Retail market report 2017 by ColliersNorway

retail market

norway 2017

Retail Market Report Norway

contents

summary 4 highlights 6 macro economy norway 8 the retail market norway 11

market outlook 12

retail performance 12 key areas oslo 14 footfall 20 investments 24 shopping centres norway 26 fashion 28 food & beverage trends 31 data & figures 33 about colliers & contact 38 Retail Market Report Norway

summary Haakon Reed-Larsen

Head of Retail Colliers International Norway

In recent years, retailers have increasingly looked at Norway as an attractive market for expansion. Despite the decrease in the petroleum industry and the implications this still has for the Norwegian economy, the Norwegian retail market is still performing relatively strongly. International retailers presence in Norway is currently low compared with other European countries. Despite many strong domestic brands, there is still a strong appetite from Norwegian consumers for new international retailers/ brands from around the world. Colliers International in Norway have the last 20 years had a strong focus on advising our clients within the Retail sector, as is the strategy for Colliers Globally. We hope this Retail report will give a valuable market input to our clients and potential clients, highlighting our strong competence within advising tenants on finding the right space and terms to open new stores, advising owners of shopping centers of new concepts on the footstep to Norway and helping owners of vacant retail space to find the right and best tenants. Our focus is all types of retail business, but I would like to put focus on our strong competence within F&B and International Fashion Retailers. Our Retail team in Norway are here to advise you to make the rignt decissions!

Retail Market Report Norway

T spen ho

spe

Retail Market Report Norway

highlights 2017 salary

The average Norwegian salary for all employees is EUR 55 044 per year.

home renewal

NorwayÂ´s capital

The average Norwegian household nds approx EUR 3 500 per year on ome renewal (decoration, furniture, appliances etc.)

Oslo, offers a variety of shopping. 1, 5 million people live in the Oslo region.

shoes & clothing

shopping habbits

The average Norwegian household ends approx EUR 2 200 per year on shoes and clothing.

More than 35 % of all retail sales in Norway take place in shopping centers

transportation

70 % of all households have a car and almost a quarter have two cars

unenployment

4,2 % amongst the lowest unemployment rate in Europe

Retail Market Report Norway

macro economy norway The Norwegian economy is recovering well from the effects of the oil downturn and the scarce growth in global demand. However, the Norwegian economy continues to be heavily reliant on the petroleum business and the “oil-fund” continues to support a growing portion of the Norwegian fiscal budget. The economic downturn has now lasted for the better part three years. However, it is becoming increasingly apparent that the tide has turned and that Norway is set up for strong economic growth going forward. Most experts in the field as well as new data that is continuously coming in support this view. The expected GDP growth for 2017 is 1.8 % which is expected to grow further to 2,4 % in 2018 and draws a very positive image for the Norwegian economy. 2016 numbers showed a growth of 0.9 % in comparison. Other sources and experts are frequently suggesting even higher growth in the coming years. This underpins the perception that the Norwegian Economy has picked up the pace and that there are exiting times ahead. CURRENCY The Norwegian NOK has in general been somewhat strengthened by the improving oil price and macro conditions. At year-end, the NOK was trading at roughly 9 against the € Euro and even below, which was for the first time in roughly 18 months. However, the NOK has decreased somewhat and as of mid-October, is currently trading at levels around NOK 9.35 per 1 € Euro. Furthermore, although not at peak levels, the NOK is currently very weak compared with the USD $ when reviewing it in a historical perspective. This is in part fueled by the Americans increasing their interest rates twice within a relatively short period of time, as well as “Trumpism”, in addition to a generally weak NOK. Before the recent fall of the NOK in the past month, an increase was widely expected. Going forward, the road a head seems somewhat uncertain. Our main scenario however, remains

GDP Mainland

Retail Market Report Norway

that the NOK will increase against most other currencies going forward in 2017 and especially in 2018. CPI The CPI rate continuously surprised on the “upside” in 2016 as ended at 3.6 %, which was well above comparable data for other Western European countries as well as way above estimates from the start of the year. However, the rate has dropped quite significantly in 2017 and it is currently around 1.5 %. The estimation for the end of the year is close to 2 %, which is far below the figure from last year. UNEMPLOYMENT The unemployment rate is as of the start of October 4,2 % which is a steady decline since the turn of the year. The overall trend is that the unemployment rate will continue to decrease going forward, although at a rather slow pace. This is due to factors such as a recovery in within the petroleum sector as it is expected that the investment will bottom out in 2017. Also, the cost of developing an oilfield has sunk by 40 % compared to 2014. Also, mainland Norway is projected to perform quite well in the year of 2017 in terms of investment and also a slight increase in exports. The unemployment rate is expected to stay at the current level during the course of 2017 and further down into 2018 and 2019. OILPRICE The oil price increased quite considerably from the end of 2016 and has since remained between $ 50 and $ 60 per barrel. At the time being (medio October) the oil price is hovering around $ 55 - 60, after a recent increase after the summer. After OPEC and other major oil producing countries has engaged in several agreements as of late, the oil price is according to most experts within the field, likely to continue to increase throughout 2017 and beyond.

CPI

UNEMPLOYMENT

2013 (%)

2014 (%)

2015 (%)

2016 (%)

2017 (E´) (%)

2018 (E´) (%)

2019 (E´) (%)

2020 (E´) (%)

GDP, MAINLAND

2,3

2,20

1,10

0,80

1,80

2,40

2,20

2,10

GDP

1,0

1,90

1,60

1,00

1,50

1,90

1,80

2,00

CPI (JAE)

1,60

2,40

2,70

3,00

1,70

2,00

HOUSEHOLD CONSUMPTION

2,70

1,90

2,10

1,60

2,20

2,60

2,30

2,10

PUBLIC CONSUMPTION

1,0

2,70

2,10

2,30

1,70

1,90

2,50

INVESTMENTS (OIL & GAS)

19,3

-3,20

-15,0

-14,70

-7,0

-0,10

6,20

1,90

EXPORT

-1,70

3,10

3,70

1,2

0,50

2,00

2,20

3,10

EXPORT (OIL & GAS)

-5,50

1,90

3,2

3,80

0,40

-0,10

1,60

EXPORT (TRADITIONAL GOODS)

1,30

3,1

5,80

-8,20

2,20

4,00

4,10

4,40

IMPORT

4,90

2,40

1,630

0,30

2,50

2,20

2,90

2,70

IMPORT (TRADIOTIONAL GOODS)

2,30

2,10

1,90

-0,60

1,50

3,10

4,20

3,60

SOURCE Statistics NOrway

UNEMPLOYMENT

3,50

4,40

4,70

4,40

4,20

4,10

EMPLOYMENT (*LEVEL)

71,2

70,7

70,4

70,5

70,6

70,8

HOUDEHOLD (DISPOSABLE INCOME)

3,80

2,70

5,20

-1,60

2,00

2,10

1,90

2,00

8,2

10,4

7,1

7,4

6,8

6,40

6,20

HOUSEHOLD (SAVINGS RATE) MONEY MARKET (RATE LEVEL)

1,80

1,70

1,30

1,00

1,10

1,40

CONSUMER PRICE EURO AREA

1,30

0,40

0,10

0,30

1,60

1,70

1,80

1,90

SALARY

3,90

3,10

2,80

1,70

2,30

3,10

3,19

RESIDENTIAL PRICES

4,0

2,70

6,10

7,10

6,50

0,60

-1,50

-2,10

CPI

2,10

2,0

2,10

3,60

2,00

2,10

2,20

2,30

Retail Market Report Norway

the retail market norway The traditional retail format is continuously under heavy scrutiny from the ever-growing e-commerce. Lately there has been several reports of shopping centres in the Unites States, which has been deserted in recent years due to new ways of doing and thinking of shopping. Al though generally not to the same extent as we see in the US, this is also taking place elsewhere in the world, such as Norway. In the context of the Norwegian shopping centre market, we are especially concerned for the small and medium sized shopping centres. While the larger shopping centres generally has more means and possibilities to expand and make shopping centres more of a destination, smaller shopping centres will struggle to do so to the same extent and to take part in the next generation of shopping centres. Admittedly, the smallest shopping centres which are often local, will continue to serve more of a purpose in more densely populated areas of the country. However, the medium sized shopping centres which to a larger degree are competing with the large regional centres, will struggle. We do believe that it will become something of “eat, or be eaten” in the shopping centre business going forward. What we mean by that is that medium sized shopping centres will in many cases need to expand in order to achieve appropriate size. If they are unable to do so, they will generally fail to attract customers and remain attractive for the public.

We are already seeing this in a highly competitive area such as Bærum and Asker where shopping centres Trekanten and Rortunet are ready for considerable expansion in order to better compete within this market. We expect other shopping centres to make similar decisions going forward. Norway is currently one of the countries in the world with the highest density of shopping centres compared to inhabitants. This is due to several factors, such as the weather and Norwegians´ appetite for convenience being a few of several possible explanations. Consequently, the sheer amount of Shopping Centres and the strong competition because of that in the Norwegian market ensures that landlords has to address the issue of more e-commerce in order to survive. However, especially in Oslo, there is one factor that is aiding the shopping centres which are located outside of the city centre. The municipality of Oslo is currently removing and closing a very substantial amount of parking places for the public. Within next year, there will be close to no public parking places left within the Ring 1 area (city centre). Combined with the Norwegian weather and the often necessity of transport while shopping, this could in many cases contribute to a preference for shopping centres compared to high street locations. In sum, we believe that it is a challenging situation for both shopping centres and retail. With the emergence of e-commerce, customers has endless options. The strongest will survive, those that are able to adapt and perhaps might to be able take advantage of the new situation. Those that are unable or unable to make adaptions will find themselves struggling in this market. Retail Market Report Norway

market outlook Our market view is that the prime rents have remained quite stable during the course of the past year in the Oslo retail market. The highest prices are still found in Karl Johans Gate with recent contracts indicating an increase in prime level rent to close to NOK 25 000 per sqm for the best retail space within this street. This is slightly up compared to previous levels of NOK 23 000 per sqm from a year ago. The recent increase underlines Karl Johans gate and surrounding areas as the most important shopping destination in central Oslo. The demand for these premises within these locations continues to remain strong. Furthermore, top locations in Oslo are gaining increasingly more attention from international retailers which are contributing to higher rental prices for landlords. One factor which is contributing to high rents in certain areas is the influx of international brands and retailers in to the Norwegian market. In Oslo, the entrance of high end international brands has been especially noticeable and has in certain areas such as in the area around Akersgaten, Øvreand Nedre Slottsgate contributed to high rents. The vacancy rate in the retail sector remains low for properties located within the central Oslo region. In the most popular streets such as Karl Johans gate with adjacent streets and Bogstadveien is experiencing close to 0 % vacancy. When there are vacant premises in these streets, it is usually down to frictional vacancy, the time from the previous tenant has vacated the premises until the new tenant is able to move in as most premises in these areas has a high demand for retail space. As of the start of November, there are only a handful of advertised properties in any of the main high street locations in the Oslo city centre. Of the few available, close to 50 % is located in the newly renovated Prinsens Gate which is an area expected to garner considerable attention going forward. We believe that strong demand for prime high street locations in the larger cities in Norway generally, and Oslo specifically, will continue going forward. Retail Market Report Norway

We see the same regarding centrally located shopping centres such as Oslo City, Sandvika and Strømmen Storsenter. We are also experiencing the same with large shopping centres outside of the other larger cities in Norway. These, and a few other shopping centres has an extended cue of prospective tenants that wants to move into premises that are left vacant in these locations. For secondary shopping centres and smaller local centres, the situation is quite different. Consumers are increasingly favouring larger shopping centres which increasingly can attend to all consumer needs and are increasingly viewing shopping centres as “making a day out of it” and as an experience rather than “just shopping.” Consequently, the letting process is far more challenging for small and medium sized shopping centres and landlords would be wise to expect a void period in order to obtain tenants. We believe that smaller and medium sized shopping centres outside of city centres will experience turbulent times going forward.

retail performance As of the start of November, the Norwegian retail market has performed below expectations for several months. The latest available data, which shows the retail index from August to September, indicated a fall of 0.8 %. This followed a fall also in the previous month and an expectation of a growth of .2 %. Sales from petrol stations as well as sales of shoes and clothing were the main negative drivers. For the year as a whole however, the picture is more positive with an increase of 2.1 %. For the Norwegian shopping centres, the outlook is slightly different concerning the past few months. In September, the increase in turnover was close to 4 % compared to last year. The increase in sales appears to be nationwide. In total, the increase in turnover for the shopping centres in Norway has been 2.1 % which is in line with the rest of the retail industry. Adjusted for new stock, the increase is 1.6 % (Kvarud Analyse, September 2017).

Retail Market Report Norway

G AT

S G AT

IES

SOF

RES E

SVE IEN W

E IL N

V E IE

SKOV

G KO

A I TZ ' G

T HARB

ØY

Thorvald Meyersgate Markveien

LÉ H E N R IK I BS E N S GAT E

N ATIONALTHEATRET ST

T O

OLA

E IEN

Areas under development (Torggata / Grønland and Barcode M U / Sørenga)

V VS GT

Aker Brygge / Tjuvholmen

D A

The shopping centre stock in Oslo & Akershus is approximately 2 million sqm and the figure is increasing quite fast. Compared to other Scandinavian cities, Norway has a considerably larger share of shopping centres compared to its’ population than Denmark and Sweden. During the past few years, a lot of new shopping centre stock has been developed in Norway and especially in the area around Oslo where we have seen severalA I A DK TA new shopping centres in the market, while others PS I L have expanded and redeveloped existingF I stock. The competition is fierce. Nonetheless, several shopping centres in the Oslo area are contemplating expansions, as well as a few new developments are currently on their way. Retail Market Report Norway

TS D N

IE E

V KE IR

AUG

DEH

F IN

DE N

ESI

ØV

Hegdehaugsveien Bogstadveien

N D shopping centres A oslo & akershus

AT A

ISK

Karl Johansgate Øvre / Nedre Slottsgate Torggata Kvadraturen

G AT

shopping streets oslo

UIS

A S G AT E

key areas oslo

FE S S

S EI

FA L

A LL

S C H L E P P E GR E L L S G AT E

FR E D E N S B

UNS AHL BR

G AT E

TO G

S RG

BO TE GØ

K O R S G A TA

EN EI

SV IM

HE D

G AT

NORD

MAR IDA LSVEIEN BR EN NE RI VN

SELS

WES

N O R D R E G AT E

K TH

DOVRE

VULK

S ER

IEN

T O F T E S GATE

LØKKA TE LT H US B

LØKKA

M A R KV E I E N

DAL S BE R

GRÜNER-

GR ÜN ER -

L EL

NI P

R ER

TA S

IT GE

E AT

T H O R VA L D M E Y E R S G AT E

S E I L D U K S G ATA

P S G AT E

IEN

S T E E N ST R U

E R T H R A N E S G AT MA

G AT A AN NE R

RS LE

BS G E

G AT A

AKERS

G ATA

TA RGA

SØ

AT GA

LLE

MØ

BBE GRU

RØ

DS L EI

TRE

LAS

GRØNLAN D

OSLO S SE

RÅDHUSGATA 1 7

5 A

1 KA

T G AT

ARU

Retail Market Report Norway

PE R

karl johans gate

nedre / øvre slottsgate / akersgata

Karl Johans gate is Norway's parade street and runs from the Central Station to the Royal Palace. In Karl Johans gate and surrounding streets you can find all the major chain stores, flagship stores and a wide range of luxury stores. Karl Johans Gate has the highest retail rents in the country and is an area where you find a large variety of shops.

These streets are side streets to Karl Johans Gate. The area has been transformed in recent years into the destination for high end and luxury shops in Oslo and this development is continuing steadily with more brands entering the area this year. Meyer Bergman continues to be the dominant player in this area through their company, Promenaden. The area has by far the highest density of luxury and high-end shops in Norway and the density and actual numbers is steadily increasing.

The best corner locations located in this street from Egertorget and westwards can be let for NOK around 25 000 per sqm for prime retail space (zone A). Due to the high rents, the stores present at Karl Johans Gate is not necessarily profitable, however, chains chose to locate to Karl Johan because they “have” to and use their store in this location as a show room and marketing tool.

In the past year, brands such as Saint Laurent, Rag & Bone, and Balenciaga have located to the area and other entrants are rumoured to happen in this area in the coming years. The largest landowners in the area seems increasingly conform to embrace this development and encourage luxury and high street shopping in the area in favour of lower scale retail establishments.

The upper part of Karl Johans gate has also in recent years undergone major transformations, Steen & Strøm Magazine has re-established itself as the leading fashion magazine, and along with fashion house Eger, this helps to create a more attractive center with a bustling urban environment.

This area continues to attract tourists in large numbers, and recently a Global Blue Tax Free station opened up between the high-end luxury stores to accommodate tourists.The rent levels in the area has risen quite significantly during the past few years with the entrance of the luxury and high end shops. The prime rent level in this area is currently NOK 16 000 - 18 000 per sqm of grade A retail space which is in line with our estimate from 2016.

During the past year, Karl Johan has continued to strengthen its position as the most attractive shopping area in Oslo. New entransts such as Nike and also a new H&M flagship store. The latter is scheduled to open in 2018.

rg ga to

ate lot

ate

ttsg

re S

l ler gat

Slo dre Ne

Mø

12 - 15 000

15 - 20 000

nok/sqm/year

Retail Market Report Norway

e nn i Dro

keg Kir

6 - 12 000

nok/sqm/year

gat

e gat ens Kon g

3 - 6 000

nok/sqm/year

ate

nge

keg

sga lott re S Ned

han

Kir

sga lott re S Øv

l Jo

ata

rsg a A ke

Ka r

ata

gat

Øv

Gr en

tsg

oha

ers

Kar

Gr en

20 - 25 000 nok/sqm/year

Ka r

l Jo

han

ate

christmas shopping oslo - karl johans gate

Retail Market Report Norway

torggata

hegdehaugsveien / bogstadveien

Torggata has been completely revitalized during the past ten years. Initially, the half of the street closest to Stortorget and Karl Johans Gate was redeveloped initially and currently has a several large chain stores and broad, attractive cobblestone pavements and façades.

The area of Hegdehaugsveien and Bogstadveien remain popular amongst retailers, however, are struggling to get back to the popularity in the years prior to the financial crisis. The pavement and tramlines in the street was recently updated after a couple of years of redevelopment.

The street has been split by Arbeidersamfunnets Plass in the middle and the divide has been apparent when looking at the various tenants. While the western parts of the street had been revitalized, the eastern parts of the street up until recently were full of small serving shops, mainly kebab and hamburger stores as a few small local shops. At nights, shady activity was highly present.

For instance, the pavements now have under soil heating in an effort to make the street more attractive for prospective customers. We are now seeing that customers are returning to the area after being somewhat alienated from the prolonged development period.

During the last couple of years, also this end of the street has been transformed with several of the most popular and hip restaurants and cafès in Oslo as well as several small, new shops opening in the area. Most of the old kebab, hamburger and telephone repair shops have been replaced. Prime rent in Torggata is currently approximately NOK 10 000 per sqm – a healthy increase compared to a few years ago. This area is becoming an increasingly popular area for prospective new stores. New entrants within this area includes TGR and Normal, in addition to several food & beverage alternatives, Koie Ramen being the newest one.

e irk

Both Bogtstadveien and Hegdehaugsveien has a high density of large chain stores, the former more so than the latter which has close to exclusively large chains present while Hegdehaugsveien has a larger influx of more exclusive shops. The prime rents in the area is rather stable, however, we are currently seeing some property owners struggling to recuperate their rent when the current contract expires. The current prime rents for Bogstadveien and Hegdehaugsveien is currently NOK 12 000 – 13 000 per sqm which it has been for the past few years despite the completion of the new pavements.

ien

eie

ieg

adv

gst

lk Va

at a Bo gs ta dv eie n

Hegd ehau gsveie n

6 - 8 000

nok/sqm/year

8 - 12 000

nok/sqm/year

Retail Market Report Norway

markveien / thorvald meyersgate Thorvald Meyers Gate and Markveien are areas that have become increasingly popular in the past 10 â&#x20AC;&#x201C; 15 years. A while ago this area was full of independent shops and diversity. We are now however starting to see a larger influx of larger chain stores such as The Varner Group. H&M opened their stores of COS and Weekday during 2016 as well. The gentrification in the area has been strong in recent years and rents has risen quite strongly and also dramatically for several of the smaller independent shops which are now being forced to vacate the area. The prime rents in Thorvald Meyers Gate and Markveien is currently around NOK 8 000 per sqm.

Markveien Thorvald Meyers gate

Markveien

5 - 8 000

nok/sqm/year

thorvald meyers gate oslo

Retail Market Report Norway

footfall Historically, there have not been many measurements of footfall readily available in Norway and Oslo as a means of predicting retail performance. Colliers International is currently working on systems in countries such as the UK. This will hopefully become available in Norway in the future However, Gehl Architects conducted such a research back in 2014 which remains valid.

An area however which is frequently being mentioned as “the next big thing” in terms of the Oslo high street retail scene is Kvadraturen. However, according to Gehl Architects the footfall rate at Kvadraturen is very limited, despite its´ very central location. Especially when it becomes dark there is very limited football in the Kvadraturen area as of yet and this will need to change if there is any hope of a significant upturn for the retailers that is located here.

Source: Gehl Architects

Non-surprisingly, it showed that Karl Johans Gate has a very heavy footfall with the street being frequently visited nearly at all times. What is more, the street is most often visited in the summer with 42,7 % of total footfall, while the autumn accounted for 31.3 % and the winter the share of footfall had dropped to 26 %.

This is finely correlated with most centrally located shopping centres which reports of more traffic and turnover in autumn and winter months compared to the summer when there is much lower activity going on. Saturday is also generally slightly better visited compared to Tuesdays with a 51.5 % share compared to Tuesdays 48.5 %.

Retail Market Report Norway

karl johans gate and sorrundings

Retail Market Report Norway

louis vuitton oslo Retail Market Report Norway

investments After the publication of our retail report from last year, the retail transaction volume ended up nearly doubling in size due to a few large transactions towards the final two months of the year. The end summary shows a transaction volume for the retail sector of over NOK 12 bn. We might be seeing something similar this year, with transaction levels on par of what it was last year this time of year. After what was a record breaking year in 2015, the transaction volumes have down. Looking at the nature of several of the 2015 transactions, this was fully expected. What is more is that retailâ&#x20AC;&#x2122;s share of the total transaction volume is now more or less in line with an historical average of between 15 % - 20 %. What we have generally seen in the last few years, is that retail properties, especially shopping centres, has been quite often been sold as portfolios. High street properties in good locations are rarely up for sale, and when they do, it is nearly always for a very low yield and high price. The demand is there, however, the supply is very limited. Outside of a flurry of high profile sales in 2015, these types of sales are rare in Norway. In 2015 alone we had the 2nd and 3rd largest shopping centre chains in Norway change hands, one of the largest single standing shopping centres sold, in addition to the most attractive high street real estate portfolio in central Oslo being bought by foreign investors. In years prior and in 2016 and 2017, we have not experienced anything close to this. As of the start of November, the transaction total close to NOK 8 billion. This is in line with the numbers from 2016. There has been a few larger transactions, such as the sale of a large portfolio of Esso petrol stations, Ă&#x2DC;yrane Torg in Bergen and Norwegian Outlet in Vestby. These three properties combine of more than NOK 3 billion, which is more than 40 % of the total transaction volume for retail properties. In terms of share of the total volume YTD for commercial property in Norway, this is close to 15 % of the total, which is also in line with the data for 2016. There are a few larger processes which might still be completed during the course of 2017, and we expect a higher transaction volume at the end of the year. Our estimate is for close to NOK 12 billion worth of retail property to be sold within the end of 2017. The current transaction market within the retail sector is very unbalanced. We see that the demand for retail property in Norway is very strong at the moment, however, is severely lacking in supply which subdues the transaction volume. This does place pressure on the yield levels which has now been steadily decreasing for several years in high street locations as well as shopping centres and big boxes. In addition to the strong Norwegian players, there is strong international interest for retail property in Norway as evidenced by recent purchases by CityCon, Axa and Meyer Bergman to name a few. The lack of supply will unfortunately continue to curb the transaction volume going forward, especially concerning the larger transactions. Al though the supply undoubtedly is strained, we see that the actual numbers of transactions remains on historically acceptable levels. The yields in the retail sector has been quite stable the past year. We do however note a small decrease for both the High Street and Shopping Centre segments where the prime yield now is 3,9 % and 4 % respectively. The demand remains very high for prime property, while the supply is also highly limited. This is in line also with our expectations going forward. Prime Yield levels 2017: High Street: 3.9 % Shopping centres: 4 % Big Box: 5.25 % Retail Market Report Norway

istock photo Retail Market Report Norway

shopping centres Norway is the country in Europe with the highest density of shopping centres compared to inhabitants. There is probably several reasons behind this fact, however, the principal reason mentioned if more often than not the weather. All across Norway, there are small, medium and large sized shopping centres and even some of the largest shopping centres in Sweden are predominantly visited by Norwegians as they are strategically placed along the Swedish / Norwegian boarder. The total stock of shopping centres (larger than 5 000sqm) within the Greater Oslo region is just over 1.5 million sqm and quite a few have been constructed or revitalized in the past ten years. Additionally, Steen & Strøm is curently building what will become one of the largest shopping centres in the region at Økern within the city limits of Oslo. Despite all this, there is a legislative from 2008 that was made in order to impede too rapid development of shopping centres and which states that shopping centres can only be built only on land already pre-approved zoned for such purpose within the county plan. One incentive to behind this is that according to The Norwegian Institute of Transport Economics, several shopping centres in Norway outside of the large city centres has a share of transportation at as much as 95 %. In more densely populated areas, the car share of transportation is as low as 20 %. We do expect that small and medium sized shopping centres will increasingly face difficulty going forward. Large shopping centres are increasingly providing additional services such as restaurants, cinemas, games and even swimming pools. People are increasingly viewing going shopping as an experience, which, despite all our shopping centres, has taken us Norwegians quite some time compared to many other countries. We do expect that several tenants will struggle in smaller shopping centres going forward. As for the largest shopping centres in Norway, Sandvika Storsenter outside of Oslo to the west remains the largest while Strømmen Storsenter to the east of the capital has overtaken Lagunen Storsenter in Bergen as the second largest.

Norway´s 20 largest shopping centres RANK

SHOPPING CENTRE

PLACE

Q1-3 2017

GROSS TURNOVER Q1-3 2017

Q1-3 2016

Change in %

SANDVIKA STORSENTER

SANDVIKA

2196

2195

0,0

STRØMMEN STORSENTER

STRØMMEN

2175

2113

2,9

Shopping performance BY SECTOR

JAN-AUG 2017 (%)

GROCERIES

1,7

LAGUNEN STORSENTER

BERGEN

1964

2151

-8,7

AMFI MOA

ÅLESUND

1943

1958

-0,7

MISCELLANEOUS

5,5

SØRLANDSSENTERET

1729

1679

3,0

ALCOHOL

-0,1

STORO STORSENTER

OSLO

1584

1561

1,5

COSMETICS

-4,4

KVADRAT 2)

SAMDMES

1529

1458

4,9

TEXTILES

7,7

CLOTHES

-3,7

SHOES

-7,0

SPORTS EQUIPMENT

-1,5

SARTOR STORSENTER 3)

STRAUME

1497

1355

10,5

ALNA SENTER

OSLO

1472

1469

0,2

CC VEST

OSLO

1457

1470

-0,9

CITY NORD

BODØ

1389

1331

4,4

FURNITURE

3,1

SKI STORSENTER

SKI

1379

1377

0,2

ELECTRICAL HOME APPLIANCES

8,5

OSLO CITY

OSLO

1347

1361

-1,0

CONSTRUCTION

0,9

CITY LADE

TRONDHEIM

1315

1324

-0,7

BOOKS

-0,2

CITY SYD

TRONDHEIM

1305

1282

1,8

FLOWERS & PLANTS

7,1

JEKTA STORSENTER

TROMSØ

1299

1272

2,1

PHARMACY

4,9

AKER BRYGGE

OSLO

1293

1168

10,6

JEWELERY

-7,8

JESSHEIM STOSENTER

JESSHEIM

1199

1235

-2,9

GAMES & TOYS

-2,3

E-COMMERCE

13,6

ÅSANE STORSENTER

BERGEN

1146

1171

-2,1

VESTKANTEN STORSENTER

BERGEN

1100

1095

0,4

Retail Market Report Norway

Source: Kvarud Analyse

OSLO CITY oslo

Retail Market Report Norway

fashion Very exciting things are happening within the fashion industry today, both concerning international trends as well as locally in Norway. We are observing that an increasing number of brands are looking to establish themselves in Norway, both in the luxury and mass-market segments. The population is steadily increasing and the average income is significantly higher when compared to the rest of Europe and consumption is growing. Norwegians actually spend 30 % more on clothes and shoes compared to the European average. This makes Norway, and Oslo especially, to a highly attractive destination for new concepts. Several luxury brands such as Saint Laurent, Balenciaga, Hermes, Gucci and more have already established themselves in Norway, and others are coming as well. International concepts are contributing to lift Norway as a shopping destination, which is something that is also beneficial for the shopping centres. In sum, this is making Norway an increasingly appealing destination for new establishments. There are some concerns regarding e-commerce and the threat it brings for the traditional business community in addition to the “Millennials” generation, who are increasingly demanding more. This means that shops within the fashion segment have to adapt, and this should happen quickly. Sales over the internet increases the availability for the consumer, which in turn increases the total consumption. Consequently, the competition amongst the traditional stores increases, where the strongest ones survive. The consumer can buy what he or she needs online. The consequence is that when you go to buy something in an actual store, you need to receive something “more”. The consumer wants a unique experience that inspires. The service has to be good and you would want to exit the store with something more than what is in the shopping bag. Especially in the USA, we are seeing several new ways of shopping in traditional stores and this will in turn come to Norway. E-commerce is here to stay. This makes it essential to see it not only as a threat, but also to find means to take advantage of it. Click and collect is a popular form of shopping and 24 % of adult European consumers that has used this service, also buys other goods while they visit the store to collect their purchase. You therefore also need to think about space management to increase your upsell. Lastly, click and collect increases footfall and the potential of upsell in the stores. Retail Market Report Norway

Retail Market Report Norway

food & beverage The Food & Beverage segment is subject to big changes. What makes it even more exciting is that the different trends has considerable variation and goes in different directions. In total, the Food & Beverage sector in Norway has had a fantastic turnover development of 7.9 % in 2016. In 2016, the total turnover for this sector was NOK 39.4 billion. This is an increase of 16 % since 2014 according to data from Statistics Norway. What is exciting is that several new players have recently established themselves within the Norwegian market and they are finding their niche. Examples includes hot dogs and home brew beer, salmon as the main attraction or Sunny Up which has egg as the main focus for the food they create. The Bar, Himkok, was also recently named the 20th best bar in the world. While the local innovation is high, there are exciting new players that are establishing themselves in Norway such as Ling Ling by Hakkasan as well as Jamie Oliver. Cuisines that are trendy are Asian, seafood, burger, barbecue and healthy among others. “Crossover Kitchen” is also here to stay where food from different countries are combined. The Food & Beverage and eating out will continue to grow in Norway for several reasons. Consumers saves time, lack of food knowledge in the home, an experience, good economy and a social meeting point. The latter seems to be perhaps the largest single factor. Consequently, shape and design has to be such that people want to stay at your establishment. Additionally, it is worth mentioning that Norwegians are not just eating bagged lunches anymore. It is becoming an increasingly important point in the average workday. In Lonely Planet, Oslo is in the top 10 list of cities to visit. Architecture, experiences and restaurants are important criteria to meet in this ranking. After all, Food & Beverage is all about the experience. Food & Beverage establishments which are likely to succeeed in the future will be recognized by: • • • • • • • • •

A proper location will become even more vital The “right” neighbours Two way communication with their guests through social media Visibility online Best regarding services (read: building relations) Create authentic experiences Open to change Able to renew themselves Quality of foods Retail Market Report Norway

Retail Market Report Norway

data & figures Sources: Bank of Norway Colliers International AS Gehl Architects Statistics Norway

Retail Market Report Norway

Retail index

Imports

Exports

data & figures

Retail Market Report Norway

Historical retail transactios Share of total volume

Historical retail transaction volumes NOK Billion Historical prime-yield levels

Retail Market Report Norway

The Colliers retail team are ready to help you get the best solution for your company.

Retail Market Report Norway

about colliers international Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. For the latest news from Colliers Norway; colliers.com/no or follow us on Twitter (@ColliersNorway) and LinkedIn (Colliers International Norway).

retail contact norway haakon reed-larsen head of retail haakon.reed-larsen@colliers.com +47 482 99 834 jĂ¸rn andersen senior advisor retail (food & beverage) jorn.andersen@colliers.com +47 934 69 729 stine bjĂ¸rdal senior advisor retail (fashion) stine.bjordal@colliers.com +47 928 81 075 kari gro herrem senior advisor retail (landlord rep.) karigro.herrem@colliers.com +47 913 81 950

Retail Market Report Norway

Copyright ÂŠ 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Images used in this report: Istock, Colliers & Nyebilder.no colliers.com/no

Retail Market Report Norway