When Can You Move Into the Apartment Building Rebuilt From the First Office Building?

Although a record low number of new office buildings will be added to the market this year, this is not accelerating transactions with older commercial real estate either. According to optimistic forecasts, the first residential building converted from an office building could be completed as early as next year.

"2026 will be remembered in the commercial real estate market primarily as the beginning of recovery. There are signs of economic improvement, which will become more clearly reflected in the real estate sector in the second half of the year. At the same time, this is a year when an exceptionally small amount of new office space will be added to the market. Approximately 30,000 m² of new office space will be completed in Harju County, which is the smallest volume in the last 10 years," says Raimond Pääslane, team and sales manager of Domus Kinnisvara's commercial real estate department. According to him, the scarcity of supply will persist in the following years, and it should be taken into account that many buildings under construction already have anchor tenants in place and a large portion of the spaces are covered by tenants, which is why a clear supply gap is emerging precisely in Tallinn's sought-after business districts. Consequently, it may be difficult to find office space in the coming years in areas such as Maakri and Rotermann quarters, Telliskivi, Volta, and Ülemiste City. Due to limited supply, the rental price of A-class office buildings should remain in the range of 18-22€/m².

According to Pääslane, the shortage of modern office buildings and high rental prices are not a lifeline for older office buildings either. "The main problem with an older office building is structural uncompetitiveness. A modern tenant prefers a building that essentially meets new construction standards: high ceilings, plenty of natural light, modern interior finishing, and energy-efficient building systems. Mere renovation does not make an older office building equivalent to a new one, which is why these buildings often remain vacant even when the rental price is significantly below market level," explains Pääslane. For example, this threatens older commercial buildings on the outskirts of Tartu, Pärnu, and Narva roads. Thus, according to his assessment, rental prices in Tallinn's peripheral and suburban areas could fall to the level of 9–12 €/m², and in individual cases even lower.

Therefore, in his view, one should assess the potential of residential development or a mixed-function solution in a location with weak office market prospects. "The construction of many old office buildings allows for the building to be adapted into apartments or a combined business and residential building, which reduces the dependence of rental income on only one demand segment and creates a new life cycle for the building," he says. It would be particularly sensible to convert a building that is located in a strong neighborhood center, where housing demand is stable.

Taking into account the duration of planning and design processes, according to the expert's assessment, the first residential building converted from an office building in Tallinn could be completed in 2027–2028.

According to Urmas Uibomäe, CEO of the real estate portal Kinnisvara24, the portal currently has 4,200 commercial real estate sales and rental offers. More than 3,300 of these are rental listings. "When comparing the results of 2024 and 2025, interest in commercial real estate rental offers increased by 7.2% last year.

Uibomäe supports the idea of finding a new use for an older building, such as residential use, and believes that there is also a target group in the market that would be willing to move into a former business building that has been converted into a new and modern residential home during renovation, especially if banks finance it and one can buy a home there more cheaply than in a new development in the same area.

"For the consumer, there is certainly also a prerequisite that real estate prices in sought-after areas remain more stable and a person can afford a larger home than before if they wish," says Uibomäe. Since there is currently greater demand for secondary market apartments in Mustamäe and Lasnamäe, the conversion of office buildings in these areas would likely be worthwhile.