Revitalizing Kista – a unique collaboration in urban development in Sweden
With a vision to reverse the downward trend in Kista, a suburb in the north of Stockholm, five of Sweden's most prominent property owners and developers have united in an urban development project, the likes of which has not previously been seen in Sweden. The companies Corem, Vasakronan, Kungsleden (Castellum), Revelop and Atrium Ljungberg will jointly invest more than SEK20 billion1 in the upcoming years, with the goal to turn Kista into an attractive area for investors, businesses and residents. DLA Piper has acted as overall legal advisor to the project manager in charge of this unique collaboration.
The newly founded company, Kista Limitless, will act as the hub for the collaboration, where the five investing parties will join together as one during the project. In interviews with the Swedish real estate magazine Fastighetsvärlden, Johan Thomsson, CEO of Kista Limitless, said that Kista already holds a unique position as the leading ICT2 cluster in Europe and is a financial motor for Stockholm and Sweden. These are values that Kista Limitless is looking to nurture and develop. The vision is to further develop the area as a creative hub and growth center, realizing the suburb's potential. Historically, Kista has contributed to making Sweden the innovation hub it is today, and the goal is to secure this position for the future. Considering the size of the investment, the long-term perspective and the broad and positive response, Thomsson thinks there is a good chance of success.3
A brief history of Kista
Modern Kista was built and expanded in the 1970s and 1980s. The suburb has great international diversity and a relatively young population. Since the 1980s, Kista has been known as the IT center of Sweden, which has given the area nicknames such as "the Silicon Valley of Stockholm" and "Chipsta." It takes about 15 minutes to get from the center of Stockholm to Kista by subway, and today about 35,000 people work there and 7,000 people study in the area. World-leading tech and telecom companies such as Ericsson, IBM, Huawei, CGI and Tele2 have offices in Kista, and the Swedish Royal Institute of Technology and the University of Stockholm and the International English School have branches in the area. Kista's skyline is dominated by the 32-story Kista Science Tower and the 35-story Victoria Tower. Close to Victoria Tower you can find the Kista Exhibition Hall, comprising two halls and a total exhibition area of 9,000 m2.
Issues to address
The suburb is facing several challenges and is perceived as unsafe, inflexible and out of date. The trademark "Kista Science City" is unknown for many people, and as much as 65% of current tenants think the trademark has not had the anticipated positive effect on their business. As a result, companies have become reluctant to move their businesses to Kista, competition with other areas has become harder and rent levels have stagnated. Although Stockholm's overall market for premises and rental apartments has been performing well for several years and is estimated to grow further in the coming years, it’s obvious that Kista's position will continue to weaken, unless measures are taken.
Another problem Kista is facing is the architecture. When the area was built in the 1970s and 1980s, a function-based city plan was adopted. In the center, adjacent to the subway, you can find the Kista Galleria shopping center with approximately 180 stores and restaurants. East of the shopping center there are offices and other business premises. And to the west, mainly residential apartments have been built. Walkways and places for social activities are mainly concentrated in the areas adjacent to the subway station and the shopping center, whereas the outdoor area elsewhere is dominated by transit routes and high, wide buildings with reserved, anonymous facades. The area is simply uninspiring, boring and doesn't invite people to meet and connect.
Another negative trend Kista Limitless aims to revert is the way Kista is depicted in the media. News regarding gang-related shootings is often featured in headlines, whereas positive news and statistics showing that the number of robberies and assaults has decreased significantly since 2017 are ignored.
An action plan for the future
To revert this negative development and make Kista a more attractive choice for investors, businesses and residents, the five major property owners and developers initiated the joint venture. Kista Limitless was founded and an action plan was drafted based on qualitative and quantitative information together with an econometric model, including analysis of earlier studies and reports such as trend reports and articles.
To prepare the action plan, experts, employees, students and residents were interviewed and measurements and observations of the surrounding areas regarding for instance health factors were conducted. The analysis covered demographic data, property-related data, crime statistics, premises and dwelling potential. And current and potential target groups were identified and analyzed. Subsequently, a combination of architects, property experts, management consultants, trademark strategists and service designers worked closely together to find the best way forward before carrying out project, management and cooperation workshops. Lastly, panels with expertise in organizational development, communication and urban development gave feedback and potential services were tested to ensure high relevance and give guidance to the prioritization process.
The analysis resulted in three main recommendations:
- to create conditions for a safe, functional and dynamic urban environment;
- to be relevant and connect businesses, educational institutions, workers and residents without friction; and
- to encourage differentiation to inspire world-class innovation where possibilities have no limits.
The timeframe of the finalized action plan extends to 2035 and includes the development of:
- 8,000 new residential apartments
- 8,000 new workplaces
- 2 new hotels
- 20 new community properties
- restaurants, cafés and commercial areas
- renovation of parks and other public areas
- a new infrastructure with renovation of subway areas, bus stops and the extension of the tram line, connecting current bus and subway lines
The work begins
The project has been divided into stages, each of which has been discussed and developed together with the relevant project group. The first stage will be completed in 2022 and will include:
- art and light installations at bus stops and in pedestrian and bicycle tunnels
- pop-up studios on the ground floors of several buildings
- food trucks
- a food festival
- cleaning and renovation
- activity areas
- sports events
By 2035, with effectiveness and flexibility in mind, the intention is to have made Kista a more inviting, appealing, secure and clean suburb. Roads that are today constructed for traffic will be adapted for pedestrians and cyclists, and new apartment buildings and parks will be built. Meeting places will be created as the architecture is opened up and ground floors adjusted for restaurants, sporting events, exhibitions and food festivals. Social events and activities will be promoted in areas between buildings and in parks. Artistic lightning and wayfinding signs will be designed to make the area more inviting and increase the general sense of security. As Kista is situated in an area where nature is just around the corner, a green network with easily accessible roads will be created to offer beautiful scenery, recreation and play areas. The objective is to attract more people to spend time in nature and get the population to stop, meet and talk, and open up for activities, life and involvement.
In close cooperation with businesses already active in the area, investments will promote the local education system, trade and industry, culture, sports, entertainment and health, including inspirational lectures and local exhibitions where companies and individuals can present themselves and show innovations made in Kista. In short, Kista will be a place for creativity, inspiration and sense of belonging.
To realize its vision, Kista Limitless has observed and analyzed the current situation, created a new design plan for the local area based on research, interviews and observations, and developed a concept that has been tested and revised. The work has, and will be, substantial and an aggregate amount of approximately SEK20 billion will be invested in the project. The investments are significant, but they are also expected to pay off in the future. If Kista becomes more attractive for investors, businesses and dwellers, the average rent could increase by as much as SEK900 per m2 a year. The potential increase in property value would amount to approximately SEK4.5 billion.4 On the other hand, if no measures are taken, it’s likely Kista would continue to lose its competitiveness, in an otherwise growing property market, and that rent levels would continue to fall.
1 Approximately EUR1.94 billion or USD2.19 billion.
2 Information and Communications Technology.
3 Engström, Fredrik. Nu investeras 20 miljarder i Kista. Fastighetsvärlden. 2021-11-23; Engström, Fredrik. Kvintett bildar bolag i Kista – ska driva utvecklingen. Fastighetsvärlden. 2021-11-11; and Engström, Fredrik. Toppolitiker säger nej till flytt av mässan. Fastighetsvärlden. 2021-11-24.
4 Approximately EUR435 million or USD492 million.