The number of people in work rose by 3.9 per cent in Norway during 2022 – the fastest growth rate since 2007. According to figures from Finn, a Norwegian website widely used to advertise jobs, the number of vacancies posted in 2022 rose by 13 per cent compared with 2021. Big demand for labour, combined with unemployment as low as 3.4 per cent, has produced a heated job market.¹ However, “all” the indicators point to a lower temperature in the time to come. 

• According to the Norges Bank regional network in December, companies expect employment growth to slow and be virtually flat for the next three months.

• The latest labour market survey from Manpower shows that the net employment outlook from the companies is +23 for the first quarter – a sharp decline from the previous three months, when +34 was the highest level ever recorded.

This picture is confirmed by an 18 per cent decline in the number of vacancies advertised on Finn in Oslo from the fourth quarter of 2021 to the same period last year.

But it should be noted that none of the indicators reveal a trend which suggests any particular decline in jobs. Norges Bank’s expectations survey, which includes data on company employment plans for the next 14 months, has actually strengthened a little from the fourth quarter of 2022. The sub-index on employment in the purchasing managers’ index (PMI) also rose in February. It seems possible that a downturn, which many have anticipated, will be more moderate than previously expected and in any event occur later.

So far, moreover, no problems have been faced in raising rents using the consumer price index (CPI), even though companies are experiencing increased costs on many fronts.

Regardless, we are almost certainly entering a weaker rental market than has been the case for the past two years. Analysts expect an almost flat trend for mainland GDP and employment in 2023, and growth in 2024-25 below the average for the past 10 years.² We are already hearing anecdotal evidence that companies are preparing for tougher times. In Norway, Telenor is cutting 200 full-time equivalents and reducing its use of external consultants, while Schibsted is to lower costs by NOK 500 million over two years.

Our expectation is that net absorption of new space, which has been strong over the past two years, will decline from 90 000 m2 in 2022 to zero this year. At the same time, the supply side looks extremely favourable. That will help to balance the market at a time of little or no growth in demand.

Higher signing volume 

The number of m² of office space covered by signed leases in 2022 was higher than we have ever seen, and amounted to a 20 per cent increase from the year before. This high volume must nevertheless be viewed in relation to the large number of leases expiring in 2023, which means that many tenants have been in a renewal position.

Trends in space use by companies 

Given our current market observations, it is too early to draw any conclusion about how any shift to home working will affect future demand for office space. We hear some anecdotal evidence that tenants want to sub-let some of their space as a result of home working. Whether this is a trend, the result of a labour market which favours employees, or mere chance is more uncertain. 

The working from home wave has influenced demand for office space in several other countries, including the USA. However, many conditions vary so markedly between nations and cities that caution must be exercised in transferring conclusion from one market to another.