The first half of 2021 was marked by the highest level of commercial real estate transactions ever. The latest reports and statistics show that this trend has continued in the last six months, and the total transaction volume is likely to exceed NOK 130-150 billion. This surpasses the record year of 2015, when the total transaction volume for commercial real estate was NOK 129 billion.
The pandemic caused increased use of home office. This led to an uncertainty regarding the office rental market. Several companies introduced a hybrid solution where you could split your working time between the office and home office. Which consequences the pandemic will have for the rental market in the long run, is currently uncertain. Nevertheless, there are reasons to believe that the demand for office space will remain. However, it will be interesting to see if the tenants change their views on which premises are sufficient for the individual business in terms of space and quality.
Logistics properties have proved particularly attractive in 2021. The best logistics properties on the market are traded at a yield of about 4.0%, which is a fairly large decrease compared to January 2020. We have reasons to believe that the sharp decline will continue into 2022. The attractiveness is mainly due to yield development, as the rental price growth has been virtually non-existent. This development is also seen on a global level. The sale of the logistics portfolio LogCap is set to become this year’s largest logistics transaction. LogCap is set up by Colliers International Corporate AS and OroEiendom AS, and Simonsen Vogt Wiig’s real estate team has assisted in the build-up of the portfolio.
Even though interest rates are rising, there is lot of capital seeking good real estate projects, especially in logistics. Prime yield is at 3.3%, and there are indications that the yield will stay at the current level or increase marginally during 2022. If yields remain at the current level, the total transaction volume will probably be somewhat smaller in 2022 compared to 2021.
Simonsen Vogt Wiig’s real estate team has capitalized on the high activity in the market and is leaving behind its best year ever.