Bergen

Key figures

Q1 2021

Investors have both the willingness and the capital to buy more commercial property in the Bergen market, but are frustrated by the low number of investment opportunities. Despite their high willingness to invest, these investors report that their purchasing preferences are changing, and that they to a greater extent than before are seeking lower risk. read more

Head of the Bergen office, Haakon Jard Veidung, says that there was a high level of activity in the transaction market at the start of the new year. At the same time, we are still experiencing a certain degree of risk aversion, and ‘the best’ objects with long lease contracts and low counterparty risk are in greatest demand. Low interest rates, greater faith in the future and a limited number of available objects is creating a demand-driven price pressure that we believe will continue into 2021.

Our impression of the rental market is more mixed. The level of activity in the office segment has been lower than our historical average, while activity in the warehousing and logistics market has increased considerably. We are not expecting any permanent changes in the demand for office space in the short term, but as with previous crises, and especially during this pandemic, several processes have been postponed or temporary agreements have been entered into until the company’s future needs have been identified.

Bergen has a robust and complex economy with ample supply of capital and qualified labour. If we keep up the rate of vaccinating more people than those who are infected by COVID-19, we can look forward to a pleasant and positive spring.

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

Prime Yield

3.75
0

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

6.25
0

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 2021

(Accumulated)
47

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)
8.5

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)
7.6
0

Office vacancy in Bergen is 7,6 per cent.

Office rental market

Q1 2021

So far, the COVID-19 pandemic appears to have had little effect on the office vacancy rate in Bergen. Our latest vacancy count shows that the office vacancy rate has risen slightly to 7.6 per cent (2019: 7.3 per cent), and thus remains at unprecedentedly low levels. However, there are major differences between the various areas. The industrial area called Næringskorridoren now has a vacancy rate of only 3.8 per cent, whereas the rate is significantly higher in both Fyllingsdalen (12 per cent) and Bergen South (11 per cent). read more

We saw hardly any effects of the COVID-19 pandemic on the Bergen rental market in 2020. There were only minor changes in the levels of activity in the rental market, office vacancy rates and, not least, rental prices during the course of this highly unusual year.

Figures from Arealstatistikk show that the average rental price per square metre per year in Bergen remains approximately unchanged at NOK 1 940 (2019: NOK 1 930), while a total of 125 lease contracts were entered into, which is on the same level as 2019. The same can be seen in the top segment (the 15 per cent most expensive lease contracts), where the average rental price is now NOK 2 770 (2019: 2 790). It’s worth mentioning that 14 lease contracts with a rental price of more than NOK 2 500 per square metre have been signed. This illustrates a high level of willingness to pay for the best office premises in Bergen. Our investor survey from last autumn showed that investors still believe that the rental prices of properties in Bergen city centre will see the strongest development in the time ahead. We are still seeing a very low office vacancy rate in Bergen city centre, and at the same time, a great number of tenants are seeking a central location. The majority of investors still believe there will be rental price growth, but markedly fewer than in 2019, when all investors believed this.

 

Expecting a flat development in the office vacancy rate in the time ahead

Despite expectations of reduced employment growth in the coming years, we expect the office vacancy rate in Bergen to remain at around 7–8 per cent until the end of 2023. In many ways, the market is expected to be saved by a low to moderate supply of office premises over the next two years, while we see somewhat greater potential from 2023. We expect just over 60 000 square metres to be placed on the market over the next three years, of which approximately two thirds is planned for 2023. Examples of new builds entering the market in the time ahead are Bara’s new building ‘Buen’ in Kronstadparken, Frydenbø’s new building ‘Kilen’ at Damsgård and Veidekke’s ‘Fantoftparken’.

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Click the rows for more information about the area
AreasA - Å High standardHigh - Low Office vacancyHigh - Low
Fyllingsdalen 1500 - 1900 12.2 %
Bergen Sør 1300 - 1850 11.2 %
Næringskorridoren 1500 - 2100 3.8 %
Sentrum 1900 - 2800 6.0 %
Sandviken 1400 - 1700 9.0 %
Åsane / Bergen Nord 1400 - 1700 8.4 %
Laksevåg 1500 - 1800 9.7 %

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

Transaction market

Q1 2021

Activity in the transaction market has been somewhat lower than in previous years, but investors have both the willingness and the capital to buy more if the number of premises on offer increases. Nevertheless, we are seeing a change in the investors’ purchasing preferences//the purchasing preferences among investors. read more

In the market for buying and selling commercial property, we have so far this year seen somewhat lower activity than we normally see in an otherwise very active Bergen market. In the previous two years, commercial properties worth more than NOK 10 million have changed hands in Bergen, whereas in 2020, only 21 sales at a total value of NOK 5.9 billion were made. The four largest transactions account for more than half of last year’s sales value. Nevertheless, our latest investor survey in Bergen indicates that there is both willingness and capital to invest more in Bergen if the right objects come up for sale, but that it is considerably more difficult now than it was to find good investment objects, and that this is the main reason for fewer sales. Despite a high level of willingness to invest, we are seeing a change in purchasing preferences. We are to a greater extent than before seeing that investors are seeking safe investments. An increasing proportion are looking for secure and steady cash flows, preferably from investments in the city centre. In other words, there is high demand for the best properties in both the office and the warehousing and logistics segments, but investors have been somewhat more cautious about investments involving a greater degree of risk. As in Oslo, we are also seeing very high demand for warehouse properties in Bergen. Many believe this segment has strengthened its position relative to the alternatives. DNB Næringsmegling recently revised its estimate for warehousing and logistics facilities, reducing it to 5.00 per cent (2019: 5.25 per cent).

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