Almost 13 000 new office jobs were created in Oslo, Asker and Bærum during 2021 – a growth rate of almost 4.4 per cent, the highest we have seen since 2008. The upturn admittedly followed a slight decline in 2020, but the reduction was much smaller than in earlier downturns and the bounce-back has been considerably faster and stronger. This means the “lost” growth in 2020 has been recovered, and the past two years have collectively been virtually normal in terms of solid growth for office employment in Oslo.

High demand has undoubtedly characterised the labour market, which is also reflected in figures from the finn.no website. Its summary for 2021 shows that the number of published job vacancies was up by 56 per cent from the year before. The figures also show that office-heavy sectors, such as IT, had a 46 per cent increase in published job vacancies in 2021.

Norwegian employment growth is expected to continue in 2022, with Statistics Norway forecasting a total rise of 1.6 per cent this year – the same level as in 2018-19. However, the estimate for 2023-24 is lower at 0.6 per cent per annum. A challenge for many companies in the time ahead is presented by low unemployment, which makes securing qualified personnel difficult in many cases. At the same time, the outlook is more unpredictable than usual. High inflation, a tightening in monetary policy, rapid price rises for raw materials, and war contribute to great uncertainty over the macro picture.

According to Arealstatistikk, no less than 912 new office leases covering a total of 763 000 m² were signed in 2021. That compares with an average of just over 650 000 m² in the four-quarterly rolling volume since 2009. The volume has only been higher than the latest period on two occasions.

The growth in demand means that vacancy has failed to increase even though much new space was completed last year. Office vacancy in Oslo is 6.4 per cent for the first quarter of 2022, which is primarily flat in relation to a year earlier. With little new space in the pipeline, we expect vacancy to start declining.

Although demand for office space is high for the moment, much uncertainty remains about the role of the office in coming years. New requirements have arisen which challenge its layout, and which may be space-intensive.

At the same time, it appears overwhelmingly likely that we will continue to see a substantial element of working from home in the years ahead. The question many ask is naturally how that will affect the use of space.

According to a survey by Economics Norway on the office after the coronavirus, 44 per cent of respondents say they have made or are planning changes to their office because of the pandemic. It also shows that no less than 70 per cent of employees are experiencing an increased need for space to hold virtual meetings, while 60 per cent want to see more one-to-one meeting rooms.

These findings agree with responses to corresponding questions in UNION’s coworking survey. This shows that 63 per cent of the operators have altered the outfitting of their premises to meet new user requirements. More small meeting rooms and technology which improves the conduct of virtual meetings are once again the most important changes.

Viewed in isolation, these modifications could increase the space needed by tenants. On the other hand, greater use of home working may pull in the opposite direction.

The Economics Norway survey cited above found that 79 per cent of tenants continued to use home working wholly or partly after the reopening of Norwegian society last autumn. Of these, 19 per cent thought this would mean a reduced need for space. Assuming that these respondents cut the area they occupy by 25 per cent (at random), we can calculate an overall improvement of just under four per cent in space efficiency.

Figures for the growth in office employment and demand show that enhanced efficiency has annually eliminated 0.8 per cent of space required over the past 10 years. Returning to the calculation above, and assume an average rental period of five years, we end up at an annual efficiency improvement of 0.8 per cent – in other words, identical with the trend over the past decade.

We would emphasise that great uncertainty attaches to many of the figures above, but the calculation illustrates an important point – the market can cope with a significant improvement in efficient use of space as long as it occurs gradually (in other words, when leases expire).

Our forecasts assume that the trend towards greater efficiency continues but that the growth in new office jobs nevertheless creates a demand stimulus strong enough to reduce vacancy. We expect 90 000 m² of new space to be absorbed in 2022 before the figure drops back to 60 000 m² over the next two years. Combined with low supply growth, that will probably be sufficient to drive vacancy down towards 5.5 per cent over the coming year.