the 30 percent of the total transaction volume in Stockholm, of short term is limited and predominantly pre-let, the Stock- which the majority was targeting the office sector. The sector holm vacancy rate is currently at a record low of 5.5 percent. is still much in demand amongst both local and foreign Currently a total of 360,000 sq m of new office space, of which investors and even though supply is limited and prices are 50 percent pre-let, is under construction in the Stockholm high, numerous transactions have been made. Underlying region with estimated completion over the following three market fundamentals are robust, with high office demand years. Solna/ Sundbyberg continue to dominate as the from its innovation economy supporting continued growth sub-market with highest development activity, and where in values. In H1 2019 transactions in the office sector con- the largest volume of new supply is being constructed. High tinued to dominate with a volume reaching SEK 9.4 billion, activity is also recorded in the take-up figures, with a total representing 34 percent of the total transaction volume. volume of 260,000 sq m for H1 2019, with Solna/Sundbyberg Prime office yields have remained low and stable across all dominant, followed by the Rest of Inner City and Adjacent sub-markets during H1 2019. Suburbs. The rents continue the upward trend, primarily in the central parts of Stockholm but also in other popular office zones like the Adjacent Suburbs. High prices and lack of available supply in the most central parts of the city con- tinues to push tenants out into development areas with good public transportation that are relatively cheap in compari- son. In the CBD, prime rent have risen by 4.1 percent year-on- year to an estimated SEK 7,600 per sq m p.a. However, signed lease agreements with top rents above SEK 9,500 per sq m have been confirmed.
Trends and Market Outlook
• The Stockholm office market continues to perform well with robust underlying market fundamentals, high demand, limited supply, and rents growing. • Record low vacancies and limited construction will keep the market tight in the short term and underpin opportunities
Offices to increase supply in new emerging areas, several of which are south of the city centre. • Stockholm is a favoured destination for real estate investment with strong interest from foreign capital in all segments. • JLL forecast an active and healthy investment market in Stockholm for the remainder of 2019, with transaction volumes mainly driven by deals within the office and residential sector, and prime office yields remaining low and stable across all sub-markets.
10 Nordic Outlook | Autumn 2019 Representative office investments transactions H1 2019
2,000 (mSEK) 1,608 (mSEK) 1,200 (mSEK) Area: 33,699 sq m Area: 21,500 sq m Area: 18,000 sq m Yield: n/a Yield: n/a Yield: n/a Property: Skjutsgossen Property: Pelaren 1 Property: Skålen 24 Location: Rest of Inner City Location: Adjacent Suburbs Location: Rest of Inner City Purchaser: Blackstone Purchaser: Folksam Purchaser: Invesco Vendor: AFA Fastigheter Vendor: Fabege Vendor: SEB Trygg Liv
Representative office leasing transactions H1 2019
42,000 sq m 12,600 sq m 7,200 sq m Property: Nya Kronan Property: Tre Vapen Property: Strand (Nöten 5) Location: Solna/Sundbyberg Location: Rest of Inner City Location: Solna/Sundbyberg Tenant: Skatteverket Tenant: Handelsbanken Tenant: SCB Property owner: Vasakronan Property owner: Vasakronan Property owner: Vasakronan
Representative office developments, under construction H1 2019
26,000 sq m 36,000 sq m 25,000 sq m Project: Sthlm01 (Sthlm New) Project: Sergelhuset Project: Life City Location: Adjacent Suburbs Location: CBD Location: Rest of Inner City Pre-let (%): 18 Pre-let (%): 39 Pre-let (%): 68 Completion: 2020 H1 Completion: 2020 H2 Completion: 2021 H2 Landlord/Developer: Skanska Landlord/Developer: Vasakronan Landlord/Developer: Atrium Ljungberg
Total Office 2019 H1 3.8 5.6 9.4 investment Total volume 2018 H1 5.9 5.1 11.0 (bnSEK) Domestic Cross-border
Total New office supply vacancy rate 5.5 % Total Est. Completions (sq m)
2018 2019 2020 Office Properties H1 2019 Short-term forecast 2021
101,000 Rest of Adjacent Solna / CBD Kista Inner City Suburbs Sundbyberg
89,000 Vacancy rate 2.3% 1.8% 6.4% 17.6% 5.1%
Prime rent 32,000 (SEK/m2) 7,600 5,100 3,400 2,400 3,300 54,000 48,000 43,000 41,000 37,000 Prime yield 3.50% 3.75% 4.00% 5.50% 4.00% 5,000 16,000 4,000 16,000 16,000 15,000 14,000 11,000 10,000
CBD Rest of Adjacent Solna / Rest of Inner City Suburbs Sundbyberg Stockholm
Kista 0 sq m
Nordic Outlook | Autumn 2019 11 12 appetite for modern in products good locations. supply. The office sector continues to dominate the investment market withstrong increasing take-up volumes, acontinued rental growth and astrong pipeline of new in the GothenburgActivity office rental market has been high during H1 2019, with Gothenburg Office Market Trends andMarket Outlook • • • • • levels are recordedlevels restricted supply onthemarket, thevery CBD. Eventhoughrents are increasing, top rental andnew supply isunderconstruction, theRest ofInnerCityandthe activity hasbeenrecorded inthesub-markets where new H1 2019approximately 70,000sqm.Thehighestleasing take-upopment, volumehasincreased andreached during for modernproducts- andmajorleases devel signedinnew and Norra Älvstranden. Aspredicted, drivenbyhighdemand still pressured bylimited supplyintheCBD,Rest ofInnerCity 2019 thevacancy rate inGothenburg reached 4.6percent, kets, especiallyinthemostcentral parts ofthecity. For H1 vacancy rates continue lowonseveral sub-mar to bevery supply intheshortterm islimited andpredominantly pre-let, officevolumes ofnew supplyinthenextsixyears. Since new the expected demand there are additionalplansfor large velopers. Gothenburg isinanexpansive phaseandto meet where Platzer, Vasakronan, Skanska andNCC are activede comingnew supplyisintheRest ofInnerCity, andtheCBD ed completion overthenextfour years. Themajorityofthe officesq mofnew space isunder construction withestimat has increased significantly, andcurrently a total of201,000 officenew office supplyisstrong. Thepipelineofnew supply andastrongmotive industry, labourmarket thedemandfor still underlyinggood economic conditions, ahealthy auto high demand,lowvacancy, andgrowing rents. Boosted by The Gothenburg office market continues to perform wellwith Rental Market Prime yieldswillremain lowandrelatively stable across allsub-markets. the remainder of2019. The healthy andstable investmentmarket experienced duringthefirst halfoftheyear isexpected to continue throughout active rental market inGothenburg for theremainder of2019. Boosted bystrong macro-economic conditions, astrong labourmarket, high demand,andlimited supply, JLLforecasts an Officesunder construction, ofwhich53percent ispre-let. office The pipelineofnew supplyhasincreased significantly, andcurrently atotal office of201,000sqmnew space is the mostcentral parts. High activityintheGothenburg office rental market withincreasing take-up volumes,rental growth andlowvacancy rates in - - - - have remained flatacross allsub-markets duringH12019. total transaction volumeinGothenburg. Primeoffice yields ment reached SEK2billion,representing 41percent ofthe there isclearly reduced demand.For H12019theoffice seg- properties ingood locations, locations, whileinsecondary continues to dominate, withhighdemandonmodernoffice being represented bycross-border deals. Theoffice sector close to 35percent ofthetotal investmentvolumeinH12019 enburg market, international investors are alsoactivewhere though domesticcapital continues to dominate theGoth- the total for Swedenand16percent upyear-on-year. Even 2019 amounted to SEK4.9billion,equivalent to 6percent of the past sixmonths.Thetotal transaction volumefor H1 The Gothenburg investmentmarket hasbeenactiveover Investment Market further rental growth isexpected intheshortterm. confirmed. supplyinattractive Drivenbynew locations a agreements withtop rents atSEK4,000persqmhavebeen an estimated SEK3,500persqmpa, signedlease however In theCBDprimerent haverisenby6percent year-on-year to continues to havearestrained effect on robust rental growth. Nordic Outlook
| Autumn 2019 Representative office investments transactions H1 2019
867 (mSEK) 650 (mSEK) 375 (mSEK) Area: 16,611 sq m Area: 27,800 sq m Area: 6,840 sq m Yield: n/a Yield: n/a Yield: 4.1 % est. Property: Gullbergsvass 1:2 & 1:12 Property: Part of Gårda Vesta Property: Lorensberg 54:9 Location: CBD (Gårda 2:12) 50% Location: CBD Purchaser: Castellum Location: Rest of Inner City Purchaser: Wallenstam Vendor: SEB Trygg Liv Purchaser: Länsförsäkringar Vendor: SEB Trygg Liv Vendor: Platzer
Representative office leasing transactions H1 2019
7,700 sq m 5,360 sq m 2,200 sq m Property: Mektagonen, extension Property: Gårda Vesta Property: Platinan (Krokslätt 20:4) (Gårda 2:12) Location: CBD Location: Rest of Inner City Location: Rest of Inner City Tenant: Wistrand Advokatbyrå Tenant: Schenker HQ Tenant: Länsförsäkringar Property owner: Vasakronan Property owner: Alecta Property owner: Platzer
Representative office developments, under construction H1 2019
25,000 sq m 25,000 sq m 40,000 sq m Project: Gårda Vesta Project: Platinan Project: Citygate Location: Rest of Inner City Location: CBD Location: Rest of Inner City Pre-let (%): 86 Pre-let (%): 18 Pre-let (%): 0 Completion: 2020 H2 Completion: 2022 H1 Completion: 2022 H1 Landlord/Developer: Platzer & Landlord/Developer: Vasakronan Landlord/Developer: Skanska Länsförsäkringar
Total Office 2019 H1 2.0 investment 2.0 Total Total volume 2018 H1 1.8 1.8 vacancy rate 4.6 % (bnSEK) Domestic Cross-border
New office supply Office Properties H1 2019 Short-term forecast Total Est. Completions (sq m)
Rest of Norra Western Rest of Eastern 2018 CBD Mölndal Inner City Älvstranden Gothenburg Hisingen Gothenburg 2019 Vacancy 2020 rate 3.2% 2.9% 1.7% 12.0% 8.7% 7.2% 7.1% 2021 2022
Prime rent (SEK/m2) 3,500 2,600 2,700 1,200 2,000 2,000 2,500
Prime yield 4.00% 4.25% 4.25% 6.50% 5.75% 5.50% 5.00% 63,000 62,000 37,000 28,000 25,000 24,000 5,000 5,000 5,000 4,000 3,000 11,000
CBD Rest of Norra Mölndal Eastern Inner City Älvstranden Gothenburg Western Gothenburg 0 sq m Rest of Hisingen 0 sq m
Nordic Outlook | Autumn 2019 13 Malmö Office Market
The office rental market in Malmö/Lund has performed well in H1 2019 with high activity on the development side and falling vacancy in several sub-markets. As predicted, prime rents are relatively stable due to the high volume of new supply.
Rental Market Investment Market The office rental market in Malmö/Lund continue to perform As predicted, the Malmö/Lund investment market has been well, with high demand for modern and flexible office space healthy and relatively strong over the past six months. The close to service and public transportation. New development total transaction volume for H1 2019 amounted to SEK 5.6 in station near locations, such as Hyllie, and around the Cen- billion, equivalent to 7 percent of the total for Sweden and tral Station is of high interest. Driven by interest from existing an increase of 44 percent year-on-year. The Malmö/Lund tenants that are expanding as well as from new players and region is picking up as an interesting region amongst foreign start-ups, the vacancy rate continues to decrease in several investors, however domestic players continue to dominate. sub-markets. Compared to previous years, the construction During H1 2019 transactions with local capital accounted for speed is very high, especially in Malmö. New supply complet- 95 percent of the total transaction volume in Malmö/Lund. ed in H1 2019 was around 67,000 sq m and for the remainder Thanks to the major office transaction between Wihlborgs of this year an additional 40,000 sq m will enter the market. and Vasakronan regarding Nya Vattentornet 2 & 4 in Lund, During 2020 another 37,000 sq m is scheduled for comple- office transactions accounted for close to SEK 1.3 billion, tion. Hyllie, located in the adjacent suburbs, continues to be representing 24 percent of the total volume. Except for Rest the sub-market with the highest development activity, but of Inner city, where prime office yield has been adjusted also Central Station and the new area Nyhamnen. Reflecting downwards, prime yields have remained flat across all the high demand for modern products and available new sub-markets during H1 2019. supply, take-up volumes continue to be high with around high 50,000 sq m office space signed in H1 2019. The highest leasing activity has been recorded in the CBD and Hyllie, but also in the Rest of Inner city. Driven by new supply in attractive locations close to service and public transporta- tion, strong rental growth has been recorded in Malmö in the past two years. However, and as predicted, the high volume of new supply has had a dampening effect on strong rental growth. In the CBD prime office rent is stable at SEK 3,000 per sq m pa, however, signed lease agreements with top rents above SEK 3,500 per sq m have been confirmed.
Trends and Market Outlook
• Continued high activity with demand for modern, flexible office space in locations close to public transportation and with access to service. • For the remainder of 2019 JLL forecast a continued active office rental market in Malmö/Lund, with relatively stable vacancy
Offices rates and a modest rental growth in prime products in attractive locations. For coming years, a potential risk of imbalance between supply and demand in combination with a possible recession could create sharply rising vacancies, primarily within the secondary segment, and falling rents. • Investment activity in the region will most likely continue to be confident for the remainder of 2019. Within the office sector, new supply continues to enter the market with developers such as Skanska on the selling side. • Prime yields will remain low and relatively stable across all sub-markets throughout 2019.
14 Nordic Outlook | Autumn 2019 Representative office investments transactions H1 2019
1,260 (mSEK) Area: 49,000 sq m Yield: 6 % est. Property: Nya Vattentornet 2 & 4 Location: Lund Purchaser: Wihlborgs Vendor: Vasakronan
Representative office leasing transactions H1 2019
8,200 sq m 6,300 sq m 1,900 sq m Property: Elefanten 40 Property: Origo (Bure 2) Property: Eminent Location: CBD Location: Hyllie Location: Hyllie Tenant: Malmö Stad Tenant: n/a Tenant: Diaverum Property owner: Wihlborgs Property owner: Wihlborgs Property owner: Castellum
Representative office developments, under construction H1 2019
7,700 sq m 11,500 sq m 20,000 sq m Project: Foajén Project: EPIC Project: The Point Location: CBD Location: Västra Hamnen Location: Hyllie Pre-let (%): 85 Pre-let (%): 97 Pre-let (%): 28 Completion: 2019 H2 Completion: 2019 H2 Completion: 2020 H1 Landlord/Developer: Jernhusen Landlord/Developer: Skanska Landlord/Developer: Annehem (Peab)
Office Total 2019 H1 1.3 investment 1.3 Total Total volume 2018 H1 1.1 1.1 (bnSEK) vacancy rate 6.5 % Domestic Cross-border
New office supply Office Properties H1 2019 Short-term forecast Total Est. Completions (sq m)
Rest of Inner Västra Adjacent 2018 CBD Lund City Hamnen Suburbs 2019 Vacancy 2020 rate 4.3% 4.8% 7.4% 10.0% 6.3%
Prime rent (SEK/m2) 3,000 2,700 2,600 2,700 2,200 44,000 34,000 Prime yield 4.25% 5.00% 5.00% 4.50% 5.25% 25,000 21,000 21,000 2,000 12,000 8,000
CBD Rest of Västra Adjacent Lund Inner City Hamnen Suburbs
Nordic Outlook | Autumn 2019 15 Helsinki Office Market
The first half of 2019 continued in strong terms for office leasing transactions and hasn’t shown signs of slowing despite of uncertainties in the global economy.
Rental Market The 2019 office market has been building on top of the from outside of CBD. Some 79,500 sq m of office comple- strong year in 2018, occupier activity has remained on tions were recorded during H1 and 21,500 sq m are sched- the same active level while quality offices keep attracting uled to complete in H2. This shall put the total on par with occupiers. Two major trends are visible: firstly, occupiers the 10-year completion average of 90,000 sq m. There is also seek quality buildings that enable single floor solutions, 135,900 sq m already under construction and scheduled to even as large as 2,000 sq m which can be a difficult task to complete in 2020 keeping the development pipeline robust. accomplish. Secondly, employees are getting more say over the decision where companies locate themselves. Decision Investment Market makers of major corporations, even conservative ones, are Robust investor demand for the Helsinki office market contin- beginning to realise the challenge that poor location and ued in H1 2019, boosted by solid underlying economic condi- uninspiring premises cause on HR and their fight for best re- tions, favourable currency rates and the global wall of capital cruits. The CBD has remained the most sought-after submar- looking for investment opportunities. The generous amount ket, however shortage of supply and increased asking rents of assets on the market as well as improved occupier market have continued pushing the activity to surrounding areas. An fundamentals have generated notable activity also in second- interesting CBD specific trend has emerged, companies that ary office submarkets such as Leppävaara. Offices continue have made their last leases three or more years ago and are to be the most transacted property type in 2019. Some of now up for relocation or renewal have been shocked of the the largest single office transactions in H1 2019 include increased rental level and sometimes cannot afford the CBD Skanska’s sale of the ECHA headquarters to Hansainvest for anymore. The Secondary Business District and Ruoholahti €135 million and OP’s sale of the Atlas CBD office property have been the immediate winners. The CBD has also grown to BlackRock for €113 million. The transaction volume for from traditional high value area around Esplanadi Park to- offices in H1 totalled c. €750 million as no deals comparable wards Kamppi district, which can be largely explained due to to Sponda and Technopolis in 2017 and 2018 respectively the importance of railway connections and great accessibility have been closed during H1 2019. The prime CBD office yield valued especially by the IT industry. Pasila and Kalasatama in Helsinki decreased by 10 basis points to 3.4 percent driven areas, both going through major development activity, by exceptionally strong investor demand for prime assets. continue to attract occupiers which benefits the areas near Strong rental growth underpinned the record low yield. them, Vallila and Sörnäinen. This axis has everything from major banks and listed corporations to creative industries In a Nordic setting, the yield is largely on the same level with and major culture events thus being the area of interest for Stockholm and ahead of Oslo. New office completions have many. The downward trend of vacancy rates that started stayed on a moderate level; at the same time vacancies con- in 2017 has started stabilizing; the HMA vacancy decreased tinue to decline maintaining robust market conditions. The from 11.8 to 11.4 percent during H1, and the CBD from 3.9 to growing investor appetite and the contracting yields across 3.8 percent. The diminishing supply has been evident also in multiple submarkets combined with considerable cross-bor- the rental growth, the CBD prime rent grew 4.4 percent (€1.5/ der activity and fierce competition for Core assets have also month/sq m) and SBD prime rent 7.8 percent (€2/month/ led to a growing interest for Core+ and Value Add properties. sq m), caused by the immediate effect of demand spreading
Trends and Market Outlook
• Office rental market has reached its peak during 2018 but hasn’t started to slow down; occupier activity is strong and Offices expected to continue. • Market polarisation remains evident, take-up is focused on higher quality targets close to transportation connections. • The importance of office premises in HR strategy is spreading from IT and creative industry; the young generation wants to work in homelike offices in city centre or trendy submarkets near homes and services. • Typical lease length is between 2-5 years and occupiers often demand break options to leases of 5 years or longer – landlords that can offer flexibility have a competitive advantage.
16 Nordic Outlook | Autumn 2019 Representative office investment transactions H1 2019
112.9 (mEUR) 135 (mEUR) 120 (mEUR) Area: 12,200 sq m Area: 17,700 sq m Area: 20,000 sq m Yield: n/a Yield: n/a Yield: < 4.50 % Property: Atlas Building Property: ECHA HQ Property: Sweco HQ Location: Helsinki (CBD) Location: Helsinki, (Telakkaranta) Location: Helsinki (Ilmala) Purchaser: BlackRock Purchaser: Hansa Invest Purchaser: GLL Real Estate Partners Vendor: OP Asset Management Vendor: Skanska Vendor: Sponda
Representative office leasing transactions H1 2019
3,500 sq m 11,000 sq m 6,000 sq m est. Property: Tripla Offices Property: Sätenrinportti Property: WeLand Location: Helsinki (Pasila) Location: Espoo (Leppävaara) Location: Helsinki (Ruoholahti) Tenant: WSP Tenant: Sitowise Tenant: Deloitte Property owner: Commerz Real Property owner: Nordika Property owner: NCC Investmentgesel
Representative office developments, under construction H1 2019
49,500 sq m 17,500 sq m 27,500 sq m Project: Tripla Workery Offices Project: ECHA Office in Project: Urban Environment House Location: Helsinki (Pasila) Telakkaranta Location: Helsinki (Sörnäinen) Pre-let (%): 95 Location: Helsinki (Punavuori) Pre-let (%): 100 Major tenant: Telia Pre-let (%): 100 Major tenant: City of Helsinki Landlord/Developer: Commerz Real AG/ YIT Major tenant: ECHA (European Landlord/Developer: Union Investment Real Chemicals Agency) Estate/Skanska Landlord/Developer: Hansainvest Real Assets/Skanska
Total Office 2019 H1 217 808 1,025 investment Total volume 2018 H2 82 722 804 (mEUR) Domestic Cross-border
Total vacancy rate 11.4 %
129,500 New office supply Office Properties H1 2019 Short-term forecast Total Est. Completions (sq m)
Ruoholahti, Keilaniemi, Aviapolis, 2018 CBD Helsinki Espoo Vantaa 2019 Vacancy 2020 rate 3.8% 10.4% 6.5% 12.6% 2021
Prime rent
56,900 (EUR/m2) 426 270 282 240
Prime yield 3.40% 4.65% 4.75% 5.65% 25,050 6,400 5,390 19,000 17,500 16,900
Rest of Helsinki Espoo Vantaa
CBD 0 sq m
Nordic Outlook | Autumn 2019 17 18 estimated at NOK billion. 85 strong in the first half of 2019, and the total transaction volume for the year stillis continued upward pressure in on the rents. The transaction activity market continues The rental market has well performed far so in 2019 with decreasing office vacancy and Oslo Office Market • • • • • Trends andMarket Outlook 1-5, Fjordalléen 16and Haakon VII’s gate 5. WeWork’s leases for intotal 11,000sqmin Tjuvholmenallé term lease of4,000sqminTelegrafen, Kongens gate 1and of 5,200sqminRuseløkkveien26VIA,Vika, BaneNor’s long- leases duringH12019havebeenSwedbank’s 10years lease imately 550,000 sqm,spread across 627contracts. Notable total volumeofsignedoffice space inOslostood atapprox projects.petition Year amongmanynew to date 2019the experiences ahigherpressure onprices dueto strong com- same increase andespeciallytheeastern inrent levels, fringe officeof new space. Theperipheral areas havenotseenthe 5-15 percent annuallyintheCBDareas dueto lownet supply Going forward, are therent expected levels to increase by have beenrecorded inselected high-endtop-floor locations. 4,900. However, uptowards rent levels NOK6,000persqm office rents haveincreased byNOK400since Q42018 to NOK the CBDisstillcharacterized bystrong supplierpower. Prime years. Office rents in central areas ofOsloare increasing, and to bottom outinearly 2020before increasing thefollowing space isexpected to pickup, thevacancy rate isanticipated space.supply ofnew However, asconstruction office ofnew due to highdemandfor office space combined withlimited rate isexpected to continue decliningthroughout theyear office space, recorded andisthelowestlevel since 2008.The This isequivalent to approximately 400,000sqmofvacant rate inOslostands at4.6percent, vs.5.5percent inQ42018. anticipated.previously AsofQ22019,theoffice vacancy 2019 andthevacancy rate hasdeclinedmore rapidly than The Oslooffice rental market hasperformed wellso far in Rental Market levels are expectedlevels to offset theyieldincrease interms ofvalue. expected to Prime yieldlevels years riseoverthenextfew dueto expected higherinterest rates, inOslorisingrent however The highactivityexperienced inthefirst halfof2019isexpected to continue throughout theyear. space, thusnotin thesamespeedasearlier observed. The flexibleoffice space overthepast year trend observed isexpected to continue astheseoperators for more are hungry buildings overthenextyears. Officesfringe areas, are especiallyOsloeast, notexpected to experience thesamegrowth dueto completion office ofseveral new Low office vacancy economy andpositivesentimentintheNorwegian impliescontinued rental growth inOsloCBD.The of space to otherpurposesthanoffice. Office vacancy isexpected to continue to decrease towards 2020dueto office limited volumes ofnew space andconversion - increasing yields,leading to appreciating property values. However, inOslo, growing isexpected rent to levels offset pected to increase inthemedium-to-long term. somewhat yield isexpected to remain stable intheshortterm butis ex term contracts are yieldedinthearea 4.25-4.75 prime yield,thus,thebestproperties infringe areas withlong locationsin secondary istypically 50-100bpshigherthanthe located objectsinOslo. Theoffice yield for good properties 3.75 bank ofNorway, theprimeoffice yieldestimate isstillat Despite therecent interest rate increases bythecentral selling approximately NOK4.8billion. been net sellers ofoffice assets inOsloduringH12019, appeared onbothsidesoftransactions lastyear, have they of thetotal volumeinthemarket. Whileforeign investors for NOK10billion,standing for approximately 50percent The transaction volumefor office assets inOsloaccounted contributed to mostofthetransactions inOslothisyear. retail assets gained momentum lastyear, office assets have transaction volumefor duringthisperiod.While Norway the first sixmonths,andaccounts for 47percent ofthe total recorded19 billion.Thisisthethird highestvolumeever for in thefirst halfof2019,withatransaction volumeofNOK The Osloinvestmentmarket continues itsstrong sentiment Investment Market percent, asthere isstillahealthy appetite for centrally Nordic Outlook
percent. The | Autumn 2019
- Representative office investment transactions H1 2019
1,325 (mNOK) 4,488 (mNOK) n/a Area: 24,000 sq m Area: 49,168 sq m Area: 4,200 sq m Yield: n/a Yield: n/a Yield: n/a Property: Vitaminveien 4 Property: Dronning Eufemias Property: Kongens gate 2 Location: Nydalen gate 30 Location: Kvadraturen Purchaser: DNB Scandinavian Location: Bjøvika/Barcode Purchaser: Anders Opsahl Gruppen Property Fund Purchaser: DNB Liv Vendor: Private Owners Vendor: Skanska Commercial Vendor: Samhällsbyggnadsbolaget Development
Representative office leasing transactions H1 2019
5,200 sq m 4,300 sq m 3,000 sq m Property: Ruseløkkveien 26 Property: Haakon VII’s gate 5 Property: Dronning Eufemias gate 8 Location: CBD Location: CBD Location: CBD east/Bjørvika Tenant: Swedbank Tenant: WeWork Tenant: Føyen Torkildsen Property owner: Aspelin-Ramm/Storebrand Property owner: Pecunia Property owner: Braathen Eiendom
Representative office developments, under construction H1 2019
18,280 sq m 85,000 sq m 18,000 sq m Project: Lørenveien 65 (Parallell) Project: Construction City Project: Karvesvingen 5 Location: Økern Location: Ulven Location: Økern Pre-let (%): 0 Pre-let (%): TBD Pre-let (%): 60 Major tenant: n/a Major tenant: OBOS Major tenant: ATEA Landlord/Developer: Skanska Landlord/Developer: OBOS/AF Gruppen/ Landlord/Developer: Hasle Linje (Höegh/AF) Betonmast
Total Office 2019 H1 5.5 4.8 investment 10.3 Total volume 2018 H1 6.8 2.0 8.8 (bnNOK) Domestic Cross-border
Total New office supply vacancy rate 4.7 %
Total Est. Completions (sq m)
2018 Office Properties H1 2019 Short-term forecast 2019 2020 Rest of Outer Outer City CBD 2021 Inner City City West East/North/South
Vacancy
169,000 rate 3.6% 3.1% 11.9% 8.1%
Prime rent (NOK/m2) 4,900 4,000 2,300 2,800
61,000 Prime yield 3.75% 4.00-4.50% 4.25-5.25% 4.25-5.00% 49,000 43,000 32,000 30,000 22,000 20,000 20,000
CBD Rest of Outer Outer City Inner City City West East/North/South
Nordic Outlook | Autumn 2019 19 Copenhagen Office Market
The Copenhagen office rental market has remained strong during H1 2019, with high demand fuelled by rising employment and continued limited supply. Vacancy rates continued to fall, and prime rents remained stable. The Copenhagen office investment market saw a downturn in the transaction volume compared to H1 2018, but not as sharp as that for the total real estate market, where particularly residential properties have gone out of favour with office investment property increasingly in demand.
Rental Market Investment Market The Copenhagen rental market has remained strong during H1 The Copenhagen office investment market saw a declining 2019 with a clearly positive sentiment. Continued high demand transaction volume for H1 2019 with total volume amounting is fueled by continued rising employment, with fulltime employ- to DKK 5,2 billion (compared to DKK 6.2 billion in H1 2018). ment numbers now up 14.9 percent in Copenhagen since 2010. Despite this decline market sentiment remains positive. As the In Denmark the increase in fulltime employment is “just” 7.3 per- overall transaction volume across sectors in the Copenhagen cent for the same period, which substantiates Copenhagen as real estate investment market fell much sharper (down more the growth locomotive of Danish economy. Driven by increasing than a third to DKK 22.6 billion in H1 2019 from DKK 35.5 billion demand as well as low real supply, office vacancy rates declined in H1 2018), predominantly due to the slowdown registered in further in H1 2019 to 5.6 percent in Copenhagen and 8.9 percent the residential sector over the past year, the office investment in Greater Copenhagen. In addition to a continued limited market has increased its relative attractiveness among inves- amount of new supply under construction, the market is also in- tors. In a world where capital allocation towards real estate is fluenced by the fact that a large portion of the vacant office stock higher than ever, the Danish real estate investment market with in Copenhagen is in old, outdated buildings without amenities its AAA-rated economy and stable framework conditions con- and facilities in demand by occupiers. Despite positive market tinues to offer a “safe haven” for investors in times of increased sentiment with demand continuing to outstrip supply, inves- uncertainty and global fear of recession. The foreign investors’ tors and developers are still very reluctant to initiate new office share of the transaction volume in the Copenhagen office mar- construction without a significant element of pre-letting. There- ket fell slightly, from 32.3 percent in H1 2018 to 30.8 percent in fore, even with a current demand pipeline indicating a strong H1 2019. New foreign investors include institutional investors, number of major take-ups over the coming 6-12 months, many not only from neighbouring countries such as Germany, Swe- occupiers may continue to find it difficult to fulfil their location den and the UK, but also increasingly from more distant origins requirements, since supply is only slowly adapting to demand. such as Japan and South Korea. With continued momentum The mismatch between a very low supply and the expectations in the occupational market, prime office yields have remained for a continued high demand for new and modern office space low and even decreased further in the tier 2 districts adjacent has led to a rising upward pressure on rent levels. First in line to the CDB areas such as Carlsberg Byen. However, with limited to benefit from this are landlords with much coveted, modern availability of large, prime investment assets within the office office buildings in the city center (i.e. the old CBD area), which sector, the actual transaction volume as well as its distribution together with Nordhavn (part of the new CBD area), command between domestic and foreign buyers continues to be directly top rents, and where the increasing rent levels may be of a more influenced to a very large extent by any larger assets offered for persisting nature due to the low and very limited amount of new sale and the specific timing hereof. development plots within this area. However, the surrounding areas, e.g. Valby, Carlsberg Byen and Ørestad, still hold enough development land to help ease the pressure on the old CBD area and stabilize rents in these adjacent areas in the longer run.
Trends and Market Outlook
• High demand for modern, flexible office space continues to outstrip supply. • There are speculative office developments under way, but not any major new supply in the next year. • The opening of the Metro City Ring in central parts of Copenhagen in H2 2019 will drive further rental growth for districts and properties close to the new metro stations. Offices • Vacancy rates are expected to drop even further, particularly within the Old CDB area, where new office developments are extremely limited. • Some rental growth is expected in the short term, but a slower, more modest pace. • The investment market is expected to remain strong, as we have already witnessed investor interest shifting from the residential sector towards the office sector. • Prime yields are expected to remain low and stable, with possible improvement in some submarkets, e.g. Carlsberg Byen and districts along the Metro City Ring.
20 Nordic Outlook | Autumn 2019 Representative office investments transactions H1 2019
725 (mDKK) 320 (mDKK) 310 (mDKK) Area: 19,700 sq m Area: 7,650 sq m Area: 8,250 sq m Yield: 3.75 % Yield: 4.00 % Yield: 4 .00 % Property: Emil Christian Hansen Property: Niels Juels Gade 9-13 i Property: Flintholm Company Hus, Carlsberg Byen København K. House ll Location: Copenhagen West Location: Old CBD Location: Frederiksberg Purchaser: KLP Purchaser: Aviva Investors Purchaser: Deka Vendor: Carlsberg Byen P/S Vendor: Gefion Group Vendor: NCC Property
Representative office leasing transactions H1 2019
4,526 sq m 977 sq m 1,295 sq m Property: Sydhavnsgade 16, Property: Codanhus, Gammel Property: Prags Boulevard 80, Copenhagen SW Kongevej 60, Frederiksberg 2300 Copenhagen S Location: Rest of Copenhagen Location: Old CBD Location: Rest of Copenhagen Tenant: Mercedes-Benz CPH Tenant: Better Energy Tenant: Kraftværk Property owner: AberdeenStandard Property owner: Klövern Property owner: Topdanmark Ejendom Investments
Representative office developments, under construction H1 2019
19,700 sq m 8,250 sq m 13,640 sq m Project: Emil Christian Hansen Project: Flintholm Company Project: Østerport II Hus, Carlsberg Byen House II, Flintholm Location: Old CBD Location: Copenhagen West Location: Frederiksberg Pre-let (%): 0 Pre-let (%): 100 Pre-let (%): 100 Major tenant: n/a Major tenant: Visma Major tenant: EY Landlord/Developer: Fokus Asset Management Landlord/Developer: Carlsberg Byen P/S Landlord/Developer: NCC Property Development
Total Office 2019 H1 3.6 1.6 5.2 Total investment 2018 H1 4.2 2.0 volume 6.2 (bnDKK) Domestic Cross-border Total vacancy rate 7.0 % New office supply
Total Est. Completions (sq m)
2018 Office Properties H1 2019 Short-term forecast 2019
Old New CBD Rest Of Greater Ørestad CBD Waterfront Copenhagen Copenhagen
250,000 Vacancy 5.60% 5.60% 5.60% 5.60% 8.90% 230,000 rate
Prime rent 1,600- 1,100- 900- (NOK/m2) 2,000 2,000 1,600 1,500 1,700 110,000
85,000 Prime yield 3.75% 4.00% 4.00% 4.25% 4.50% 65,000 10,000 40,000 40,000 30,000
Old CBD New CBD Rest of Ørestad Greater (City) (Waterfront) Copenhagen Copenhagen
Nordic Outlook | Autumn 2019 21
Focus Living
The profile and living preferences of an average European household are shifting, which is changing the patterns of demand inside the European residential markets — and creating attractive opportunities for investors and developers across the continent’s urban agglomerations. FocusLiving
Definition In its simplest form, the term Living captures the residential real estate sector from individual’s viewpoint. It includes the different options for accommodation through one’s life cycle, from student housing to traditional residential offering to healthcare, as well as retirement living and co-living offering. The broader meaning of the term Living does not stop here, however, as the choices one makes in accommodation are an inseparable part of broader spectrum of lifestyle choices. For this reason, to understand the future of residential sector and its changing demand patterns, one must also understand the trends in Living in a broader sense.
Today, investors are drawn to the residential market by opportunities related to overall sluggish supply response to changing patterns in housing demand, which again are a re- sult of changing urban demographics and changing lifestyle choices. Other key attractions in the residential market are the stable income stream that investments in the sector can provide, and the low return correlation with other real estate sectors, providing attractive diversification options. Some barriers for investment, however, exist – the top two being lack of suitable product available and low income yields. What comes to European Living in general, however, investor confidence is as strong as ever. While at 69 billion euros 2018 investment volumes for Living are still significantly below offices volumes, residential is likely to overtake retail as the second largest sector in 2019.
Key Drivers With ever-growing globalization affecting societies already for decades, the key drivers of changes in Living are also becoming increasingly international. These drivers include the increasing urbanization, ageing of population, diminishing size of an average urban house- hold and increasing mobility for educational and working opportunities.
While a decade ago the share of urban population was 72.7 percent, today around 74.7 percent of Europeans live in cities. In ten years, the share is expected to rise to 77.2 percent. While the pace of urbanization in Europe slowed down in 1980s, after the millennium the trend has been slightly accelerating, and according to UN’s forecast in World Urbanization Prospects: The 2018 Revision the slight acceleration will continue in the coming years. According to a study by JLL, in nine of Europe’s largest urban agglomerations the popula- tion will grow by over 10 percent during the next decade.
The demographics of cities is also changing, aging being the most obvious of the current trends. Due to improved healthcare people are reaching older ages, and combined with a decreasing birth-rate, the age structure is top-heavy in many nations in Europe. As the nations get older and the average age of their populations shift, the average household’s life-cycle related living preferences will also shift. This will affect the channeling of demand towards different sectors of living, as well as preferred living locations inside the urban structure.
While the urban population of Europe has grown fast, the number of distinct households has grown in an even faster pace. This means that the average household size has de-
24 Nordic Outlook | Autumn 2019
Nordic Outlook
| Autumn 2019 to themarket. volumes, since investor demandwillbeconstrained byalackofsuitable product coming ing years, however, most markets are predicted to seeslowingdown growth ininvestment demand for theseproducts isexpected to grow significantly intheshort term. Inthe com- As long-term demographics supportthefurther ofthesesub-sectors, the development dential sub-sectors like student housing,retirement/elderly housingorco-living. (serviced) current investmentallocations, butover75percent ofinvestors havealsoinvested inresi- far surpassed theanticipated activity. Multifamily isstillthemostpopularsector based on ferent riskprofiles. Allinall, total ofinvestmentonEuropean levels residential sector have These trends haveincreased thevariety ofalternative investmentopportunities withdif increased demandfor dense,mixed-use neighborhoods. to publictransport andhavegood access to local amenities–whichinmanycases mean structure, smallerhouseholdsare likely to want to liveinlocations thatare wellconnected Andwhatcomes developments. more to ononeand two-bedroom unitsinnew theurban to fall from current 2.25to 2.19overthenextdecade. For thismeans developers, focusing time, andpartially because oftheageing, average householdsizes incitiesare projected portunities from livingconcepts serviced andretirement livingto healthcare. At thesame million inEurope overall andby5.2millioninmajorcities.Thiswillcreate investmentop On theotherhand,innextdecade thepopulationaged 65andoverwillgrow by20 of buying. ity pressures andlifestyle choices, meaning thatmore peopleare choosingto rent instead For youngpeoplehomeownership isalsobecoming lessdesirable bothdueto affordabil- will increase. Thiswilllikely create ahigherdemandfor co-living andmultifamily products. to meaning current levels, thattheabsolute numbers ofyoungpopulationinbigger cities in Europe willbeunder 30in2030,meaning onlyadrop ofonepercentage pointcompared remain relatively youthful dueto continuing urbanization. Aboutthird ofurban population Despite ofthegeneral ageing ofpopulations,larger European citiesare projected to returns. the Livingmarket create appealing opportunities andpositiveexpectations for investment coupled withinadequate supply. From investors’ pointofview, thekeydrivers changing As Europe’s citiesare growing, manyofthemare facing tightening demandfor housing European overview co-living concepts. Europe –creating market wholenew volumesfor student housingandaffordable serviced and more education international, students thenumberof tertiary isincreasing across living are alsoincreasingly important. Additionally, ashighereducation becomes more options, however, for younger generations easy mobilityandflexibilityenabledbyserviced ishing householdsize together withtheageing hasincreased demandfor living serviced increased divorce rates andanincrease inold-age single-person households.Thedimin- areThe drivers lifestyle behindthisdevelopment changes, delayedfamily formation, creased, andsingle-person householdsare more common inallage groups. thanever - - 25 Focus Living 26 Focus Living investors are expected to remain reluctant. on thefuture rules,includingrulesregulating minimumapartment projects, sizes innew tion regarding rent assessmentrulesinhousingproperties. Untilthere ispolitical certainty investor concerns supply, ofnew anduncertainty overthehighlevel aboutfuture legisla- investor restraint maybeascribedto acombination ofthe sellers’ highprice expectations, InCopenhagenacross thedeclinewas Denmark. 25percent inthesameperiod.The The transaction volumefor residential properties fell 30percent from H12018to H12019 Denmark interesting, andlarger portfolios are beingbuiltbythelikes ofFredensborg andSelvaag. During thelastthree years, however, professional investors havefound themarket more the incentives to ownyourhome,has kept thelandlord situation good, butnotgreat. havemostlyseengrowth inbigger closetolevels cities.This,combined theCPI,even with mostly unregulated and has been dominated by small owners with one to ten units and rent percent unitconstruction ofnew for asawhole.The residential Norway leasing market is close to, the5-10biggest citiesandtowns, althoughsingle-family homesstillmake up23-25 healthy construction apartment demand.Mostnew thushappensasnew buildingsin,or the bigcities,especiallyOslo, residential havezoned landplotswhichattract alotofnew a industrial sites being changed residential to areas. new Also, somemunicipalities bordering homeshasvaried,ply ofnew butthelarger citieslike Oslohaveafair supplyofpreviously and upto 85percent ofcitizens owntheirhome,whichisusuallylightlytaxed. Thesup The residential market goal isshapedbyalong-timepolicy inNorway of homeownership, Norway Turku andJyväskylä. non-subsidized apartments ingrowing cities:first and Greaterforemost, Helsinki, Tampere, arerent expected levels to decrease construction in allcities.New isconcentrated onsmall apartments to inbigcitiesare keep believed increasing, whilefor larger apartments the with growing urban population.Asaverage householdsizes decrease, therents for small withering. EspeciallyinHelsinkiandthesurroundings thehousingsupplycannot keep up for housingdue to continuing urbanization, andsmallercitiesare whilecountryside has generally beenincreasing inrecent years. Thebigger citiesface increasing demand The share ofresidential properties intheFinnishprofessional property investmentmarket Finland likelytion subsidiesare however to increase thebuild-to-rent outputinthemediumterm. weakening off-plan salesmarket inthe “Reintroduced”condominium segment. construc period lastyear. Constructionrates onthecontrary are falling, primarilybecause ofthe properties exhibited aslightincrease duringH12019compared withthecorresponding interest from international (non-Nordic) investors. Thetransaction volumefor residential Nordic countries, butinrecent years there hasbeenanoticeable shift towards agrowing national market participants. Mostcross-border originated activityhaspreviously from other of themostliquidasset classesinthemarket withawidegroup ofbothdomestic andinter to cautiously grow inpopularity. Theresidential asset classisandhashistorically beenone the greatest demandfrom investors, whilesub-sectors suchasstudent housingcontinues traditional multifamily properties andaged care facilities belongto thegroup ofassets with for stable, inflation-linked income, with good potential for asset value appreciation. Both categories coupled withagrowing andageing populationprovides favorable conditions for safe andsteady cash flows.Theexplicitdemand-supplyimbalance across allLiving driven primarilybystrong macro fundamentals andaconsistent institutional demand The Swedishresidential investmentmarket hasperformed welloveralongperiodoftime, Sweden Nordic overview Nordic Outlook - - -
| Autumn 2019 Percentage population residing in urban areas
90 %
80 %
70 %
60 %
50 %
40 %
30 %
20 %
10 % 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
EU (28) Northern America Oceania Europe Latin America Asia Africa Source: UN World Urbanization Prospects 2018 Average household size in Nordic countries
2,4
2,3
2,2
2,1
2,0
1,9 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Denmark Finland Norway Sweden
Population aged over 64 in Nordic countries
28 % 26 % 24 % 22 % 20 % 18 % 16 % 14 % 12 % 10 % 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Denmark Finland Norway Sweden Source: Oxford Economics 2019
Percentage of population residing in urban areas, Nordic countries
93 % 90 % 88 % 85 % 83 % 80 % 78 % 75 % 73 % 70 % 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 2033 2036 2040
Denmark Finland Norway Sweden Source: Oxford Economics 2019
Nordic Outlook | Autumn 2019 27 Retail Market Sweden
Changing consumer behaviour and growing e-commerce is altering the very foundation of brick and mortar retail. While consumption and consumer demand are still strong, the retail market is a very polarized landscape with a lot of underlying turbulence.
Rental Market Investment Market Retailers are seeking for physical retail space that meets up Having been categorically shied away from, investors to their requirements in every aspect and the demand for are now starting to look more granularly at the segment A-locations are increasing. The appetite for new retail space and seek opportunities in this fragmented and polarized is generally limited to only the very best available locations market. For prime assets in A-locations demand has not in each category. This has led to increasing polarization, been the issue, but rather the lack of supply in the market. where the difference in demand between AA locations and Grocery anchored retail assets in larger cities are also high secondary locations is growing. Stockholm keeps a high in demand, regarded as a safer haven than other categories attractiveness for flagship store among international retailers of retail. High street retail also sticks out as the ever-green but the willingness for A-locations combined with key money choice in turbulent times like these, but the category is far due to low vacancies are becoming difficult to motivate too consolidated in Sweden to generate any major activity. when comparing with other European cities like Berlin or Co- When compared to the previous six months, investment penhagen. There are still virtually no vacancies in high street activity slowed down during H1 2019 and ended up with prime locations or the most dominant regional Shopping a total transaction volume of SEK 6.9 billion, a 51 percent Centres, while supply in less attractive locations is growing. decrease. It should be noted that large volumes and several Landlords face increasing competition for good brands and prime assets have been on the market during the period, not retailers when vacancies arise as there is an oversupply in generating offers acceptable to the sellers. The pricing gap many areas. Prime rent levels have remained stable for some between sellers and potential byers has a dampening effect time now, indicating the lack of upward pressure. In external on transaction activity, as the buyers are reluctant to assume Shopping Centres and Retail Warehouse locations we see a any further yield compression and furthermore takes a highly strong downward pressure on rents and expect prime levels conservative approach in underwriting rents. The Shopping to start declining in the short term. Centre segment stands out in this regard, which we expect will have a negative effect on yields in the category during the forthcoming period. We do expect to see a slight increase in demand for the segment going forward, however the long-term sustainability of every asset is carefully evaluated by the byer side why sellers are struggling motivating pricing based on market evidence dated from when things were very different in the retail segment.
Trends and Market Outlook
• Retailers focusing to rationalise store portfolios, with healthy demand for the best and dominant locations. • Physical retail space in the right location is still recognized as holding value. Whether it is to drive online sales, offer better customer services, collect customer data, reduce costs of last-mile delivery or drive additional sales with higher margin products, services, or experiences. • E-commerce is only one of many factors influencing the performance of retailers and rent. Economic fundamentals, rise of millennials, aging population, changing shopping preferences and over-established or outdated retail concepts are also Retailfactors to be calculated with in the changing retail landscape. • Retailers are becoming more proactive studying how to optimise financial performance and margins through improved supply chain, automation, data and analytics. • Following a time of trepidation from the investor community, we expect to see a positive shift in investor sentiment towards retail in the coming 6 – 12 months.
28 Nordic Outlook | Autumn 2019 Retail market revenue growth 1998-2020 (%)
%
% %
% % %
% % %
% % % % % % %
% % % % % % % % % % % % % % %
%
%
ro t ore a t Source: HUI Research, december 2018
Representative retail investment transactions H1 2019
680 (mSEK) 708 (mSEK) 167 (mSEK) Area: 36,600 sq m Area: 50,300 sq m Area: 11,800 sq m Yield: n/a Yield: n/a Yield: 6.5 -7 % est. Property: Handelsområdet Ingelsta Property: Boländerna 28:3, 28:4, Property: Hemlingby 71:4 & 52:13 Location: Norrköping 35:1 & 35:2 Location: Gävle Purchaser: Deka Immobilien Location: Uppsala Purchaser: Tvättbjörnen Fastigheter Vendor: Aberdeen Standard Purchaser: Svenska Vendor: Estea Investment Handelsfastigheter Vendor: Castellum
Retail Total investment 2019 H1 3.8 3.2 7.0 Total volume 2018 H1 1.8 4.0 (bnSEK) 5.8 Domestic Cross-border
Retail Properties H1 2019 Short-term forecast
Retail warehouse External shopping Unit shop Unit shop Unit shop Stockholm centre Sweden Stockholm Gothenburg Malmö
Prime rent (SEK/m2) 1,950 10,500 23,500 11,000 5,500
Prime yield 5.25% 4.50% 3.50% 4.00% 4.25%
Nordic Outlook | Autumn 2019 29 30 Retail Market Finland to avulnerable position. a key factor in adapting to new market conditions and failing to do may so put operators (HMA) is getting denser, competition for customers is tightening. development Active is grip onits the market and the shopping centre in network Helsinki metropolitan area The growth of the Finnish retail market to has slow started down. online As is strengthening • • • • • Trends andMarket Outlook Additionally, suitable spaces for global high-endretailers are especially fashion retailers are cautious aboutexpanding. retailers critical whenitcomes to rents andlease times,and locations stays active,uncertainty inthemarket ismaking with thecost oftemporary vacancy. Whiletake-up inprimary Inprimelocations, rentsnant. stay highandstable, even The rental growth ofretail unitscontinues to remain stag- the centres, are required to avoidnegative effects. opments, suchaschanges intenant mixandtheconcept of demand, competition inHMAisgetting harder- andredevel growing supply of shoppingcentres isstarting to bypass the outlet village inHMA,isalsoset to openinOctober. Asthe F&B and/or entertainment thefirst selection.HelsinkiOutlet, Seinäjoki inWestern Finland, are characterized bystrong Helsinki andAinoa expansion inEspoo, butalsoIdeapark this fall: bothmajoropeningsinHMA,MallofTripla inPasila, can alsobeseen intheupcoming shoppingcentre openings on whichonlinesaleshaveasmallerinfluence. Thistrend fashion, andtowards F&B,entertainment andotherservices are shiftingtheir focus away from traditional retail suchas more retail categories, traditional shoppingdestinations 2019. Withtheincreased coverage ofonlineovermore and Finnish Commerce Federation estimates 8 Online retail continues to strengthen, andforecasts bythe come downfrom lastyear. tious, andbothretail andconsumer confidence indices have uncertainty intheeconomy hasmadethepublicmore cau- 1.4-1.5 the retail market inFinlandisestimated revenue to grow According to FinnishCommerce Federation’s forecast, Rental Market F&B and service spaceF&B andservice allocation willbeincreasing across theline. Fashion space allocation willbedecreasing across theline. In thecompetitive locations market, secondary are andmaybeforced hithardest, usecases to outsideretail. seeknew tenant mix. Changing consumer habits andpressure from competition are forcing shoppingcentres to theirconcept redevelop and Online isaffecting traditional retail more, andincreasing even itscoverage categories, overnew suchasgroceries.
Retail percent in2019and1 percent in2020.Theincreased percent growth in shops contracted by 10basis points. remained unchanged from 2018,whereas primeyieldfor unit are unchanged from late 2018.Theyieldfor shoppingcentres The yieldsmaycurrently beseeking equilibriumastheyields reflecting the market polarisationwithin retail properties. are currently at4.75 The yieldsfor primeshopping centres andretail unitshops behind, demonstrating thedemandfor bestretail premises. The primerents inHelsinki leave theotherNordic capitals among themajorretail transactions ofH12019. high street property Lasipalatsi inHelsinkiCBDhavebeen deals, thesalesofDixishoppingcentre andthelandmark tertainment centre. Inadditionto theJumboandFlamingo share ofwhatnow istheNordics’ largest shoppinganden- Once finalised,thepension companies will each holda50 Centre, ina€600 milliontransaction merging thetwocentres. the ownerofneighbouringFlamingo Entertainment joined forces withfellow pensioninsurance company Varma, co-Westfield’s share ofJumboShoppingCentre andthen Company Elofirst acquired its Unibail-Rodamco-owner - others are makingboldmoves–theFinnishMutual Insurance nities. Whilesomeinvestors hold a“wait andsee” approach, resilient andthusmore appealing retail investmentopportu- tres, grocerystores andlocal centres are stillseenasmore HMA continue to create uncertainty regarding shoppingcen- While theriseofonlineretail andincreasing competition in Investment Market tenants maybehardnew to find. with increased vacancies asunprofitable retailers exitand and attractive tenants. locations Secondary are struggling short insupply, whichlimitsthepotential supplyofsolvent percent and3.50 Nordic Outlook percent respectively,
| Autumn 2019 % % Retail market revenue growth 1998 -2020 (%)
% % % % % % % % % % % % % % % % % % % % % % % % % % %
% % % % %
ro t ore a t Sources: 1995-2018: Statistic Finland 2019-2020: Forecast by Finnish Commerce Federation
HMA Shopping centre completions and pipeline 2019 -2023
rea e (t ou a )
Sources: 2011-2016: Finnish Council of Shopping Centers 2017-2021: JLL
Retailer and consumer confidence indexes Finland 2009-2019
eta er o e e o u er o e e Source: Eurostat 2019
Nordic Outlook | Autumn 2019 31 32 sectors duringsectors the first six months of the year. and foreign capital has pushed the industrial and logistics ahead sector of the remaining ongoing rental growth continues in the market. Strong investor appetite from both local logistics distribution facilities. Combined with low vacancy rates and limited supply, Occupier has healthy been activity during H1 2019, with increasing demand for modern Logistics Sweden • • • • • Trends andMarket Outlook overall upward trend for thesubsegment isclear. y-on-y, butthisshouldbeconsidered coincidental asthe of thetake upvolumeinH1.Notably e-commerce decreased Retail, distributionandfood took represented themajority remain strong throughout 2019. or repositioned units,andthishighdemandisexpected to supply, occupiers are increasingly ready to moveinto older ofover5percent. Asdemandcontinueslevels to exceed than 20percent, leading to anincrease inheadline rental past twoyears, take-up exceeded constructions new bymore limited supply, hasputupward pressure onrents. Overthe which, combined withcontinued lowvacancy rates and Occupier demandhasalsoremained healthy duringH1 completed during2019. largest represent closeto 90percent ofthevolumebeing nated sector-specialized byafew andthefive developers, Borås, Stockholm, andSkåne. Themarket islargely domi- completed, where themajorityislocated inGothenburg/ logisticsspaceDuring 2019350,000sqmofnewbuilt willbe ties israpidly expanding. Europe, thedemandfor modernlogisticsdistribution facili- reached €7.5billionin2018.Aswithothercountries across to 8.7percent in2017.Total retail salesare expected to have goods. E-commerce salesincreased from 3percent in2007 pushing theneedsoffast andflexible ways ofdistributing there iscontinued growth inretail salesconducted online, cent ofSweden’s populationhaveaccess to internet and other factors, theglobal trend inretail spending.94per The elevated interest inthesector issupported by, amongst Rental market Activity ontheinvestmentmarket willbehighduringthecoming 6to 12months. All timehighinvestor appetite from international capital. Logistics portfolios currently trading atportfolio premium. buildvolumesinwell-establishedSolid new locations. Strong fundamentals drivingoccupier demand. Logistics - during thecoming 6to 12months. and domestic.Activityontheinvestmentmarket willbehigh lot ofcapital willingto investinthesector, bothinternational appetite showsnosignsofweakening. There are currently a largest inSwedenacross allsegments. Thestrong investor and logisticsinvestmentduringtheperiod,butalso behavior. Thetransaction was notonlythelargest industrial Group inJunefor SEK4.2billionisaperfect example ofthis a 30-assets portfolio from Swedishlisted Corem Property which fivewere portfolios. American giantBlackstone buying transactions overSEK1billionwas noted duringH12019,of strategy perfectly. Intheindustrialandlogisticssector, six tunities witheconomies ofscale andtheseportfolios fitthis managers withamplecapital to investare lookingfor oppor Also,logistics andindustrialsegment. international fund seek opportunities to quicklyincrease theirexposure to the lios are currently trading withpremium, asmostinvestors potential ofthe shift ofglobal retail flows. Logisticsportfo deals withinternational capital, wanting to tap into the The base ofthehighvolumecomprised oflarge portfolio in Swedennowstand at4.75percent. international capital. Primelogisticsyieldsinthekey markets attracting investmentfrom adiverse range ofdomesticand logistics markets inEurope interms oftransaction volumes, long-term average. Swedenhashistorically beeninthetop 5 ment transaction volumeduringH1,afigure wellabovethe sector accounted for 26percent ofthetotal Swedishinvest strong. Overall,tinues to bevery theindustrialandlogistics Investor interest intheindustrialandlogisticssegment con- Investment market Nordic Outlook
| Autumn 2019 - - - Representative logistics investment transactions H1 2019
3,800 (mSEK) 4,000 (mSEK) 240 (mSEK) Area: 295,000 sq m Area: 420,000 sq m Area: 30,000 sq m Yield: 4.65 % Yield: 5 % est. Yield: n/a Property: Ostium (portfolio) Property: I&L portfolio Property: Väla Södra Cross dock Location: Various (incl. Sörred 7:20) Location: Helsingborg Purchaser: Prologis Location: Various Purchaser: Skanska Vendor: Bockasjö & Alecta Purchaser: CBRE GI & Allianz Vendor: Logicenters Vendor: NRP & Söderport
Total Transaction 2019 H1 11.6 volume Total 2018 H1 (bnSEK) 1.3
Logistics Properties H1 2019 Short-term forecast
Stockholm Gotherburg Jönköping Skåne
Prime rent (SEK/m2) 900 725 480 630
Prime yield 4.75% 4.75% 5.00% 5.00%
Development, pipeline 2019 -2020 Total Est. Completions (Thousands sq m)
2019 2020 146,8 108,4 75,0 72,5 63,6 38,5 36,0 37,0 27,0
Jönköping Kronoberg Skåne Stockholm Söder- Västra manland Götaland
Nordic Outlook | Autumn 2019 33 34 the construction activity hasthe construction returned activity to more moderate levels. After an unforeseen amount of logistics completions in the previous year-half, however, positive trend, embodied by keen investor interest and tightened further prime yields. In the first half of 2019, theFinnish logistics market has followed the alreadyfamiliar Logistics Finland • • • • Trends andMarket Outlook developers refrainingdevelopers from starting speculativeprojects. average of2016-2018,continuing thelonger-term trend of complete during2019-2020remains smallcompared to the of 40,600sqmcurrently under construction andexpected to nal phaseof10,000sqmbeingcompleted. Thetotal pipeline expansion ofKesko’s central warehouse inVantaa withthefi- spacewith 20,000sqmofnew andthethird largest was the largest project was Masku’s logisticscentre new inMäntsälä space.sq mofmulti-purposelogisticsservice The second Transval’s centre industrialservices inHyvinkää with45,000 built-to-suit solutions.Thelargest completion inH12019was sq mofcompleted space. Allthecompleted schemeswere the three-year average ofc.99,600sqmwithatotal 90,300 were more moderate and reached avolumeslightlybelow three-year average perhalf-year. Thecompletions inH12019 m ofcompletions intotal exceeding more than2.5timesthe Region andtherest ofFinland,withtherecorded 272,000sq amount oflogisticsspace completions inboththeHelsinki The second halfof2018sawanunforeseen spike inthe to form akey driver. decisions theeffectiveness ofdistributionnetwork continues experience diminishingrates ofinterest. Intenants’ location Meanwhile, theareas east ofTuusula motorway continue to and Hämeenlinnamotorways andalongRingRoad III. Region hasnarrowed andliesnowlargely between Tuusula ants. Thelocations gaining tenants’ attraction intheHelsinki shortening lease terms withbreak optionsfavoured byten- ing stable. Thetrend inlease agreements isstilltowards net rents at€8.0/sqm/monthandoccupier interest remain- rental haveremained largely levels unchanged withprime um-sized (1,000to 3,000sqm)andhigh spaces. Despite this, on logisticspremises continues to focus onmodern,medi- stayed atstatus quoin thefirst halfof2019.Strong demand From theoccupier pointofview, themarket haslargely Rental Market substantially. Together withgrowing e-commerce, changes inlastmiledeliveries holdpotential to alter theprevailing market dynamics motorways. Most oftheoccupier demandcontinues to focus onmodern,medium-sized and high logisticsspaces alongmajor solutions. In thecurrent completions market andnew situation, are there mostlybuilt-to-suit isnospeculativedevelopment, Logisticsavailable for purchase. strong investorDespite interest, transaction very volumesremain moderate dueto alackofprimequalitylogisticspremises of Oslo. currently atpar withStockholm and25basis pointsahead Nordic capitals (175basis points).TheHelsinkiprimeyieldis market hasseenthefastest yieldcompression ofallthe H1 2019.Since thebeginning of2016,theHelsinkilogistics prime yieldbelow5.00 ing demandfor prime logistics properties haspushedthe significant dealsever-increas closedduringH12019.The m Onninenlogisticscentre inHyvinkää isoneofthemost suitable properties for sale.Thesaleoftheover40,000sq translated fully into transaction volumesdueto alackof The strong investor demandfor logisticsproperties hasnot maturities combined withhigheryields. market, findlogisticsappealing astheproperties offer longer actively lookingto enter theFinnishreal estate investment most indemand.EspeciallyKorean investors, whoare very with suitable locations andsufficientvolumesare theones other logisticsproperties. Modern,pure logisticsproperties er, aclear distinctionbetween attractive primelogisticsand support thedemandfor logisticsproperties.- There ishowev retail andtheglobal capital flowsallocated into real estate and international investors. Theenduringsuccess ofonline Prime logisticsproperties continue to attract bothdomestic Investment Market percent to 4.75 Nordic Outlook percent attheendof
| Autumn 2019 - Representative logistics projects completed during H1 2019
45,000 sq m 20,000 sq m 10,000 sq m Total area scheme: 45,000 sq m Total area scheme: 20,000 sq m Total area scheme: 20,000 sq m Property: Transval industrial Property: Masku logistics centre Property: Kesko warehouse service centre Location: Järvenpää, Poikkitie expansion (2nd phase) Location: Hyvinkää, Sahanmäki business area Location: Vantaa, Hakkila Usage type: Multi purpose Usage type: Logistics terminal Usage type: Warehouse logistics centre & warehouse Occupier: Kesko Transval & customers Occupier: Occupier: Masku
Logistics completions and future pipeline in the Helsinki region
S ( )
o et o ore a t
Completions 2016-2018 (596,000 sq m) Forecasted 2019-2021 (165,300 sq m)
14,900 10,000
o et o ore a te o e t o ore a te
220,800 58,800
360,300 96,500
e eg o (e ) e t o a e eg o e (e eg o ) (e e t ) o a e t o a e eg o (e ) e t o a
Nordic Outlook | Autumn 2019 35 36 with 26 percent of the total volume. logistics portfolios sold to international buyers. This segment dominated during the H1, several large portfolios trading low at yields. very biggest The were two industrial and Investment volume H1 2019 was one of the strongest in the past five years, a result of Investment Market Sweden • • • • • Trends andMarket Outlook increase inthecoming 6-12months. not gained traction inSweden,althoughweexpectactivityto gained interest inthepast years few inEurope butsofar has last year. Alternative sectors suchasstudent housinghas major sectors are largely bottomed out for most sectors since ment volumeto reach SEK170-180billion.Yieldsonthe H1 atSEK85.4billion,JLLexpectsthefull year 2019invest the mostliquidglobally. Basedonthestrong performance in Nordics remains stable andthemarket isconsidered oneof consecutively for several years. Interest inSwedenandthe International capital hasincreased itspresence inSweden stream investors inthecoming years? Mostcertainly not. will retail property continue to bea“nogo zone” ofmain- the uncertainty caused byshiftsincustomer behavior. But ing yieldsanddecreasing investmentvolumesbecause of value. Theretail segment continues to struggle,withincreas and Liliumisagood example ofbothparties getting more property value inadirect sale.Thetrade between Castellum and manycompanies are notwillingto decrease theirtotal buyers thansellers onthemarket for mostproperty types, Linköping to Castellum for SEK2billion.There are stillmore leaving thecity. At thesametime,Liliumsoldsixproperties in properties in Sundsvall to Lilium for SEK 3.3 billion, effectively largest transaction inthesegment was Castellum selling20 offices, with25percent ofthe total transaction volume.The The second largest segment duringthefirst halfof2019 was Capital Market Real estate companies nowtrading onaverage atahigh15percent premium to EPRA NAV. OMX Real Estate Indexcontinues to outperform OMXS30 Index. Investing ontheretailKeep aneye segment. Industrial andlogisticswas thebiggest sector H12019,closelyfollowed byoffice. Strong H12019withaninvestmentvolumeofSEK85billion. - - any yieldcompression ofsize going forward. pared to thoughoneshouldnotexpect itsalternatives, even Real estate investmentsstillprovide attractive returns com- EPRA NAV, compared to 4percent asofthebeginning of2019. average trading ata15 percent premium to theirreported performance. AsoftheendAugust 2019,thesector was on values (EPRA NAV), appreciating values havereinforced their real estate shares tend to trade inproximity to theirnet asset important contributor for theincreased net asset values. As pression hasstarted to slowdown,risingrents havebeenan majority of property companies during H1 2019. As yield com- Net asset values havesteadily beenappreciating for thevast Net asset values rates inSweden. supported bystable earnings andthecontinued lowinterest outperformed thebroader OMXS30 byatotal of28.6percent, volatile. OMXReal Estate indexGIhasduringthesameperiod od H22018andH12019thestock market hasbeenrelatively relatively volatileduringthesecond quarter. Duringtheperi- quarter 2019theOMXS30 indexincreased again buthasbeen quantitative easing programs coming to anend.Duringfirst approaching inUS more andcentral normallevels banks’ Major reasons were US andChinesetrade wars, interest rates a majorhitandSwedishstock indices were noexception. of 2018andthebeginning of2019,global stock markets took formed wellinrecent years. However, duringthelastquarter Both theSwedisheconomy andthestock market haveper Stock market development Nordic Outlook
| Autumn 2019 - Stock exchange development 1 year
40 %
30 %
20 %
10 %
0 %
-10 %
-20 % Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19Jun-19
OMXS real Estate GI OMXS 30
Net asset premium/Net asset discount
100 %
80 %
60 %
40 %
20 %
-28 % -13 % -9% -7% -2% -1% 0 % 1 %2 %4 %4 %75 % %19% 11%11% 13% 15% 5% 16%216% 0% 23 %24 %24 %28% 45 %78 %99 %
-20 %
- 40 %
- 60 % SB B NP3 Diös Heb a Saga x Balder Corem Nyfos a Platzer Catena Fabege Pandox Klöver n Brinov a Trianon Hembla Eastnine Amasten Hemfos a Wihlborgs Castellu m Fastparner Stendörren Kungsleden Wallensta m Hufvudstaden Maxfastigheter Atrium Ljungberg
Transaction volume per segment
S
Office Retail Industrial/logistics Mixed-use Residential Hotel Other (land & development incl.)
Nordic Outlook | Autumn 2019 37 38 total volume during H1 2019, which is considerably higher than in the other Nordic countries. transactions with at least one foreign counterparty amounted to almost percent 80 of the which has contributed to the tightening of yields across differentsegments. The share of as well as local active investors. Domestic players have bidding started more aggressively, Transaction in H1 activity 2019 remained high, spurred by increasing international interest Investment market Finland • • • • Trends andMarket Outlook across FinlandbyeQto theSwedishlisted company SBBfor Major transactions includedthesaleof48 care properties and especiallySwedishinvestors haveshownstrong interest. healthcare properties hasbeensubstantial duringH12019 547 apartments byLocalTapiola to OP. Investor appetite for sion insurance company Elofor €248.6millionandthesaleof 34% stake intheJumboshoppingcentre to themutual pen- Sweco HQto GLL,Unibail-Rodamco-Westfield’s saleofits a CBDbuildingto Blackrock aswellSponda’s saleofthe tions duringthefirst half of2019includeOPGroup’s saleof been closedduringthefirst half of2019.Notable transac Also anumberofsignificant residential transactions have followed byretail withatransaction volumeof€663million. of 2019withatotal transaction volumeof€915million, Offices were themosttraded property typeinthefirst half momentum across segments. years. Looking ahead, themarket continues to showgrowth acquired byinternational investors asseenin theprevious where alltheshares ofpubliclisted companies havebeen explained through the absence ofsimilarlymassivedeals reach therecord-breaking of2017and2018.Thisis levels anticipated thatthefull-year investmentvolumedoesn’t volume amountingto €2.3 billionduringH12019,itcan be sentiment remains high. However, withthetotal transaction Finnish real estate investmentmarket asthegeneral market 2019 isontrack to become yet anotherstrong year for the billion (€2.3includingresidential transactions). The total transaction volumeinH12019amounted to €2.1 yearsin previous anddeal volumeswere onaverage smaller. H1 2018asthere were noexceptionally large transactions as ties for sale.Thetotal transaction volumewas lowerthanin fundamentals andgood availability ofhigh-qualityproper continued international interest, dueto thesolideconomic H1 2019was marked byhightransaction activityand Highest demandfor primeoffice andlogistics properties, especially amonginternational investors looking to enter themarket. properties insearch ofhigherreturns. As yieldsfor primeassets havedecreased to record manyinvestors lowlevels, haveturned theirinterest to Core+ andValue Add Almost 80percent oftheoverall transaction volumeinH12019comprised cross-border transactions. Strong economic fundamentals andtheavailability ofhigh-qualityproperties for salecontinue to attract international investors. Office yieldscontinued to decrease from record-low due to highcontinued levels investor interest. Investing - - ments aninteresting alternative to direct investments. combined withtheall-time lowyields,make indirect invest centre market, trades currently belowNAV. Thesediscounts, other hand, Citycon, a major player in the retail and shopping estate investor trade currently for apremium to NAV. Onthe healthcare properties, andKojamo, thelargest Finnishreal further, SuomenHoivatilat, aninvestor concentrating on tor, currently trades for aremarkable discount to NAV. Going a Finnishlisted company specialisingintheresidential sec to trade atadiscount to net asset value. For example Ovaro, The majorityoflisted Finnish real estate companies continue occupier market andcontinued lowinterest rate environment. to continued highinternational interest,awellperforming prime yieldsare expected to mainlydue remain atalowlevel orslightlydecreasingremaining atthe samelevel inretail. The crease inmostsegments, includingoffices andlogisticswhilst continued bytheendof2018,they tolowest possiblelevel de Even against speculationsthatprimeyieldshadreached their healthcare homeportfolio from theCityofTurku. sinki Metropolitan Area, withHemsöacquiring a€130million already begun expanding theiroperations theHel- beyond target theHelsinki region. Somecross-border investors have locations whereas international investors tend to primarily properties to smalleracquisitions insecond andthird tier remained activeinallsectors ranging from HMAoffice at least oneforeign counterparty. Domesticinvestors have more aggressively. Nonetheless, mostofthedeals featured market, andinparticular local players havestarted bidding Both local andinternational investors havebeenactiveinthe can beexpected to continue inthelatter halfoftheyear. throughout different segments andthepositivemomentum €142 million.Thefirst halfof2019hasshown robust activity Nordic Outlook
| Autumn 2019 - - - Prime yields in Helsinki
8.0
7.5
7.0
6.5
6.0
5.5
5.0 Prime yield (%)
4.5
4.0
3.5
3.0 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2
Office Warehouse & Logistics Retail Warehouse Park Shopping Center Unit Shops
Source: JLL 2019/01
Transaction volume per segment
12,000
10,000
8,000
6,000 mEU R
4,000
2,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Office Retail Industrial Other* Residential**
* Includes JLL categories: Mixed-use, Hotel, Alternative and Healthcare ** Source of residential transactions: KTI.
Nordic Outlook | Autumn 2019 39 40 Interest andCredit Markets
of short-term market theappe borrowing. Nevertheless, banks appliedintheirlendingincreased theattractiveness interest rates belowzero inmid-2010’s. that Theasymmetry gained ground whiletheECBandRiksbank lowered their Short term borrowing usingthecommercial paper market FinancingCommercial paper he showmustgo on,right? ers andastrong riskappetite from investors. Itseemslike t fuelled bylowfinancing costs, good liquidityamongstlend- search real ofnew estate opportunities, andthemarket is positive trend. Capital keeps flowingaround theglobein At thesametime, thereal estate iscontinuing its industry appears increasingly chaotic. muz andinHongKong,theUK’s withdrawal from theEU basis, tensions remain heightened around theStrait ofHor The trade war between onaweekly US andChinaisevolving continue to cast darkshadowsovertheglobal economy. are becoming lesspositiveandvarious geopolitical issues producerinflation ghost, and consumer confidence surveys and thewestern hemisphere. Central banks are chasingthe phase where GDPgrowth isdeclininginalmostallofAsia last timewesawrecord lowinterest rates, we’re nowina Rates haveturned downagain, significantly. Contrary to the The show mustgo on approaching itsmid-2016all-timelow. both SwedenandEurope. isnow In the US, theswap curve We’re currently seeingalltimelowon10-year swap rates in negative, withdecliningglobal interest rates asaresult. The financialmarkets interpreted thesemessages as financial policy going forward. on growth andinflation, andtheimportance ofa cautious projections, but theRiksbank underlinedtheglobal risks in early July. Therepo rate was leftunchanged, aswere the ures. InSwedentheRiksbank delivered amessage ofcaution on thetable, asare further quantitative easing (QE)meas tion regarding future movements,butrate cutsare nowback a muchmore dovishandcareful tone intheircommunica- InEurope,their decent. MarioDraghi andtheECBhavetaken since thenUS swap rates andbondyieldshavecontinued first timeineightyears. This was priced inbythemarket, but US, theFederal lowered theirgoverning Reserve rate for the debt havedeclinedsignificantly duringthesummer. Inthe Interest rates onUS, Eurozone andSwedishgovernment interest rates wasn’t up, apparently. GDP growth declined.Itturned outthattheonlyway for towards higherinterest rates whilsttheoutlookfor global percent increase from Themarket theRiksbank. was aiming Federal Reserve’s expected interest rate hikes, andthe0.25 wewroteIn ourlastissueofNordic Outlook, aboutthe The onlyway wasn’t up, apparently… Interest rate market - - - markets advisory. investment agency to create acohesive, full-service capital the financialmarkets, streamlining withourmarket-leading and interest markets to giveourclientsthebestadvice on attract JLLiscontinuously monitoring investment. currency perspective, real estate performance andpricingwillstill though there isadisadvantage from afinancial markets’ estate investmentsare based onmanyfactors andeven EUR denominated investors entering theseregions. Real US andAsiaPacific. Despite this,we’re stillseeingsome an interest rate andcurrency perspective towards boththe European investors haveacomparative disadvantage from 4 percent willproduce hedged returns ofnearly 6percent. investinSweden,anassetequity exposure. yielding Ifthey investments overafive-year hedge horizon, their ifthey a pickupnorthof2percentage pointsonEURdenominated This means thataUSD denominated investor stillreceives rates between manycountries remains largely thesame. Interestunderwriting. rates havefallen across theglobe, but of investors lookatcross-currency hedgingeffects intheir of cross-border hedging andhowanincreasing number In ourlastNordic Outlook weemphasized theimportance Currency hedging their funding. yield segment thatmay haveproblems whenrefinancing estate bonds,there inthehigh willstillbesomedevelopers the market isshowinganinsatiableappetite for Swedishreal which 40percent were bondsdenominated inEUR.Evenif currencies amounted to approximately SEK67billionof the second quarter of2019thetotal issuedvolumeinall has reached record new onasemiannualbasis. levels By in spreads thetotal issuedvolumebyreal estate companies of 2019.Eventhoughthemarket witnessedaminorup-shift estate bondmarket asspreads drifted widerinthebeginning scale contraction alsohadanimpact ontheSwedishreal in Europe’s bondmarket towards theendof2018.Thislarge- through itsquantitative easing program provoked arepricing The withdrawal oftheEuropean Central Bank’s support Bond market commercial papers whenitrisesabovezero. opment asitmayhaveanegative impact ondemandfor for real estate companies to keep track ofSTIBOR’s- devel on athree-month term. Theconclusion isthatitnecessary Willhem are theonlyactors to issueanegative interest rate conditions, Hemsö, Specialfastigheter, Vasakronan and slightly duringthesecond quarter of2019.At current market rates, thetrend hasreversed astheissuedvolumeincreased Instead,moment. inthewake ofrecent declininginterest the past year andahalf, thatseems distant anevent atthe that themarket hasanticipated anincreasing STIBOR for since itspeak in2017.Therationale behindthisdeclineis tite for commercial paper hasbeeninadownward trend Nordic Outlook
| Autumn 2019 Swedish market rates
%
%
%
%
%
% aug aug aug aug aug aug aug aug aug S S a S S a St or
Volume commercial paper (bnSEK)1
e ar u e e ar u e e ar u e e ar u e e ar u e e ar u u u u u u u e e e e e e e e e e e ar ar ar ar ar ar
1) I n c l u d e d c o m p a n i e s ; Listed companies: Atrium Ljungberg, Balder, Castellum, Catena, Diös, Fabege, Fastpartner, Hemfosa, Hufvudstaden, Klövern, Kungsleden, Pandox, Platzer Sagax, SBB & Wallenstam Other: Akademiska hus, Hemsö, Jernhusen, Rikshem, Specialfastigheter, Vasakronan & Willhem
Real Estate corporate bond issuance 2009-2019 2
u e S u u u u u e ar e e ar e e ar e e ar e e ar e e ar
2) In all currencies.
Nordic Outlook | Autumn 2019 41 42 changing world. changing We are in business to create and deliver value for our clients in acomplex and constantly JLL is aworld leader in real powered estate services, by an entrepreneurial spirit. JLL services inSweden JLL services ofAgency Head Skalin, Erik clients. our for value added unlocks which presence, global and local toour due knowledge market in extensive our lies strength Our cost. rental cient effi at an environment occupational inspiring an through operations business specific support best that premises offinding process the during advisory We provide location. re or establishment during issues estate real strategic their with corporates helps Tenant JLL Representation decisions. strategic tobase which upon knowledge detailed accurate, provide we segments, retail and &logistics, warehousing office, in the expertise specialist our With terms. leasing viable commercially for investments right make the them helps and premises vacant for tenants right the find owners property helps Leasing JLL tocorporates. representation tenant and advisory strategic and owners, to property advisory development and leasing offer we Agency At Agency Markets ofCapital Head Ericsson, Linus raising. equity or mergers&acquisitions tions, transac border cross transactions, local is it if regardless transactions your with succeed you tohelp network a global and representation local strong with base knowledge broad a has Markets Capital team. Advisory &Financial Debt the with team together Markets Capital our through financing and finance corporate services, advisory transaction within ofcompetence combination aunique is edge Our estate. real about passionate are team all ofwhom transaction We experienced an have market. estate real Nordic the in happen transactions makes and value team creates Markets Capital our advice, inventive and proactive Through Markets Capital SERVICES –OUR SWEDEN JLL www.jll.com orwww.jllsweden.se. Lang LaSalleIncorporated. For further information, visit JLL isthebrand name,andaregistered trademark, ofJones countries andaglobal workforce ofnearly 92.000employees. JLL isaFortune 500company withoperations inover80 our clients,peopleandcommunities. ambitions. Indoingso, wewillbuildabetter tomorrow for tunities andamazingspaces where their peoplecan achieve About us reimagine theworldofreal estate, creating rewarding oppor in real estate Ourvisionisto andinvestmentmanagement. JLL isaleading professional firmthatspecializes services - - - - Linus Ericsson, Head of Debt & Financial Advisory &Financial ofDebt Head Ericsson, Linus bonds. or papers ofcommercial form in the markets financial from funds raising as well as derivatives financing, mezzanine bank loans, conventional on advice of financial range afull toprovide us allows which in securities, to trade Authority Supervisory Financial Swedish the by authorized is Advisory Financial & Debt JLL efficiently. portfolios debt their to manage and investments their for solution financial able avail best the find clients tohelp goal aprimary with advice financial leading-edge offers Advisory &Financial Debt JLL Advisory &Financial Debt Services &Development ofProject Head Jensen, Miranda business. core ofour part integral is premises in existing changes implementing or ofrelocation process the through Guiding organisations management. change and interiors AV), and architecture/ (IT, security technology construction, in involved processes ofthe knowledge broad possess ers manag project experienced Our efficiently. implemented are they that and clients our for profitable are projects that ensure is to Our goal changes. office during services ment manage project and advisory strategic P&DSJLL offers (P&DS) Services &Development Project ofResearch Head Gunnarsson, Cecilia decision-making. toyour depth and knowledge will add we that sure be can –you premises retail or space office facility, –logistics type property the what matter No sets. data unique compiled have we years, 15 past the For levels. rental and volumes take-up rates, vacancy example, for on, data collect and trends market current measure and We monitor transactions. property to successful contributes and decisions strategic underpins that analysis relevant accurate, produces Research JLL Research Analysis ofValuation &Strategic Head Löfvenberg, Patrik buildings. apartment and premises toretail facilities tics industrial/logis and office from estate, real of commercial all types We appraise standards. international and national both with accordance in certified team is valuation Our dex. In Property IPD Global tothe reporting when or statements, financial and mortgages for transactions, property during input essential Valuation provides JLL selling. or buying is investor an –whether transaction property a successful for aprerequisite is value market estate ofreal Knowledge Valuation Nordic Outlook
| Autumn 2019
- - - - - JLL services in Finland
Capital Markets nization and the local team’s long experience that together Our Capital Markets team is the market leader in property form a winning combination of extensive knowledge of the transaction advice, delivering tailored solutions and pro- property market. During 2018 the team negotiated leases for viding strategic advice to clients looking to acquire or sell over 78,000 sq m of premises. properties or portfolios. We advise our clients in both sell and Katri Lehtonen, Head of Leasing buy side transactions across all property sectors, combining first-hand knowledge and comprehensive market data with Retail rigorous analysis to maximise value and deliver results. With experienced professionals and market leading analytics International co-operation is a cornerstone of our business capability, our Retail team is poised to maximise value from – we work seamlessly with colleagues from across the globe retail properties across Finland. We understand where and and with our dedicated Pan-European Capital Markets team what consumers shop and how their shopping needs are to fully leverage our cross-border network to benefit our changing and pride ourselves for consistently high client clients - broadening the perspective from local to internatio- satisfaction and concrete results. For shopping centres and nal. Over the past 24 months we have advised on transac- other retail locations, we offer strategic advisory to position tions with the combined value in excess of €5.8 billion in the concept for competition and market trends, creating Finland, making us the clear market leader. winning shopping destinations. After the direction is set, we Christian Hohenthal, Head of Capital Markets will also help find and negotiate the right tenants for the pro- perty, utilising our extensive contact network with retailers. Architectural Services For retailers themselves, we offer tenant representation Our Architectural Services provide property investors, owners services ranging from crafting market entry strategies to and occupiers with high-quality and individualized design improving store networks and negotiating leases. and consulting services. Architectural Services employ 15 Kaisu Pienimäki, Head of Retail design professionals as the largest business unit in JLL Fin- land. Our core business is divided into three different design Property Development & departments: principal and architectural design, interior Project Management Services design, visualization and 3D modeling. Our team consists of Our comprehensive approach in property development specialists in the various fields of design: architects, interior services combines commercial and technical expertise to architects, modelers and visualizers. Our resources enable us create the highest possible added value to the client. We to react quickly and manage large-scale design entities. have ability to deliver the entire service from business plan Together with other JLL experts, we can provide comprehen- scenarios to implementation: planning, letting, construction sive analysis, design and project management services as the and sales – all under one roof. Property development is only ones in Finland. packaged into seamless and effective service focused into Timo Koskinen, Head of Architectural Services maximising value increase for client. In Project Management services we develop and manage projects for our clients Technical and Environmental Services making sure the project goals are accurately met. Our project We provide technical and environmental due diligence servi- management services range from project management and ces to property owners, sellers and buyers. Our experienced supervision to cost estimation and analyses. Our ambitious specialists find essential risks of the property as well as cre- team has comprehensive experience of all property types ate the future action plan in order to maintain the property. and an impressive track record of successful renovation and Independent estimations will support the parties to establish construction projects. objective and truthful view about the subject property. Our Tomi Tiainen, Head of Property Development environmental specialists are also specialized in the arrang- ement of competitive bidding as well as the implementation Valuation & Advisory of demanding environmental projects and the general plan- Our expertise encompasses valuation of single assets and ning of waste management. We are also the market leader of portfolios to complex development schemes and ranges vacuum waste collection system consultancy. from shopping centres to residential properties. Valuations Nina Kujala, Head of Technical & Environmental Services are carried out in accordance with International Valuation Standards (IVS), RICS Valuation Standards and local AKA/KHK Leasing guidance. In total our Valuation & Advisory team carried out Our Leasing team is the number one leasing agent in Helsinki valuations with reported value of ca €39.8 billion in 2018 and metropolitan area and we have reached this level by specia- was voted top advisor for Valuation in Finland in Euromoney lizing into profiling available properties to meet the market Real Estate Awards 2018. We provide advice also on invest- demand. Our team combines their vast knowledge of the ment strategies, strategic portfolio planning, asset specific local market, ability to recognize market trends and their bro- business plans, commercial due diligence and determining ad networks to find suitable tenants quickly and efficiently. of rental values. We are able to maximise property owners’ profitability with Dr Tero Lehtonen, Head of Advisory tenants that suit their strategies, from long-term tenants to short-term solutions. Our advantage is in JLL’s global orga-
Nordic Outlook | Autumn 2019 43 Offices
Stockholm Birger Jarlsgatan 25 Box 1147 SE-111 81 Stockholm Tel: +46 8 453 50 00 www.jllsweden.se
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