Logistics

Similar to other segments within commercial real estate, the logistics market is heavily influenced by macroeconomic uncertainty. There is still high activity in the leasing market for logistics properties, and rental prices in attractive logistics hubs continued to rise in 2023.

Transaction Market

In 2023, we recorded a transaction volume of NOK 12 billion in the Norwegian market, representing a decrease of around 30 percent compared to 2022. However, there is still strong demand for logistics properties, and the sector accounted for approximately 20 percent of the total volume in 2023. As of January 2024, we have maintained our prime yield estimate unchanged at 5.75 percent. This represents an increase of 100 basis points since the beginning of the year.

Logistics rent, large and small warehouses

Rental Price Growth Slows Down

We continue to experience strong demand for logistics space in several of the establishes logistics hubs around Oslo. Rental prices for large warehouses have increased from NOK 1,600 to NOK 1,700 per square meter, representing a rental growth of approximately 6.5 percent, over the past 12 months. This is mainly explained by a constrained supply side.

For smaller and centrally located warehouses, known as last-mile logistics, rental price growth has been even more impressive. Prices have increased from NOK 2,000 to NOK 2,200 per square meter (10 percent) for smaller, centrally located warehouses during 2023. The expectation of weaker consumer spending in the short term leads us to anticipate a flat rental price development going forward.

→  Prime yield

Transaction volume, bn NOK
2023 and
2022

Prime rent, NOK
→  Large space (>6 000 sq m) and
→  Small space (<6 000 sq m)

Logistics prime yield, percent

Outlook

Consumer spending has remained surprisingly robust throughout 2023, but there is negative pressure on consumer spending in the short term due to high price growth and high interest rates. Therefore, we expect a flattening in rental prices in the short term, where low vacancy rates in attractive logistics hubs act as a counterbalance to somewhat weaker demand. We anticipate increased liquidity and a pickup in investment activity during 2024.