07

Bergen

Transaction market

  • The transaction volume in Bergen as of the first half of 2019 was around NOK 3.1 billion, equivalent to the first half of 2018, not taking the Mongstad transaction into account.
  • There is increased interest from Nordic neighbours who go to Bergen when looking outside of Oslo.
  • One of 2019's most significant purchases was transacted in Bergen. Kroepelingården in the city centre sold for NOK 360 million, and a yield below 4%
  • Interest is high within the city with a few good properties on the market. Newsec sees greater interest in the development segment in 2019.
  • The new E39 route from Os to Bergen / Flesland is nearing completion. This will provide good opportunities for new retail and logistics properties.
  • Newsec operates at a prime yield of 4.50%. Newsec believes this will remain stable in 2019, as rental prices are expected to rise in Bergen.

Newsec has been the exclusive advisor to Ferguson plc in the sale of one of Bergen's most attractive development projects. The buyer was OBOS.

Rental market

  • The vacancy rate has been on a downward trend since Q1 2017 (9.1%), before stabilising in recent quarters. As of Q2, the vacancy rate is 8.2% for office premises in Bergen.
  • In particular, the city centre and the business corridor have signed several lease agreements during the past quarter. There is great demand and a lack of new (vacant) quality buildings.
  • Kokstad / Sandsli is again experiencing an increase in vacant space. This is being slowed down by several projects on the drawing board as tenants are drawn closer to the city centre.
  • There is a big difference between rental properties in Bergen. New office premises with good locations and close proximity to the light rail system are very attractive. Properties outside of the infrastructure and service areas are faced with a more challenging market.
  • Bergen will experience an artificially low vacancy over the next two years; The County Administration at Agnes Mowinckels gate 5 is being refurbished and they are taking up large temporary premises outside Kokstad; at the same time, the city hall in Bergen is being emptied, creating an increased need for temporary premises.
  • Newsec also observes that buildings with less area-efficient premises and lower standards are being vacated. These are difficult to rent out.
  • Pressure on rents is expected in the city centre and out towards the business corridor, while the peripheral zones will remain stable. Lease durations are shorter, often 5 + 5 instead of 10 years.