After a couple of years with little new space added in the city, we are heading for a series of completions. A total of 30 500 m2 in additional offices are due to be ready next year, with almost 33 000 m2 confirmed for 2023.The two biggest projects are the second construction stage of Entra’s development in Holtermanns veg 1-13 and the Trondheimsporten 2 building being put up by KML Næringsprosjekter. They will provide 20 895 m² and 17 825 m² respectively.

In addition to the newbuilds already confirmed, several large projects lie further off in time. KLP, for example, is well under way with planning Teknostallen, covering 46 250 m2. Planned construction start for this project is January 2022.

Such building has picked up pace in parallel with a decline in office vacancy after three years of a rising trend.¹ Figures from Norion Næringsmegling now show 8.2 per cent vacant space, indicating a good balance in the market. Like Norway’s other cities, we see a big distinction emerging between new, modern and flexible buildings on one hand and older, outmoded premises on the other.

Employment in the region has coped well during the pandemic, with office jobs declined by just 0.3 per cent in 2020. By comparison, Oslo experienced a drop of 0.7 per cent. An important part of the explanation for this labour market stability in the region is its large public sector, which accounts for almost 40 per cent of all jobs.

Nothing is wrong with the trend for signings in the region. According to figures from Arealstatistikk, the volume was record-high in 2020 and is set to be at a corresponding level this year after a very active first half.² 

Nor are there any signs that the pandemic has left its mark on rent developments. The average rent has risen by more than eight per cent since 2019,and was NOK 1 850/m2 in the first half of this year. It amounted to NOK 2 560/m2 for the 15 per cent most expensive leases in the first half, corresponding to an increase of no less than 10 per cent since 2019. Despite the uncertainty in the Arealstatistikk figures, we can safely conclude that the letting market has coped well during the pandemic.

Transaction market

The high level of activity characterising the transaction market in the Trondheim region over recent years is being maintained. So far this year, commercial property worth more than NOK 4.7 billion has changed hands in 18 deals.

Although we have not observed any prestige properties changing hands since 1 January, the appetite among investors is great. One example is Peder Falcks veg 31 A-B, acquired by a Clarksons Platou club deal for NOK 440 million. This office building stands outside the city centre and has the Labour and Welfare Administration (NAV) as its largest tenant on a long lease.

Great variation can be seen in the objects being sold, and student housing forms a substantial proportion of the transaction volume so far this year. Such properties are associated with low risk, and are high on the wish list for a growing number of investors. 

The large number of students in the Trondheim region and a more professionalised letting market make this type of housing an attractive segment. We believe it will become more important in the time to come, particularly in areas with a large number of students.

Based on several indirect references, our estimate for prime yield in Trondheim is being kept unchanged at 4.10 per cent.