Introduction

Over the summer, weaker economic data have contributed to the expectation that central banks may need to accelerate interest rate cuts to ensure a soft landing in both the Norwegian and global economies. The office rental market now appears to be stabilising after two strong years, while the anticipation of lower interest rates and narrowing credit margins is boosting activity in the CRE transactions market.

In Norway, GDP growth has slowed since last year, although the activity growth leading up to this summer was better than initially feared. Before the summer, the dominant scenario among market participants was a soft landing both in Norway and internationally. However, weaker data over the summer have created uncertainty regarding future developments. Western central banks are now expected to accelerate planned interest rate cuts to support economic activity ahead. Until more information is available regarding the growth potential of the Norwegian and global economies, as well as the actions of central banks, market sentiment is likely to remain somewhat nervous.

In the commercial property transactions market, activity has picked up significantly this year. The decline in property values appears to be behind us, and we expect further stabilisation going forward. Transaction volumes in the first half of the year were 56 percent higher than in the same period last year. We are observing that falling credit margins and upcoming interest rate cuts are contributing to increased activity, and we anticipate that the transaction volume for the entire year will be substantially higher than last year.

The office rental market has stabilised throughout the year following two consecutive strong years. Demand for office space has increased every year since the pandemic, but this year, businesses seem to be adopting a more cautious approach. However, due to a limited supply of new office space, we expect office vacancy rates to remain low in the coming period. Office rental prices levelled off at high levels during the first half of this year. Some uncertainty about the future development of the Norwegian economy and a heightened focus on cost management among businesses will likely result in limited upside for rental prices in the short term.