Fred Linnukütt (Head of Industrial and Logistics at UUS MAA Commercial Real Estate), Andi Pleskovski (Partner and Senior Consultant at RE Kinnisvara), Rainer Hinno (Board Member at Favorte OÜ), and Holger Tilk (Head of Investments at Kapitel AS) analyze current warehouse investment opportunities and share their recommendations. They also comment on the current state of relations between developers and major investors.
Which Warehouses Are Worth Investing In – and Which Are Not? How Are Developer–Investor Relations Right Now?
Fred Linnukütt:
“The warehouse sector has historically been less volatile than the rest of the economy. That’s why interest in warehouse investments surged during the COVID crisis—offices emptied, production halted, but warehousing remained relatively stable. With the war, manufacturing came under pressure, and the sector is still struggling for the fourth year. Fortunately, in 2024, we’re seeing some signs of stabilization.
It makes sense to invest in projects secured by one or two strong tenants with long-term leases. Another valuable category is warehouses for sale—while there’s limited supply, Estonians prefer ownership, and demand exists.
Avoid investments in upcoming projects with 400–800 m² units, as multiple developments in this segment are now being launched. I’m not referring to those already under construction, but rather projects still in the planning stage.
Developers have understandably raised capital from investors. What we’re now seeing is an exit from older or stalled projects, and plots are available again—something that was nearly impossible to find just a couple of years ago. This shows a shift in focus: capital is being freed up for new developments.
2024 marks the end of one cycle and the start of a new one. The hardest phase is over, and developer–investor relations remain strong.”
Andi Pleskovski:
“Market demand supports the launch of new warehouse and stock-office buildings in prime logistics locations. However, high interest rates mean only well-capitalized developers can move forward.
For investors seeking cash-flow-generating properties, there are more buyers than sellers. But actual transactions are rare—sellers lack urgency and motivation. This could change if confidence returns and sellers decide to release capital for new developments.”
Rainer Hinno:
“The first factor to consider is logistical location—proximity to major roads and ease of access.
We’re seeing consistent demand for larger warehouses near the Tallinn Ring Road, as well as on Paldiski Road, where our fund (Favorte REIF) owns fully leased stock-office buildings.
When investing, pay attention to the type of warehouse. Is it a standard storage space or a multi-functional unit that can accommodate warehousing, production, sales, and office functions under one roof?
Additional features matter too:
solar panels, EV charging stations, quality facility management, attractive design, adequate power/data connections, good access, and sufficient parking—all add value for tenants.
For major investors—typically companies that want a custom-built business premises—we’ve seen a sharp rise in demand since late 2023 for 5,000 m² stock-office projects.
We’re currently negotiating with multiple such clients, aiming to create tailored solutions that support their business growth.
As the saying goes, the best time to invest in real estate was five years ago; the next best time is today. In early 2023, demand in this segment was minimal, but with energy prices stabilizing, expansion plans have been given the green light again.”
Holger Tilk:
“It’s worth investing in well-located, efficient, energy-efficient warehouses, especially since development volumes remain modest, vacancies are low, rental rates are rising, and tenant turnover typically doesn’t require costly refurbishments—as is often the case with office spaces.
Avoid warehouse investments that cannot be aligned with environmental or energy-efficiency standards, or where doing so would be prohibitively expensive. Also avoid inefficient layouts (low utility per m²).
I can’t comment on developer–investor relationships in general, as we primarily develop properties for our own use.”
Äripäev / Siim Sultson
