In the latest competition, Tallinn's City Center district government sought tenants for several dozen commercial properties in the Old Town and its surrounding area. However, the competition was deemed unsuccessful after it failed to attract any bids by the deadline.

According to Sander Andla, the elder of the City Center District, the issue with these properties is likely that businesses simply don't want to set up offices in the Old Town right now.

"If a company has the option to choose between setting up an office in the Old Town, where they may also need to bear maintenance costs and carry out certain renovations, or moving to a new development, it makes more sense to pick the new building," Andla acknowledged.

He added that he doesn't believe the issue is in high asking prices.

"We understand very well that when we organize auctions, we're competing with private properties," the district elder noted.

"If the city is asking for unreasonably high sums for its properties, business-owners will opt for private properties if they can operate there more inexpensively," he explained. "We'll certainly also be analyzing this, especially now that the auction has only just flopped, and [then] we'll announce new competitions."

A new competition for these office spaces is planned to be announced before summer. Andla noted that if city-owned spaces remain vacant for an extended period, they could also be used to host temporary art exhibitions, for example.

The district elder repeatedly emphasized that Tallinn's real estate policy, including its rental policy, needs to be reviewed.

Even when discussing the recently completed Old Town development plan, it was acknowledged that when leasing spaces, the actual use of a space should be taken into account as well — not just the maximum rental income.

Nonetheless, Andla also stressed that rental income should not be undervalued either.

"For example, in the case of the City Center, we earn a significant portion of our income from property rentals, and with that money, we can offer our residents various services," he explained.

"But I agree with the point that has often been discussed regarding the Old Town — we'd like fewer Matryoshka dolls and amber and more value-based offerings," he added.

The district elder noted that city properties currently only include one long-term souvenir shop lease, which is slated to be terminated with the help of Tallinn City Council.

"I think it's really important to also strike a balance, so that we don't drive business-owners away from the Old Town with excessive regulations and bureaucratic requirements," he added.

City real estate management to be centralized

Currently, the management of the capital city's real estate is highly fragmented, but the plan is to change this going forward, Andla noted.

"The City Center manages a significant amount of real estate, the Tallinn Property Department has quite a bit, as do other city districts and agencies," he said. "The City Council's audit committee recommended establishing a single unit of competence that would manage, lease out and handle all real estate in Tallinn."

For some rental properties, the plan is to extend lease terms as well.

"Especially those properties in the Old Town, where a business has to make investments in order to operate there," Andla explained, noting that this is especially relevant to dining establishments.

"Five years is still too short a time to recoup an investment," he continued. "We are currently preparing so that at least some of these spaces can be used for a longer period, such as ten years. This would give business-owners more assurances that they will recoup their investment."

Andla couldn't yet say when exactly Tallinn might see its real estate policy updated.

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