WORLDVIEW : FINLAND
Cap Rates in 2Q2022
Investment Volume in 2Q2022
Multifamily $ 863
Industrial $ 321 Office $ 300 Retail $ 194 million ( 35 % YOY ) million ( 31 % YOY ) million ( 109 % YOY ) million ( 82 % YOY )
Office Industrial Multifamily Shopping Center
3.1 %
3.8 %
2.95 %
6.4 %
Vacancy Rates in 2Q2022 Office
11.5 %
Industrial 4.0 %
Retail
8.7 %
Major Economic Indicators GDP
0.3 % ( quarter-over-quarter growth )
Unemployment
6.12 % Annual Inflation Rate
5.7 %
2Q2022 Rental Rates ($/ sf )
Retail
$
1,334.70
( prime properties )
Industrial
$
104.79
Office
$
427.44
Multifamily
$
226.13
Data collected from CBRE and Cushman & Wakefield reports .
As Europe continues its recovery from COVID-19 , nations across the continent are seeing a continued rebound in consumer demand . Thanks to the ongoing recovery from the pandemic , Finland saw healthy economic growth in 2Q2022 . While quarter-over-quarter GDP growth was only 0.3 percent , investment across sectors of commercial real estate grew , totaling $ 8.99 billion in the first half of 2022 .
According to Cushman & Wakefield , demand for Class A office properties has remained strong as pandemic-related sanctions were eased at the start of the year . Employers who are bringing workers back to the office are looking for flexibility and amenities that are primarily offered by the top assets in the sector . Class B properties , meanwhile , face a dearth of interest and are disproportionately contributing to the 11.5 percent vacancy rate when looking at office as a whole .
Retail , meanwhile , has faced differing challenges depending on the area of the market . Big-box stores and food and beverage spaces are bright spots , with demand for space remaining relatively consistent . Global logistical challenges , thanks in part to the war in Ukraine , have spelled trouble for high-end stores and fashion outlets . These assets have also suffered due to uncertainty in international tourism as COVID-19 still continues to complicate matters .
Industrial , as in the U . S ., has performed well throughout the pandemic , with prime rents topping $ 100 psf for the last four quarters . Finland is also seeing an expedited shift to e-commerce in the wake of COVID-19 , which has boosted demand for light industrial , warehouse , and logistics assets . Finnish exports also rebounded in 2Q2022 to grow by 6.16 percent QOQ , after contracting by 9.8 percent QOQ in 1Q2022 .
Looking forward , Finland joining NATO , along with Sweden , could make it easier for interested European investors to enter the national market . Nordic countries as a whole expect capital allocation to continue to be strong throughout 2022 .
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE FALL 2022