Retail
Chapter 7
Retail was one of the sectors most severely hit by the pandemic. Strict restrictions to keep infection rates down brought about a material change in consumption patterns, and we spent less money on services and more on physical goods. Investor appetite has remained stable in recent years, while there has been low activity in the rental market – especially in the high street segment.
Prime yield high-street
There has been low activity in the rental market for retail property during the pandemic, although it began to pick up slightly at the end of 2021. Despite the slump in activity levels, new leases have been signed at same rents levels as before the pandemic, which underpins our assumption of stable rent development. The highest levels of activity have been observed in the luxury segment along with the emerging electric car segment, the latter looking for central locations in Oslo and other large Norwegian cities.
Rental market
0
0
.
%
Prime yield shopping centres
Retail transaction volumes totalled NOK 18.7 billion in 2021, up from NOK 11.1 billion in 2020, and accounted for 12 percent of the total transaction volume. We find that appetite for retail property has remained stable during the pandemic, and its share of the total transaction volume was similar to 2019.
Transaction market
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.0%
70
60
50
40
30
20
10
0
-10
Growth in e-commerce vs total retail sales, percent
Vekst i netthandel vs. detaljhandel
Prime yield big-box
Online shopping is nothing new, and even before the pandemic online retailers saw far stronger growth than overall goods consumption. In the period 2010–2019, online retailers posted annual growth of just over 10 percent, while total retail sales rose by just under 2 percent. During the pandemic, online growth accelerated at an annual rate which topped out at 67 percent. Moving forward we expect growth to stabilise, but at much higher rates than retail sales as a whole.
Online retail
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.0%
Outlook
The pandemic is for the most part behind us, and increased activity was expected in the retail rental market following the vacuum. However, the war in Ukraine has caused new shock waves, and the expectation that interest rates and high price growth will rise sent consumer confidence to a historical low in March. The changes in the consumption pattern that emerged during the pandemic are about to be reversed as society reopens, and it is expected that more money will once again be spent on services and less on goods.