The City of Helsinki has signed a 165-million-euro deal on the sale of the office building and plot of the City’s Urban Environment Division. The City is currently constructing the building, located in the vicinity of the Kalasatama Metro station at Työpajankatu 8.
The buyer of the real estate is Union Investment, a German real estate investment company. The City of Helsinki and Union Investment signed the sales agreement on 4 December 2018. The building is scheduled for completion in the summer of 2020, when the City of Helsinki becomes a tenant in the building on a long-term lease.
“This is a significant deal, not only because of the high sales price, but because of the new model of thinking and operating that the deal reflects in terms of real estate ownership,” says Technical Director JaakkoStauffer, who is in charge of the City of Helsinki’s real estate.
There is a great deal of various office space alternatives available on the market today, and resident managers compete for good tenants, such as municipalities.
“In the future, municipalities will have to consider carefully whether they want to tie their capital in real estate, when there is high demand for it from investors on the market. The City of Helsinki decided as early as a few years ago to investigate the leasing alternative with the project to construct the Urban Environment office building,” Stauffer says.
After the project decision was made, the City of Helsinki began to evaluate real estate investors. The task was given to Newsec. Thus the City could ensure that it would obtain the best possible sales price and the best terms of lease with the help of a transparent sales process.
Stauffer comments, “These types of arrangements enable the City of Helsinki better to manage real estate risks and the inherent significant risk related to residual value. In the event that we will no longer need the building after the lease expires, or that we will only need a part of it, we will not be left with empty space or with real estate requiring a sizable renovation or alternations.”
The office building is scheduled for completion in the summer of 2020. It will provide office space for approximately 1,500 City of Helsinki employees. The tenant will be the City of Helsinki Urban Environment Division, which manages the planning, construction and maintenance of the City’s urban environment as well as building control and services related to the natural environment. The division was formed in June 2017 through the merger of seven former City departments responsible for technical operations.
“Due to the former department-based organizational structure, our operations are scattered around Helsinki. By moving all operations into one location under the same roof, we seek to improve the internal cohesion of the division and to improve customer service,” Stauffer explains.
The architectural design of the office building is by Lahdelma & Mahlamäki Architects. The contractor is Skanska Talonrakennus Oy.
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