So far this year commercial real estate in Stavanger has traded hands for nearly NOK 1.9 billion. This is almost three times as much as the transaction volume in the first half of 2018, but there is still a long way to go if the transaction volume is to reach last year's level of NOK 9 billion.
Newsec records wide range of interest in Stavanger with most transactions within the office and mixed-use / warehouse segment at Forus.
There continues to be interest from the syndicates, which have completed 5 transactions so far this year.
Newsec operates with a prime yield in Stavanger of 5.00%. Compared to other major cities, Stavanger has an attractive yield gap.
Vacancy in Stavanger is down marginally from the previous quarter. There is around 231,000 sqm of vacant office space, which corresponds to a vacancy rate of 10.3%.
Hinna maintains a stable level of vacancy along with the city centre and Forus. The market has been expecting a lower vacancy rate in the city centre, but it seems to be taking time for this to materialise.
The leasing market remains challenging with plenty of available space and price pressure on retail premises. Newsec has recorded a higher level of activity with increased interest in premises along the public transit axis between Stavanger and Sandnes, and a continuing need for mixed-use premises. Forus is also experiencing an increase in activity, but struggles with its high vacancy rate.
It will be exciting to see whether new municipal plans will facilitate property conversions and whether the upswing in the oil sector will contribute to higher absorption. Though there will be some delay as large absorption opportunities are available from the sublease market.
New construction is increasing in the city centre, and in 2019/2020 almost 40,500 sqm of office space will be completed. Nevertheless, Newsec believes that vacancy will decrease modestly as employment is expected to increase in the area.
Rental rates in the peripheral zones / Forus continue to be low, but the trend for the area is positive. In the centre, prices remain stable, though the level is roughly double that of Forus.