FINLAND Office Market Snapshot Third Quarter | 2019

MARKET INDICATORS Overview Market Outlook Q2 2019 was a quarter of modest growth for the Finnish Prime Rents: Positive rental development is evident in the prime economy and the GDP grew by 0.5%. The GDP landed at 1.7% end and the best sub-markets in 2019. for 2018 and the current growth expectations for years 2019 and Prime Yields: Through high demand for office products, yield 2020 are lower at 1.3% and 1.1% annually. The main driver for compression is evident in the prime end in 2019 growth was domestic demand in the second quarter of 2019. Supply: The amount of new starts has stabilized. Domestic demand continues to be a growth driver in the short- term, yet the declining consumer confidence remains a Demand: Strengthening of demand on occupier side to be continued in the short-term. downside risk for private consumption. Export growth fell after the strong quarters of H1 due to rising trade tensions. Investor Prime Office rents – September 2019 demand towards office sector continued to be extremely strong LOCATION € € US$ GROWTH % in Q3, which led to prime yield compression in the CBD SQ.M SQ.M SQ.FT 1YR 5YR MTH YR YR CAGR and for B-category buildings in the best micro locations in Helsinki (City Centre) 38.25 459 48.1 4.1 3.2 Helsinki. Rental growth was recorded in selected locations, due Helsinki (Out of Town) 23.00 276 28.9 2.2 1.6 to strong demand and limited supply. Turku 18.75 225 23.6 2.8 4.3 Tampere 21.75 261 27.4 0.0 1.2 Occupier focus Oulu 16.75 201 21.1 4.7 2.2 The overall vacancy decreased in Q3 2019, with an increased Prime Office yields – September 2019 demand especially for modern buildings with excellent LOCATION CURRENT LAST LAST 10 YEAR connections. In Q3 total of 12,000 sq. m was completed in the (FIGURES ARE NET, %) Q Q Y HIGH LOW Helsinki Metropolitan Area (HMA). There is currently a total of Helsinki (City Centre) 3.20 3.25 3.40 6.00 3.25 150,000 sq. m under construction in the HMA due to be Helsinki (Out of Town) 4.30 4.30 4.50 6.95 4.30 completed in 2019-2021. Limited supply in the traditional Turku 6.20 6.20 6.25 8.00 6.20 Helsinki CBD has led to stretching of the borders of the CBD, as Tampere 5.60 5.60 5.75 7.75 5.60 tenants pay prime rents in borderline assets. Oulu 6.40 6.40 6.75 7.5 6.75 With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and Investment focus direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property. The volume of published office deals in Q3 amounted to some €585m. The most notable office deal was Regenero selling Recent performance office complex in Keilaniemi, , including the landmark Yield - Country Average Yield - Prime ‘Accountor Tower’. The investor base in Q3 consisted mostly of Rental Growth - Prime Rental Growth - Country Average private property vehicles. The share of international investors

8.00% 15.0% ( growthRental 7.00% 10.0% accounted for some 44% of office deals in Q3. 6.00% 5.0%

Yields 5.00% 0.0% Outlook

4.00% -5.0% y Offices have been the most traded sector in 2019 so far,

/ y 3.00% -10.0% ) representing some 36% of the total investment volume. Strong Sep-09 Sep-11 Sep-13 Sep-15 Sep-17 Sep-19 investor demand is expected to continue through 2019. There are multiple signs indicating major divestment activity in the office sector.

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FINLAND Office Market Snapshot Third Quarter | 2019

BUILT VACANCY NET NET UNDER LOCATION AVAILABILITY STOCK RATE ABSORPTION ABSORPTION (YTD) CONSTRUCTION (SQ.M) (SQ.M) (%) (SQ.M) (SQ.M) (SQ.M) Helsinki (CBD) 420,000 21,000 5.0% -1,050 -3,150 0

Helsinki (Ruoholahti) 415,000 41,500 10.0% 0 -8,300 0

Helsinki (Pasila/Vallila) 601,000 39,100 6.5% 0 21,000 58,300

Helsinki (Pitäjänmäki) 481,000 80,600 16.8% 2,400 10,800 0

Espoo (Keilaniemi/) 302,000 21,150 7.0% 3,000 24,150 6,400

Espoo (Leppävaara) 245,000 36,750 15.0% -3,700 6,100 18,500

Vantaa (Aviapolis) 280,000 21,700 7.8% 700 3,500 0 Helsinki Metropolitan Area 8,750,000 1,050,000 12.0% 150,000 (Overall) Source: Cushman & Wakefield

Key Occupier Transactions PROPERTY SUBMARKET TENANT SIZE TRANSACTION (SQ.M) TYPE Espoo Oops / Hatsinanpuisto (under construction) Trimble Solutions 10,000 Lease (Leppävaara) Keilalampi Espoo (Keilaniemi If Vahinkovakuutus n.a. Lease

Ratina office building Tampere Elisa n.a. Lease Source: Cushman & Wakefield

Key Investment Transactions PROPERTY SUBMARKET SELLER / BUYER YIELD PRICE € MILLIONS Accountor Tower, Keilalampi, and the Espoo (Keilaniemi) Regenero / unnamed international investor n.a. n.a. Keilaniemi Pavillions Eteläesplanadi 21 Helsinki (CBD) OP / Union Investment n.a. 50 Espoo Oops / Hatsinanpuisto (under construction) NCC / Varma n.a. 80 (Leppävaara) Technopolis Kuopio assets (60% share) Kuopio Technopolis / KPY n.a. n.a. Source: Cushman & Wakefield

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