Cushman & Wakefield MarketBeat reports analyse quarterly Sweden commercial property activity across office, retail and logistics sectors including supply, demand and pricing trends at the market and submarket levels.
Office
Nearly 170,000 sqm of new office space has been delivered across Greater Stockholm, Greater Gothenburg, and Greater Malmö in the first half of 2023, marking a significant increase compared to the same period last year. Over half of the space (98,000 sqm) has been delivered in Greater Malmö. Development activity is expected to remain high, with nearly half a million sqm currently under construction across the three largest urban areas in Sweden. However, only about 42,000 sqm is expected to reach the market this year, with the majority of the projects expected to be completed in 2024 and 2025. The overall vacancy rate continues to increase in Greater Stockholm and Greater Gothenburg, reaching 11% and 9.5%, respectively, while decreasing in Greater Malmö to reach 8%. Meanwhile, the vacancy rates have declined in Malmö's and Gothenburg's CBDs, reaching 7% and 10%, respectively, while registering a slight increase in Stockholm CBD, reaching 4.5%. Prime rents continued to increase in Stockholm, reaching SEK 9,000 per sqm in the CBD, while stabilizing in Malmö and Gothenburg at SEK 3,300 and SEK 3,800 per sqm, respectively. Meanwhile, the prime yields have continued to decompress, reaching 3.70% in the Stockholm CBD, 4.10% in the Gothenburg CBD, and 4.40% in the Malmö CBD.
Logistics
Nearly 400,000 sqm of new space has been added to the Swedish logistics market in the first half of 2023, and total completions are projected to exceed 1.2 million sqm by the end of the year. Approximately half of the new projects are being developed in regional cities, followed by Stockholm (22%), Gothenburg (16%), and Öresund (10%) regions. Nearly 45% of the projects projected to be completed this year are being developed on a speculative basis. Despite a robust development pipeline, the demand for logistics remains strong. The overall vacancy rate increased slightly across Sweden reaching 3.5%. Vacancy rates also increased in the Gothenburg region and the regional cities to reach 2% and 3% respectively. The rate remained unchanged in the Öresund region at 4.5% and decreased in the Stockholm region reaching 5%. Prime rents have continued to increase in Gothenburg and the regional cities to reach SEK 875 per sqm and SEK 600 per sqm respectively. At the same time the prime rent remained unchanged in Stockholm and Öresund regions. Meanwhile, after decompressing sharply the prime yields across Sweden have begun to stabilise at 4.75% for prime properties in Stockholm and Gothenburg regions, 5% for prime properties in Öresund and 5.25% for prime properties in the most attractive regional cities.
Residential
The number of new apartments in the recently started residential projects around Sweden dropped to below 6,000 units in Q1 2023, marking a decrease of over 50 percent year-on-year. Developers are facing significant challenges due to the rapidly rising construction costs and increasingly expensive debt. Consequently, despite a severe apartment shortage in 180 out of 290 Swedish municipalities, multiple projects have been placed on hold. Standard rents have risen by approximately 10 percent year-on-year across the major cities in Sweden. Simultaneously, the yields have continued on their upward trajectory, reaching 3.9 percent in Stockholm, 4.2 percent in Gothenburg, and 4.4 percent in Malmö. Meanwhile, the residential investment volume has exceeded SEK 9 billion, reflecting an increase of over 300 percent quarter-to-quarter but a decrease of 40 percent year-on-year.
