Job losses in 2020 proved less dramatic than many had feared, and most office-based companies have come through the pandemic well. The signs now are that employment will rise in the coming quarters and years. According to Statistics Norway, jobs will increase by 0.7 per cent in 2021 and a solid 1.4 per cent next year.

Although staffing will probably rise most in the sectors which were wholly or partly locked down during the pandemic, optimism is strong now across a broad range of sectors. Companies in the financial and business services sector, for example, have the biggest plans for workforce expansion in the next quarter, according to Manpower’s labour market survey.

An open question is naturally how tenants will organise their use of space, when we now can see the outlines of what life will be like after the reopening. Most large enterprises are planning some form or other of hybrid solution, with personnel working partly from home.¹

However, it is difficult to interpret the way this will be implemented in practice – and many companies have still not decided yet. The main impression is that general guidelines are given, but that flexibility will depend to a great extent on the individual employee’s duties and immediate superior. It also seems likely that many enterprises will feel their way forward.

But there seems to be a consensus that the great majority of employees must expect to spend a substantial time at the office in the future. The signs are therefore that working from home will be a complement to rather than a substitute for the office.

We have yet to see any convincing signs that tenants are reducing space because of increased home working.

• Looking at new enquiries in the market this year, virtually all tenants are seeking the same amount of space as before.²
• Leases covering 526 710 m2 of office space were awarded in the first nine months of 2021, 13 per cent above the average since 2008. If anything, this was higher than expected given that we are in a period with low lease expiries..³
• Office vacancy has risen less than might have been expected as a result of increased newbuilding and a weak macro picture.⁴
• Nothing in rent trends, the size of leases or lease durations indicates a major restructuring.
• When we interviewed eight of the biggest banks in the Norwegian market during September, all responded that they expect to occupy the same space as before. None expect office vacancy to rise as a result of increased home working, and this issue has no effect in any way on their lending policy.

On the other hand, we often hear of new requirements which are not taken into account in today’s building layouts. Increased use of digital meetings calls for more rooms to accommodate such sessions and to permit digital interaction. We are constantly hearing of tenants with too few spaces of this kind, which means in part that employees are being forced in practice to work from home on days when they have many digital meetings. Our expectation is therefore that a number of enterprises will reconfigure part of their space. 

Since activity in the letting market has remained good during the pandemic and the outlook for the labour market is promising, the signs are that we will see a positive trend for demand in the time to come.

With a limited availability of new space from next year, we expect the combination of low supply growth and increased office demand to reduce vacancy towards six per cent in 2022.

Our latest forecast is thereby rather more optimistic than before, when the peak was expected to be half a percentage point higher.