Thursday, 6 November 2025
Estonia’s office property sector remained largely stable through the third quarter of 2025, balancing an influx of new space with moderate leasing activity and firm rents in the capital.
The latest figures indicate that the average vacancy in modern Tallinn offices held at around nine percent, reflecting both the steady pace of completions and a cautious approach from occupiers. Two new developments — including the Golden Gate complex near the Old Port and the smaller Ankur project — were completed during the quarter, adding roughly 17,000 square metres of new space to the market. These deliveries expanded the city’s prime office stock, offering tenants access to modern, energy-efficient workplaces at a time when sustainability and flexibility remain top priorities.
Demand softened slightly in the summer months. Leasing volumes were down from earlier in the year, yet transactions continued in core locations, particularly for compact, high-quality premises. Tenants remain selective, with many favouring properties that meet high environmental standards and offer adaptable layouts to accommodate hybrid work models.
Prime headline rents for top-tier offices in Tallinn’s central business areas stayed broadly unchanged at around €24 per square metre per month, while secondary properties continued to trade within the lower mid-teens range. This stability has persisted despite increased competition between landlords, who often use incentives or fit-out contributions to secure long-term tenants.
Developers and investors are now watching closely how quickly the market absorbs new projects. Roughly 100,000 square metres of additional space are still under construction across the city, including major schemes in Ülemiste City and the new Talsinki/SEB headquarters. While this pipeline underscores developer confidence, it also heightens pressure to differentiate buildings through design, amenities and ESG performance.
In the investment market, sentiment remains cautious but steady. Prime office yields in Estonia are estimated at around 6.75 percent, largely unchanged over the past year, reflecting both higher financing costs and investor preference for assets with secure income.
Across the Baltic region, analysts describe 2025 as a year of normalisation rather than expansion. Tallinn continues to outperform smaller cities, benefiting from its diversified occupier base and ongoing infrastructure improvements. Yet, as construction costs stabilise and borrowing remains expensive, developers are expected to slow new project starts in favour of completing and leasing existing schemes.
Overall, Estonia’s office market enters the final quarter of 2025 with stable fundamentals: limited rental movement, contained vacancy, and a cautious but functioning investment climate. While tenants now enjoy greater choice and negotiating power, high-quality, sustainable buildings in strategic locations continue to draw steady demand — ensuring that Tallinn’s commercial core remains one of the most resilient in the Baltic region.
Source: Newsec, Colliers, CBRE and CIJ EUROPE Analysis Team
