Office
After two euphoric years for commercial real estate, the real estate market is facing more uncertain times. This holds true especially for the transactions market. The rental market, on the other hand, is benefiting from low vacancy and high levels of activity in the Norwegian economy.
Transaction market
Office buildings continue to make up the most transacted segment within commercial real estate, and per mid-October we have recorded transactions of NOK 27.4 billion office buildings, making up 47 per cent of the total transaction volume. Market sentiment was strong at the start of the year. Due to the war, a shortage of goods, problems in the supply chains, inflation and rising interest rates, there has been a gradual shift and we are now seeing signs of repricing in the market. Our prime yield has been raised from 3.3% to 3.75% in Q4 2022. There is upward pressure on the yields across segments, including offices.
3 Office
Office rent Oslo city centre
↑ Prime rent CBD, per sq m
↑ Prime yield office
55
578
%
3.
5
Rental market
The Norwegian economy has seen solid growth in 2022, and employment figures for office-based positions have been especially strong. This has led to high demand for office space. Combined with low unemployment and few new premises on the market, it has also led to rent increases. At the start of the year, market rents for “high standard” offices in the Vika / Aker Brygge (CBD) area stood at around NOK 5,000 per square metre, given our observations. By the end of the third quarter, market rents had risen to NOK 5,700 per square metre in the same area, a spike of 14 per cent. Although the city centre has experienced the highest growth in rent levels, all areas have benefited from rent increases. Our estimates show increases across Oslo, even in Nydalen, where rents have remained unchanged for several years.
↓ Vacancy rate Oslo
7
%
5.
Vacancy rate Oslo (average), Oslo CBD, forecast Oslo (average)
Den høye aktivitetsveksten vi har hatt i norsk økonomi inntil nylig har bidratt til et brennhett kontormarked med svært lav arealledighet og uvanlig høy leieprisvekst. Selv om etterspørselen etter kontorareal skulle kjøle seg ned framover, antar vi at arealledigheten vil bli holdt nede av historisk lav tilførsel av nytt areal. Sammen med høy vekst i KPI, venter vi at lav arealledighet vil bidra til å støtte oppunder veksten i kontorleie til neste år.
Outlook