Higher financing costs and prolonged uncertainty linked to the central bank’s interest rate forecasts are affecting the transaction market for commercial property. The counterweight to the transaction market has been a robust rental market with a constrained supply side, and surprisingly high demand, resulting in rising rents.
Office
Transaction market
Office transactions made up the largest share in commercial property market transactions in 2022 at 32 per cent. Low liquidity in the first quarter of 2023 indicates that there is still a significant pricing gap between buyers and sellers. Prime yield stands at 4.0 per cent at the start of the second quarter of 2023, after multiple hikes in the previous six months from the all-time low of 3.3 percent. The interest rate trend in the market indicates further pressure on yield requirements and values, across all segments.
3 Office
Office rent prime CBD, Oslo
→ Prime rent CBD, per sqm
→ Prime yield office
0
%
.0
0
000
Rental market
In recent years, we have experienced exceptionally high demand for office space among office tenants in Oslo. Since 2021, the rent has increased by 25 per cent in central Oslo (26 per cent in Vika/Aker Brygge). At the start of 2023, the market rent for offices in Vika-Aker Brygge with a "high standard" had increased from NOK 5,000 per square meter to NOK 6,000 per square meter in six months.
↑ Vacancies Oslo
8
%
6.
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