Business parks look set to keep growing

  • 2004-10-06
  • By Aleksei Gunter
TALLINN - At present there are six areas in Estonia that officially call themselves business parks, yet not all of them are actually in operation. Real-estate analysts claim that the business trend drifting toward industrial parks will accelerate as enterprises search for cheaper premises outside their inner-city locations.

The Tanassilma business park stole the glory of becoming the first of its kind in the country. Opening in July 2003, the park managed to lure in Swedish electronics producer LGP Allgon and Germany's giant retailer Lidl. In the near future it may become the new home for Tarbeklaas, the Estonian glass products manufacturer.

Herki Hollak, board member of KC Grupp, says the currently developing Muuga Industrial Park could probably open in autumn 2005. He is hoping that the local government will approve details by early next year at the latest.

Though he says it is too early to talk about the industrial park's dwellers, Hollak admits there are a number of companies interested in moving into a 40-hectare area, divided into 17 plots near the Port of Muuga. "We hope to attract both storage and industrial enterprises. There will be enough power supply to host manufacturing companies," he said.

According to Hollak, the construction of such a project costs about 1 million kroons (64,000 euros) per hectare, including roads, sewage and power supply.

The most important criteria when beginning a business park is where to build. As Hollak explains, "a business park must be located near a major transport junction. I believe there will be more such projects around the city of Tallinn because the money flows in this area much thicker."

Juri Tehnopark developers bet on their business park located on Tartu road just outside Tallinn. This is a lesser-known area for Estonian companies, many of which are inclined to look around the St. Petersburg road and Parnu road regions.

Yet Scandinavian food retailer Kesko has opened its logistical center near the Juri park, while the Kalev confectionery last week announced it had completely moved its manufacturing site from Tallinn to the Rae county area close to Juri.

Since the Juri business park's opening in the second half of 2003, eight out of 61 of the land plots have been sold. Margus Haud, board member of Kodu Grupp, which manages the Juri business park, refused to name the companies that had purchased the land plots since the park's grand opening was to take place in three weeks.

He did say, however, that Kalev and Kesko moved to Juri before the business park was completed.

In Haud's opinion, the business park will be full in about four years. This is approximately when the 3 million euros spent on the project would be earned back.

He highlighted the park's location as its main competitive advantage.

"Land is still cheaper near the Tartu road compared to other highways. Not many of the other parks have a natural gas supply. Otherwise the services offered are the same," says Haud, adding that, in his opinion, there will be more business parks outside Harju county in the next several years.

But not all business park projects seem to find their market.

Ott Otsmann, managing director of Haret AS, a branch of Harju KEK that once wanted to develop the Keila Industrial Park, says the company is now partly using the area it earlier intended to lease or sell. The area has a number of old industrial buildings and a railway spur nearby.

"The business park as of now has not been developed. It is a rather big chunk of land, and we were not interested in selling it by small plots. We were rather looking for a big partner with whom we could use it together," says Otsmann.

He added that Harju KEK, a large electrical engineering and telecommunications company, had tried to develop the Keila business park on its own without any help from a real-estate company.

Insiders also say that business parks created on municipal or state land are not developing as rapidly as those built by profit-driven private developers.

"We are not in a hurry. We are interested in the park occupants' actual beginning of work and creation of new jobs," says Kuno Rooba, mayor of Tapa, a town in Laane-Viru county.

The 60-hectare Tapa Industrial Park received a boost in the late '90s thanks to the PHARE program on converting military areas into industrial zones. In this instance, developers did not have to start from scratch, but transforming an area with antiquated military facilities into an attractive business environment was difficult nonetheless.

Part owned by the national government and part by the Tapa municipality, the park now hosts four larger and two smaller companies involved in warehousing, wood processing and other industrial activities. The companies' arrival has created 150 new jobs in Tapa since the project's inception in 1997.

The Tartu Science Park, backed by the country's oldest university and its students' never-ending enthusiasm, has been operating since 1992 and remains the only science park in Estonia.