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.
Data collected from reports by Cushman & Wakefield and CBRE.