With the exception of 2015, employment by office-based sectors in the Oslo region has developed positively since 2010. Growth has been driven to a great extent by information and communication jobs, but such sectors as legal and accounting services, public administration and technical consultancy have also been major contributors.¹

A period of strong job growth in Oslo was expected to be followed by a slow-down in coming years. At 1 January, Statistics Norway predicted that employment would rise nationwide by 0.9 per cent in 2020. Unsurprisingly, these forecasts were downgraded as a result of Covid-19. Its latest prediction indicates a two per cent decline in jobs this year, followed by an average annual rise of about one per cent up to 2023.

In normal circumstances, a significant national decline in employment would have an immediate impact on demand for offices. This time, however, the outcome is likely to be less dramatic because the impact of Covid-19 has varied widely between sectors. While a number of companies in retail, restaurants, wellness and tourism have been directly affected by the shutdown, the impact has been smaller on most enterprises in typical office sectors.

Although office sectors are less vulnerable than other parts of the labour market, we expect the pandemic to have sufficient effect on the market for employment in these to experience a decline as well. Our expectation is that this in its turn will help to reduce overall demand for office space by an overall 75 000 m² in 2020 and 2021.

Statistics Norway predicts that GDP for mainland Norway will return to the 2019 level during next year, with employment recovering on a national basis in the course of 2022. We thereby expect demand to increase relatively quickly and to absorb much space in 2022-23.

Source: UNION

Disregarding business-cycle changes, Covid-19 has been a two-edged sword with respect to demand. On the one hand, extensive use of home working has fuelled speculation that space requirements will decline on a permanent basis. However, increased remote working is not always synonymous with reduced need for space. That is because a precondition for the latter is that the office always has fewer people present. “Free seating” will also be necessary to secure the benefit. Some observers also predict a change in office layouts, with greater need for meeting rooms and social zones.

In the short term, moreover, the pandemic could increase the demand for space because cramped offices harmonise badly with precautions against infection. Companies which want many staff at the office while also preventing infection might need more room in the time to come.

The volume of new leases signed was very low in the second quarter.² This could reflect the postponement of decision processes or a weakening of the rental market. However, we believe the main explanation is that the volume of lease expiries is low in 2021-22 and that signing volumes will therefore be lower for a period regardless of Covid-19.