2018 was another record year with a strong performance for Skanska’s commercial development business. Being one of the largest European developers, the company sold 20 buildings for over EUR 744 million and leased 288,000 sqm (excluding parking)* in 16 city markets.
Skanska Commercial Development operates in two markets in Europe – Central and Eastern Europe (CEE) and the Nordics. Due to constant development of the business services sector in Central and Eastern Europe, Skanska focuses on delivering prime office space across this region. In 2018, the company sold 9 buildings for over EUR 431 million and leased 153,000 sqm* in ten CEE city markets. The company also delivered 8 buildings with a total volume of 122,000 sqm* and invested EUR 495 million in new developments which will increase total office stock by approx. 215,000 sqm* in the CEE region in the years ahead. In the Nordics, the Skanska commercial development unit offers not only offices, but also other types of properties including warehouse or retail. The company sold 11 buildings for over EUR 313 million. Skanska delivered 6 buildings with a total volume of 95,000 sqm*, leased 135,000 sqm* in six city markets and invested EUR 920 million in new developments which also means more than 280,000 sqm* is under development for delivery to the Nordic market in the next couple of years.
CEE still attracting new investors
The CEE real estate market is still capturing the attention of many market players. According to JLL, the transaction volume reached over €13.2 billion in 2018, which equates to an 11% increase over the previous year. Poland accounted for 54% of the share.
“For a few years now, we have been observing growing interest in the CEE region from both domestic and foreign investors, even some from the Far East wanting to diversify their portfolios. In 2018, we concluded our first office transaction with an Asian investor, the ISOC Group from the Philippines, which bought our Silesia Business Park buildings C & D in Katowice. This is yet another example of the great potential of the CEE region, which offers both A-class products and returns on investment that are higher than in Western Europe. And we still predict that the demand for prime office space will remain considerable. Skanska wants to meet all these expectations and that is why we are working constantly to expand our offer” – says Adrian Karczewicz, Head of Divestments at Skanska Commercial Development in CEE.
Trends on the Nordic market
Due to favorable market conditions and high demand, the Nordic real estate market remained strong in 2018. According to JLL, investment volumes reached almost EUR 25 bn (excluding residential).
“International investors were increasing their activity in the Nordic real estate market during 2018. They were especially interested in office spaces and logistics, products that look similar as in their home market. Even though foreign players are very active in the market, domestic investors continue to dominate. In terms of trends, the Nordics are still waiting for the big Asian capital flow and we think that it is getting closer. This capital is looking for large volumes for their first investments, and most likely, it will start with Stockholm or Copenhagen, following other main capital cities. It is also worth underlining that flexible office spaces and co-working are growing rapidly and will shape the future of the Nordic market” – says Jonas Karlsson, Head of Divestments & Asset Management at Skanska Commercial Development in Nordic.
Sustainability – a key to Skanska’s developments
Sustainability and futureproof is something Skanska always has in mind while doing business. It is incorporated in every level of operations to deliver high-quality commercial developments. All Skanska office buildings are developed according to the highest standards and aim at LEED certification on Platinum or Gold level. Skanska, as a pioneer in CEE, began the WELL certification process for two office buildings. Visionary in Prague and Spark in Warsaw will become the first office buildings to achieve this certificate in this region. The ongoing Epic development in Malmö is the first WELL pre-certified office building in the Nordics. Skanska is convinced that WELL-certified offices, owing to their positive impact on employee health and well-being, will not only attract and retain good tenants, but also investors, who are always looking for high-quality real estate.
The company constantly focuses on developing sustainable and innovative solutions, which would aim at lowering carbon emission. Last year, Skanska has started the first tests of two innovations in CEE – semi-transparent perovskite solar cells on the façade of the Spark office building in Warsaw and pollution-reducing concrete pavement around the Generation Park office complex. Moreover, the patented Deep Green Cooling system, developed by Skanska, is cooling the commercial buildings efficiently by using approx. one-tenth of the electricity consumed in traditional buildings. In Stockholm Skanska has initiated investment in new renewable sources of energy by supplying the office building Sthlm 03 with 540 sqm solar energy cells from Törneby Solar park.
*All figures regarding office buildings represent GLA, excluding parking space.