OREANDA-NEWS. July 21, 2010.

Office market
Although, the office sector has been quite stable for the past half a year, can be expected that the new wave of rental rate negotiations will start soon as the current discounts are ending, but the economic situation of companies does not still allow to pay the rental rate fixed in contracts concluded at “boom time”, reported the press-centre of Colliers International.

Since the landlords believe that the rental rates will more or less recover in two-three years period, they are interested in concluding rather short-term contracts, while larger tenants wish to benefit from the present situation and rent A-class premises at low rental rate for longer period of time.

Retail Market
Even though the decrease in retail sales numbers has slowed town, one reason of which is certainly good weather and increasing number of tourists, the recovery of retail sector takes time. When compared to May 2009 the retail sales numbers have fallen by 5% (the numbers are on the same level as in 2005), then compared to 2007-2008 the numbers are still down by approx 20%. Thus, similarly to office sector, in retail sector could be expected another round of lease negotiations as well.

In addition to two new local supermarkets (Tabasalu Rimi, Kopli Maxima) and Kristiine Shopping Centre enlargement, which will be opened in autumn, the renovation works of former Tallinn Post-office will start soon. According to the preliminary information, the renovated Post-office will be opened as a shopping centre in 2011.

Warehouse and Industrial market
Several local companies, whose activity is related to the construction industry, have run into difficulty, thus the vacancy rate of industrial premises is increasing. Also, the hidden or secondary vacancy is becoming more visible. The main groups of tenants looking for industrial premises currently are foreign, mostly Scandinavian companies with the aim to optimize their operating costs by transferring their production activity to a cheaper country.

Investment Market
In June was concluded this year’s largest transaction with Tartu Mooblimaja, where in autumn Prisma will open its first 9,500 sqm hypermarket in Tartu, assuring yet again the increasing activity in the investment market. However, while most of the recent purchasers are local investors, foreign investors are still rather sceptical about the market, waiting for Euro to become a local currency and therefore do not rush in making their decisions. In addition to Scandinavian investors, the interest for Baltic countries among Central-European investors is growing.

Statistics of transactions with business objects
In general, the number of purchase-sale transactions in Harju County has grown by 36% and in Tallinn by 40% compared to the 1st half year of 2009, however the average purchase price has fallen by 22% and 19% respectively.

In June 2010 were concluded 14 transactions with commercial objects and 19 transactions with vacant land in Harju County. 10 of the transactions with vacant land and six with commercial properties were concluded with objects located in Tallinn.