Sweden MarketBeat

Håvard Bjorå • 20/03/2020
Cushman & Wakefield MarketBeat reports analyse quarterly Sweden commercial property activity across office and retail sectors including supply, demand and pricing trends at the market and submarket levels.

Office

As the residential construction market in the Stockholm region has faced difficulties since 2017, the office development has geared up and moved from a production around 100,000 sqm/year to almost 200,000 sqm in additional space each year 2018 and 2019.

New development is almost all pre-let. The former trend of converting office space to residential space has also declined. Underlying factors such as the record low CBD vacancy and difficulties to add space in the central parts of the city has boosted development where possible, currently a few new central projects are mainly located around Sergels torg, close to the central station. Larger space are available and developed in submarkets and suburban areas.

Leasing moves to a new normal due to low vacancy. The vacancy in central Stockholm has bottomed out and might now also impact the take take-up levels, which has significantly dropped during the last two years. The demand for larger office space is increasingly high. However, tenants tend to demand shorter and more flexible contracts. The market for subletting has also become more common.

Investment

2019 as a total was a new record high for real estate investment transactions in Sweden, adding up to 229,5 BSEK. Last year has also been an upswing in international investors reentering the market, exceeding 27%.

Cushman & Wakefield has experienced a growing interest in the Swedish real estate market with multiple international bidders in large deals, within all segments excluding retail.

There has been a new annual rise in transactions in the residential sector, interest to purchase in this segment remains high together with the interest in public service buildings such as schools, health care facilities and portfolios of care homes. Industrial and logistics has been another winning segment of 2019 with several large deals taking place.

Cushman & Wakefield sees future demand for the logistics sector due to a continuing increase in e e-commerce. Yields have been pressed for both industrial and logistics during 2 019, especially in the largest regions. WTP is increasing due to expectations of further yield compression and rental growth. Demand for retail properties is mainly focusing on grocery and discount retail, mainly in big box locations. The liquidity of shopping centers and gallerias is however significantly lower than 2011 2011-2016.

The office sector is characterized by immense competition for products reaching the market, transactions within both traditional core products and development projects in expanding cities have generated price records during the past year.

Get the full Sweden property market picture with all the market data by downloading the reports.

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Office Marketbeat is a summary of the Sweden office property sector providing comment on recent trends as well as market data and analysis.

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Retail Marketbeat is a summary of the Sweden retail property sector providing comment on recent trends as well as market data and analysis.

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