Bergen

Key figures

Q3 2023

The mood of investors has clearly changed, following interest rate hikes and market turbulence. DNB Næringsmegling has revised its yield estimates upwards in all of Norway’s four major cities. In the rental market, we are continuing to see a good level of activity in Bergen. The vacancy rate is somewhat down, but we expect it to rise slightly in the years ahead.

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Offices with a high standard, best location, 7 years weighted remaining rental period, market rent and secure tenants.

Prime Yield

5.50
1

We assume a seven-year weighted remaining lease period, and therefore estimate that longer leases can be traded even lower.

Offices with ordinary standard, located in one of the office clusters outside the city center, 4-5 years weighted remaining rental period, market rent and ordinary companies as tenants.

Secondary yield

6.50
0.25

Normal yield is meant to reflect an average office property. We have defined it to be an office property with 4–5 years left of the lease contract, an OK location.

Number of transactions> NOK 50 million

Transactions in 2023

(Accumulated)
5

The number of transactions indicates the number of transactions with a minimum value of NOK 50 million in Bergen.

Annual transaction volume measured in NOK billion.

Transaction volume

(B NOK)
1.2

The transaction volume indicates the total property value of the transactions made, with a minimum value of NOK 50 million.

Office space offered in the market and available within 12 months.

Vacancy

(per cent)
8.9
1.9

The office vacancy in Bergen is 7 per cent.

Office rental market

Q3 2023

Our latest vacancy count shows that the office vacancy rate has decreased slightly, to 7 per cent. There are, however, considerable local variations between the different office clusters. read more

Unchanged rental prices

Despite interest rate increases and more uncertainty in the market, we are still seeing an active rental market in Bergen. Figures from Arealstatistikk show that in 2022 rental contracts were signed for close to 80 000 square metres (2021: 105 000).

The average price in Bergen in 2022 was almost unchanged at NOK 2 100 per square metre (NOK 2 070 in 2021), based on 127 rental contracts. In the top segment (top 15 per cent highest rents) we see roughly the same trend, with a price of NOK 3 110 per square metre (NOK 3 080 in 2021). Developments in recent years show that prices have not increased very much, and not nearly as much as we see, for example, in Oslo. Nevertheless, we see that prices have risen for the very best premises. In Bergen city centre, in 2022 we saw 11 rental contracts for over NOK 3 000 per square metre, and five contracts for over NOK 3 500 per square metre, of which some individual contracts are close to NOK 4 000 per square metre. This shows that demand for the very best premises has risen more than in the rest of the market.

Vacancy rates will rise slightly in the time ahead

Our latest office vacancy count in Bergen stands at 7.0 per cent (8.1 per cent in 2021). Of the 180 000 square metres of vacant office space, more than 40 per cent is located in Bergen South (9.9 per cent) and Fyllingsdalen (10.4 per cent). Both areas have, over time, struggled with relatively high office vacancy rates, despite both having had a downward vacancy trend in the most recent period. In the other areas, the vacancy rates are only moderate to very low. The lowest vacancy rate is found in Solheimsviken/Marineholmen (1 per cent).

Going forward, we expect office vacancy rates in Bergen to increase gradually from 7 per cent this year to over 8 per cent towards the end of next year. This is largely due to expectations of low employment growth in the coming years.  DNB Markets predicts a more or less flat trend over the next two years, which will result in very limited growth in demand for office space in the same period. However, low to moderate levels of new construction in 2023 and 2024 will reduce the expectations of increased vacancy rates somewhat.

 

 

 

 

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Click the rows for more information about the area
AreasSorter High standardSorter Office vacancySorter
Fyllingsdalen 1500 - 1900 10.4 %
Bergen Sør 1300 - 1850 9.9 %
Næringskorridoren 2000 - 2800 7.8 %
Sentrum 2300 - 3200 6.4 %
Sandviken 1400 - 1700 5.2 %
Åsane / Bergen Nord 1400 - 1700 2.9 %
Laksevåg 1500 - 1800 5.0 %

Rental prices
Top rent
High standard -
Office vacancy pr. %
Construction ()

Transaction market

Q3 2023

Our latest local and national investor surveys show that there is still considerable uncertainty among investors, but at the same time that optimism is increasing somewhat compared with what we saw last year. read more

A growing proportion of investors now see the current market as an opportunity to acquire properties that might otherwise never come for sale at a discounted price, compared with the situation just a few months ago. Despite this, investors have become considerably more selective. Investors are looking to a greater extent than previously for value-add and development properties, during a period where it is harder to achieve good returns on pure cash flow properties.

 

In the second quarter of 2023, DNB Næringsmegling revised its estimate for Bergen to 4.75 per cent, which is an increase of 100 basis points from the trough last year. As the market looks now, we expect yields to continue to rise slightly both in Bergen and in the other cities, but that the largest yield increase has already occurred. We also expect the difference between the best properties and secondary properties to increase slightly in the time ahead, after a long period in which the risk premium between category A and B properties has been low. This is both related to a historically small gap, differing expectations regarding rental prices going forward, and, not least, the fact that investors prefer somewhat lower risk during a period of high uncertainty.

 

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