Eyesore or opportunity? Dotted across the Baltics
are decaying, abandoned and often enormous structures
's factories that once fed the U.S.S.R.'s mammoth
industrial machine. After that machine broke down,
these factory complexes were left as a testament to
economic collapse, sometimes fascinating, usually ugly,
but mostly just in the way. Lately, however, real estate
developers have been incorporating these structures
into new building projects, transforming them into
shopping malls, apartments and art galleries. In this
installment of Industry Insider, The Baltic Times takes a
look at the phenomenon of breathing new life into
industrial properties.
TALLINN
- Around the world, the trend
of gentrification has seen
cities turn to their old
industrial areas as zones of revitalization.
While the Baltics has been
slow to join the industrial renovation
boom, a number of key
projects are appearing in the capital
cities. As land in the city centers
becomes scarce, old factories
in urban areas will become prime
candidates for renovation.
Real estate experts said there
was unmet demand for good
warehouse space and central residential
development sites. The
skeletal remains of Soviet-era
factories, which have long blighted
the Baltic landscape, are now
being viewed for their reconstruction
potential.
"To do a new building is easier,
but more costly. With old
buildings it's a question of luck.
You never know what you will
find inside," said Veiko
Veskivali, board member of
Koger Kinnisvara in Tallinn.
His company is considered an
expert in post-Soviet renovations,
having carried out three
large-scale overhauls in recent
years. Veskivali said most sturdy,
old, Soviet-era buildings make for
good renovation projects.
"They have enough strength
to rebuild them because they are
built to over-capacity," he said,
meaning the Soviet constructors
used thicker and stronger material
than normally required. "You
can easily add a few floors on top
of these type of buildings."
In the Baltics, warehouse living
has yet to attain the chic status
it carries in places like New
York and London.
This comes as
no surprise 's after all, Tallinn,
Riga and Vilnius are comparatively
young cities in terms of
modern redevelopment. In the
first fifteen years of rebuilding, a
heavier focus was placed on the
construction of brand new structures
such as glass towers, new
apartment buildings, and big,
boxy warehouses. Global trends
would indicate that the Baltic
cities are now due for a bout of
industrial-zone gentrification.
Koger is currently putting the
finishing touches on a major renovation
in Kalamaja, an inner-city
suburb with an undeserved dubious
reputation. Long regarded as a
den of bums and thieves, Kalamaja
is at the start of a major gentrification.
Its proximity to Old Town
and its mix of old residential and
industrial buildings means it is a
prime location for renovation.
Koger's Kalamaja project is an
old motor vehicle factory on Volta
street.
Abandoned since 1994, the
building is being remodelled into 92
luxury apartments. It borders an
unused 8-hectare industrial site that
has been marked for revitalization.
"In the beginning nobody had
any idea that this factory would be
valuable. But it is on land close to
the center, and there aren't many
of these kinds of sites left in
Tallinn," Veskivali said.
"For the Volta project, the
carcass of the building was
strong so we could build two new
levels. We had to put holes in the
floors to make some two-floor
apartments, and we had to put in
new elevators. But otherwise we
used the same skeleton of the
original building."
This is the third industrial
renovation project for the company.
Its most high-profile overhaul
was the Fahle paper mill complex.
A large glass box atop an old brick
base, the Falhe tower is the first
landmark to greet visitors as they
travel from the airport to the city.
Although the renovation of
the building was deemed a success,
the building failed to attract
new life to the area. It was envisaged
as a multi-purpose culture
center, with apartments, restaurants,
concert halls, shops and
even an art academy campus. Six
years after the project's conception,
the art academy has yet to
take occupancy, and its entertainment
venues are empty except for
the occasional concert.
Across the real estate market,
projects such as Volta and Fahle
are exceptions. Most Baltic real
estate buyers still focus on new
stock. Tallinn's Arco Vara real
estate company fields many
requests for industrial warehouse
space, and although there aren't
enough properties to meet the
demand, most customers still
seek out new premises.
"Mostly companies want their
industrial premises built to suit
their requirements," an Arco
Vara spokeswoman said. "The
functionality of the older premises
is not as good, and generally
it's not what companies are looking
for.
New buildings have better
functionality."
In Lithuania, industrial renovations
remain rare. Vaidodas
Sarge, executive director of the
Lithuanian Builders Association,
said it was more common for
developers to seek out greenfield
sites. From a cost perspective, a
renovation project could carry
the same price tag as a fresh construction,
due to the risks of deterioration.
But Sarge said rising
inner-city land costs might
change the situation.
"Businesspeople who have
bought such properties are looking
for possibilities of what to do
with them. The purpose of these
buildings could be changed, from
factory to residential," Sarge
said. "I think a lot of them are not
historical, but from the Soviet
era, so they are not as beautiful as
some factories in other cities."
