MARKET REPORT 2018 VOL. 3 |NOVEMBER 2018ISSUE RETAIL MARKET NORWAY 2018 RETAILRETAIL FOOD & FOODBEVERAGE & BEVERAGETRENDS Veganism, social responsibility and food quality TRENDS- What will the future of Food & Beverage look like? Veganism, social resposibility and food quality - What will the future of Food & Beverage look like? IS RETAIL DYING? WHAT’S Our Senior Retail Advisor investigates SHAPINGWHAT’S COMMERCE NOW We have interviewedSHAPING Bror William Stende from VirkeTRADE NOW We have met Bror William Stende PROP TECH from Virke

Menu MAKE YOUR 8 LEMONS JUICY

Our Senior Retail Advisor, Stine Bjørdal argues that retail is not dying, it is merely changing.

FOOD AND BEVERAGE 12 TRENDS Our Food & Beverage Specialist, Jørn Andersen comments upon food sustainability, veganism and other important trends for the industry.

WHAT’S SHAPING 16 TRADE

Bror William Stende from Virke highlights three specific trends changing the development of trade: demography, technology and consumer behaviour.

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Contents

The following document is an interactive PDF. You can easily click on the desired page from the table of contents below. You can use the menu button on each page to return to this page. This document appears best in fullscreen mode.

Editor’s letter 4 Retail performance 6 Make your lemons juicy 8 Food & beverage trends 12 What’s shaping trade 16 Disruptive technology 20 Report highlights 24 Macroeconomics 25 Key areas 27 Key areas , , Stavanger 32 Shopping centers 33 Investments 35 Data & figures 37 Retail clients Norway 39 Retail contacts Norway 40 About Colliers 41

Design by Colliers International AS I Photo credit: iStock, Patricks Dronetjenester and Colliers International AS

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Editor’s letter

The Norwegian consumer is in the driver’s seat. Enabled by technology, they remain constantly connected and more empowered to drive changes in shopping behavior in both the physical store and digital retail landscape. 2018 is turning out to be an exciting and challenging year within Norwegian retail; many predictions have been made on retail performance, but is retail really in trouble, or is it simply transforming?

Retail in general is performing well driven by the strong performance of the Food & Beverage sector and the continued growth of e-commerce. New technologies are continuously entering the market, boosting experiences in shopping and adding value.

PROFILE Colliers International Norway have in the last 25 years had a key focus on advising our clients within the NAME: HAAKON REED-LARSEN retail sector, as is the strategy for Colliers Globally. WORKS AS: HEAD OF RETAIL We hope this retail report will give a valuable market input to our existing and potential clients. We also hope ABOUT: 25 YEARS OF EXPERIENCE FROM to highlight our strong competence within advising THE RETAIL INDUSTRY. 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 find the right and best tenants.

Our focus is all types of retail business, but I would like to highlight our strong competence within Food & Beverage and retail leasing. Our retail team in Norway are here to advise you to make the right decisions!

Haakon Reed-Larsen Head of Retail

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“2018 is turning out to be an eventful year in Norwegian retail”

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Retail performance and market outlook

Retail in general is performing well, however as In order to keep customers in the center for a longer assumed, e-commerce is taking an increasingly bigger period of time, shopping centers have gone from 2-5 piece of the cake. From January to August 2018, % to 15-20% Food & Beverage coverage. e-commerce was up 13.8 %. With this in mind, there has been a lot of talk about the element of experiences Shopping centers across the country are stepping up in shopping. New technologies are continuously their game and we are seeing many big development entering the market, boosting experiences in shopping projects - some already started while some are still and adding value. in the planning phase. Experience is also on the rise within this segment, and larger parts of the shopping Pop-up is also getting more focus, and several centers are now dedicated to experience related international actors are looking to expand their brand retailers like trampoline parks, cinema, bowling, aqua to Scandinavia. The pop-up industry is enabling both land etc. On the other hand, we are not currently newly started brands to showcase their products as seeing much variety in these offerings in Norwegian well as new international brands to test the market. shopping centers, as the tenant mix seems to be very Pop-up is also increasing the number of new store similar in the different development projects. It will openings, catering the needs of the experience therefore be exciting to see whether this will change craving and news-seeking consumer. The Lobby in in the future. Stockholm is a good example of a successful pop-up concept that has gotten a lot of media attention. Another development important to note is that the Norwegian government is limiting the possibilities to The Food & Beverage (F&B) sector is also booming. drive in center, especially around the Karl In particular, we see an expansion in the number Johan area. Many street side parking spaces have of burger concepts in the Nordic countries. Going been removed, and the number of one-way streets is forward, property owners will focus on attracting increasing. If this development continues, the traffic more F&B players to their High Street locations, as to shopping centers within and outside of the city they generate more traffic than a normal shop will center will most likely increase. do in the afternoon when office workers usually go home. Rents in Oslo city center have somewhat decreased, and the expected high footfall in Prinsens gate is still on hold. However, rents in Karl Johan remain quite stable with an increase in some parts of the surrounding shopping streets. The demand for locations in these streets remains strong and the vacancy is close to 0 %. High-end brands continue to establish themselves in Oslo, with emphasis on the area around Nedre Slottsgate, making the surrounding streets even more attractive.

The Barcode area is still under development, with the new Munch Museum and luxury apartments soon completed. The retail offerings in this area is continuously improving, and the turnover in the Barcode area has increased by 20 % from the same period last year. With 400 planned apartments, 18 000 sqm office area and iconic buildings like The Opera and The Munch Museum, Barcode is expected to continue growing.

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Shopping centers have “gone from 2-5 % to 15-20 % food and beverage cover”

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Digitalization has caused worry for the future of retail as many struggle to adapt to changes in technology. However, does this change need to be negative? Our Senior Retail Advisor, Stine Bjørdal investigates.

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“The bulk of retail sales will continue to take place in stores”

Remember a couple of years ago when the music industry was revolutionized? In year 1995, listening PROFILE to TLC and Michael Jackson one would not think that the music industry could exist without the sales of CDs. And look what happened, the music industry is NAME: STINE BJØRDAL now more profitable than ever. So why can we not WORKS AS: SENIOR ADVISOR RETAIL also disrupt the retail industry and change it for the better? ABOUT: COLLIERS INTERNATIONAL ADVISOR FROM NORWAY WITH A Yes, e-commerce is accelerating store closures. Yes, the growth of online sales is increasing in a higher BACKGROUND IN FASHION. rate than physical retail. Yes, many stores will die. Nevertheless, predictions are that online sales will increase until it reaches 40 % (estimated around 2027), after that it will flatten out. This means that Let’s make one thing clear: physical retail is clearly the bulk of retail sales will continue to take place not dead, and retail apocalypse is a worn out word. in physical stores, in which some parts of the However, boring, undifferentiated, uninspiring retail is retail market will become more affected by online most definitely dying. penetration than others. There will still be segments where experiencing a product before purchasing will Retail is going through vast disruption causing many continue to be important, such as the beauty segment. stores to close, and some shopping centers to undergo Also worth mentioning is that a significant share of bulldozing. Nevertheless, it is important to point out online sales touches a physical store in some way that the “death of shopping centers” in the U.S is or another. According to GlobalRetail, 29 % of online not as dramatic as one would think. If you compare sales touch a store either through click&collect or the the number of empty centers to the total amount of customer doing research in the store before going shopping centers in the US, the statistics are not that online to purchase. This is an excellent opportunity bad, and definitely not worse than other continents. for upselling. So with this in mind, when I go to a What we actually see is a revolution. Due to the digital store for my click and collect, why am I led down to revolution, we have rapidly moved from the Industrial the men’s department to pick up my package, with Age firmly into the Information Age. What retailers nearly no exposure to women’s clothing? This is need to do now is to make their lemons juicy. definitely not making your lemons juicy.

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There are only three certainties in life: death, taxes and change. So who is to say that physical retail is dead? It is merely undergoing changes, like all other aspects of the world. From year 2000, half of the previous firms on the Fortune 500 list were gone. This means that the opportunities are endless in a fast changing world. The future will no longer be simply online vs. offline, the future will rather be about engagement and convenience across all channels. Retailers will need to engage with their customers by connecting with them. Examples of this is the UK brand Sweaty Betty selling sports clothing while offering yoga lessons in their stores, or Nike offering to test sneakers at a basketball court on the 2nd floor of their store.

So what is happening exactly? We are going from mass market to mass customization, and customer experience is the new ultimate brand. The new modern consumer is highly demanding, disloyal, time challenged, authenticity craving and experience hungry.

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new ultimate brand” VOL. 24 | APRIL 2019 IS

ally visible in the store. At the end of the session, you get a set of VR glasses where you can see your kitchen “in real life”. You can even take the glasses The consumer wants convenience and strives for the home with you and make necessary alterations to work/life balance. Easy payment is the holy grail of your kitchen. In this way, Sigdal has suddenly made convenience. Just look at Uber and how convenient kitchen shopping both convenient and a created a fun they have made the payment process for their experience out of it. customers. AmazonGo is also on the forefront in this area having removed their cashiers entirely from So what is the conclusion to draw? There is no need their stores. Vipps is also an excellent local example to despair. The so-called retail apocalypse is actually of making the payment process more convenient for really a renaissance. So to answer my question, the consumer by allowing fast mobile money transfers physical retail is definitely not dead, but boring retail regardless of which bank you are using. is heading for the graveyard. May it rest in peace.• Convenience is also installing pick up points with connected fitting rooms in shopping centers. When you pick up your package, you can try on what you have ordered and subsequently return it then and there if it does not fit. And even better, you have a whole arena easily accessible to replace that garment. Talk about win-win!

The modern consumer wants to share. Why not take advantage of this as a retailer and get some free marketing while you are at it? Examples are cafés installing Instagram-friendly flower-covered walls, or Starbucks writing your name on that instantly recognizable cup making the whole experience of buying a coffee more personalized. If they write your name wrong, you share it because it is funny. If they get your name right, it is a miracle which definitely needs to be shared. #Starbucks gets 32.6 million hits on Instagram. That is a lot of free marketing.

The consumer values experiences over products, in- store digitalization is becoming a cutting edge retail 1s experience. One example is Sigdal’s new concept Sophiegirl I said my name was Sophie with a “ph” where you walk through a labyrinth-like store, #Starbucks #funny #fail designing your kitchen by choosing materials physic-

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Food & beverage trends

Food & Beverage is becoming increasingly affected by various trends, be it taking pictures of your food for social media, becoming a vegan to positively affect the environment or growing concerns for health.

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PROFILE

NAME: JØRN ANDERSEN WORKS AS: SENIOR ADVISOR RETAIL ABOUT: COLLIERS INTERNATIONAL ADVISOR FROM NORWAY SPECIALIZED WITHIN THE FOOD & VOL. 24 | APRIL 2019 IS BEVERAGE SEGMENT

A restaurant visit is no longer just a need for food Swedish Max Hamburger is the first chain in the and socialization; it is so much more than that. In world to serve climate-positive burgers. This means Norway, we are seeing more trends in different and that every burger eaten at Max Hamburger helps new areas. Single-person households are increasing reduce carbon dioxide in the atmosphere. The chain and more people visit restaurants than ever before. is no longer only climate neutral, but also contribute Food & Beverage actors in the Oslo region had a sales positively in other ways such as by planting trees growth of 8.6 % in 2017. Overall for Norway sales in Africa. We also see a clear tendency for chefs to growth increased by 4.8 %. The Food & Beverage engage in sustainability, charity, volunteer work and segment has also had a positive development at food education. shopping centers. In additon to the noticeable growth in Food & Beverage, we also see many trends that are Vegan/vegetarian steadily increasing and likely to last in the next years.

Vegetarian food has had a major development Social responsibility and sustainability throughout the past year. The interest among consumers is increasing, not only for vegetarians but Globally, we throw out almost a third of all food in the also for people who are more concerned about their trash. In 2018, the government and the food industry own health as well as the environment. Looking at in Norway signed an agreement on measures to fast food actors, many chains have launched their reduce food waste by 50 % by 2030. This is an own versions of veggie burgers. Max Hamburger agreement between restaurants, grocery stores and launched their vegetarian burger series in 2017 and hotels. The App called Too Good Too Go is a good the success has been far greater than anticipated. example of an effort to reduce food waste. The App is free and user-friendly and aims to connect consumers We also see that chefs are increasingly experimenting to restaurants and cafés that have leftover food with plant-based proteins. Food innovation is currently which would otherwise have been thrown out. The moving at a rapid pace without negatively affecting leftover food is subsequently offered at discounted taste, on the contrary taste is actually improving. prices resulting in reduced losses for the owners and cheaper food for the customer.

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“The shift from fast food to real food real fast has moved at a rapid pace”

Increased food quality Cultural directions

Another clear trend is the increase in food quality. Andrew Freeman in Af & Co believes that the Israeli We have not stopped eating fast food, but we see that and Mexican cuisine will gain a stronger presence in much of the growth is taking place in the premium the future. We will also see more of modern Chinese market. The shift from “fast food” to “real food real and Korean cuisine. In addition to this, the Indian fast” has moved at a rapid pace. The future will be cuisine is also becoming more popular; however, characterized by casual eating venues with a narrow Indian food will become more present in the form menu of high quality, suiting most occasions. of street food. Authentic food with a clear cultural direction is also likely to become significantly more Technology popular in the future. • Technology is constantly evolving. We will probably see more efficiency through digitalization also in the Food & Beverage industry, especially within the ordering process where a customer may order through an app or a tablet on the table. In addition to streamlining the ordering process, the customer will also be able to get information about calories and nutritional content amongst other things.

Social media

We share everything all the time. Especially the things that look good and are likely to stand out in the vast sea of impressive photos on social media. Colorful and creatively arranged food will become more important and gain more attention from customers. The future will therefore bring more food concepts designed to look good on social media.

Health

Food can be used as medicine. Food as medicine is becoming increasingly popular as consumers’ requirements for health is affecting food production. Pickling and fermentation will to a greater extent take over for additives. Customers want to see a greater use of raw materials that have a demonstrable positive effect on health. With relation to this, nutritional information will become a standard at most restaurants as mentioned above.

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Colorful and creatively arranged food “will become more important, the future will therefore bring more food concepts designed to look good on social media. ”

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PROFILE

NAME: BROR WILLIAM STENDE WORKS AS: DIRECTOR RETAIL ABOUT: RESPONSIBLE FOR FOLLOW-UP OF MEMBERS IN THE CLOTHING AND TEXTILE INDUSTRY AT VIRKE

Trade According to Virke

Virke is the leading main organization for service industries in Norway and represents over 21,000 businesses. We have interviewed Bror William Stende from Virke who asserts that there are three main trends to be seen within Norwegian commerce: demography, technology and consumer behaviour.

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In the past, trade was a protected sector in Do you expect growth in the forseeable Norway. Price increases could easily be transferred future? to consumers, and although they might have been reluctant to accept this, household income growth First, let’s look at the status of Norwegian commerce quickly recovered. Today however, the tables have today. In the retail trade, 370 000 employees turned as Norwegian trade is facing competition from are currently holding 300 000 positions. It is the all corners of the world. Everything the consumer country’s largest workplace. While there previously might want to purchase is a mere click away at prices was a correlation between the number of employees that are difficult to beat for a high cost country such in the retail trade and the number of inhabitants in as Norway. Norway, there is now a clear distinction in which this relationship seems to be disconnected. We do not What challenges are Norwegian trade have the same growth in the number of employees facing going forward? in the retail trade as the growth in the number of residents in Norway. The jobs in this sector are flat. Positively speaking, Norwegian actors have innovated When we look at growth in the various retail trade significantly over many years and streamlined the channels, internet shopping in foreign online stores value chain with corresponding cost savings. This comes in at number one, closely followed by shopping contributes to making our structure leading as well as in Norwegian online stores and consumption when giving us an advantage in the competition. However, we travel abroad. We now also spend more money on the challenge is that we are facing major changes services than we do on goods, a threshold we crossed in the way trade is developing. There are especially for the first time in 2015. three main trends that should be noted: demography, technology and consumer behavior. “Norwegian actors have innovated significantly over many years”

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How will changing demographics affect the retail trade?

Norway is becoming increasingly urbanized; over half of the population now live in Norway’s ten largest cities. However, it is the municipalities around the large cities that experience the greatest growth rate and not the cities themselves. This means that the customer base becomes weaker in the districts compared to maintaining a large retail structure.

Statistics Norway has stated that the population will grow by 15 % in the 10 largest cities and surrounding areas by 2030, and less than 10 % in Norway as a whole. There is also a tendency for people to live in smaller residences and for more people to live alone, which of course changes our needs.

More specifically, how can changing age demographics play a part in this change?

We are growing older. The population in Norway is increasing the most in the upper age groups. There will be 0.5 million more people over the age of 67 in 2040. This is also a highly affluent group. By 2040, it is estimated that the population over 67 will increase to 1.2 million while 40 % of the total population will be over 50 years old.

How is technology influencing consumer behavior?

Traditionally, technology has been predominantly prevalent at the wholesale and supplier’s side. However now, the gains from new technology involve the consumer to a much greater extent. It is therefore important to view consumer behavior as a separate driver for changes in commerce as digitization is changing the consumer pattern.

The consumer is generally more knowledgeable in the sense that they can easily seek and find information about their desired product. They can also decide which seller they want to purchase the item from and through which channel, regardless of time or physical location. This creates a more demanding customer, changing the pattern of trade and expectations for the purchase experience as well as the purchase itself.

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In today’s media, the new digital age is of your audience, increase the relevance of frequently mentioned, what are your personalization, and optimization by testing and targeting through different channels. thoughts about this?

It’s all about mobile mobile mobile – the number one Finally, how can partnerships create more channel for all information and the place where most value in retail? purchases begin. Also with respect to technology in general, new technologies now affect everyone - all Not everybody can be good at everything. consumers, all jobs and all links in the value chain Partnerships can open up to new customer groups from manufacturer to consumer. Previously it was and help strengthen the brand. As an example, common to use IT or singular technologies to innovate Clas Ohlson permits Telenor to sell their services in single elements in the business model. Now we in their stores in Sweden. Komplett and Elkjøp see a “platform-based digital transformation” at every have created e-commerce platforms for partners stage. The new digital age is about integrating digital to help them face the competition from the major key technologies across the entire value chain, such international e-commerce players. Adidas entered as mobile internet, internet of things, big data and into a partnership with Findmine, a technology analysis capabilities, 3D printers, robots and artificial aiming to provide additional sales through suggesting intelligence (AI) to name a few. For Norwegian trade, complimentary products with each purchase. Jysk the interaction between these technologies will have gives subcontractors access to their online store a far-reaching effect on how goods and services are with products that are not sold through their chain, conveyed and sold to the consumer. strengthening Jysk’s online store with a wider selection. What does the modern consumer look like • now compared to before?

As a result of new technology, consumers have changed their behavior. They have adapted to new technologies and are now driving the development that the retail sector must adapt to going forward. The modern consumer is online 24 hours, seven days a week and expects answers to everything immediately. They also expect transparency in prices, excellent service and a seamless interaction between digital and physical channels. The modern consumer places more emphasis on experiences and services and shows a greater commitment to social responsibility. The last ten years have taught us that we can adapt to new technologies at record speed. We now communicate in new ways such as via Snapchat, Instagram, Facebook etc. Challenging you say? Yes - but this also provides us with many opportunities.

AI and Big Data, how can these play a part in the retail trade?

The total amount of data in the world has never been greater, but is it utilized effectively enough? In the retail trade, it is extremely important to use the right approach to technologies such as Big Data and AI in order to target communication in an effective manner. There are especially three reasons why you should better utilize your customer data: increase the scope

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Explore: Disruptive Technology New prop tech start-ups are hot, and the opportunities are endless. These changes might potentially break some retailers, but the ones that are able to exploit this will thrive in the new digital era of retail.

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The era we are entering is all about information and digitalization, and new technology is booming! One single technology will not change the world. It is the composition of different technologies paired with other elements that will drive change through increased productivity, streamlining and cost savings. We see many different trends evolving within technology. Some are simple technologies designed to make shopping more convenient and fun for the consumer, while some technologies are groundbreaking and will revolutionize the whole retail industry and the way we live our lives - and this is happening fast!

A technology that we hear about a lot these days is virtual and augmented reality (VR and AR). Despite the fact that these technologies are not brand new, they are still predominantly used in gaming and very few professional settings. Examples include real estate brokers showing houses with VR glasses, placing you in a virtual representation of a house, or furniture makers giving you the option to see whether a sofa will fit in your apartment using AR technology. These technologies are likely to develop at a rapid pace the next few years, changing not only the way we shop but also many other aspects of our lives. For now, VR and AR glasses are for particularly interested individuals. However, in two years, Google are launching their AR glasses that closely resemble regular glasses, aiming at everyday consumers. This will definitely fuel changes.

When the mobile phone was launched on the market, you had to carry it around in a suitcase. Critics were saying that there was no way that this product would last long on the market. Now, look at what has happened with the mobile phone industry; we can hardly live without them! Who is to say that the same thing will not happen with AR glasses? An even more interesting question is perhaps how long it will be before AR contact lenses become available on the market.

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Another technology that is rapidly evolving is 3D idea is quite simple and quite brilliant; they use Google printing, which has moved from prototyping to search words and social media to map upcoming production. 3D printers are printing everything from trends. As consumers often tend to do research clothes to houses, and the technology is becoming online before purchasing a product, they can get an increasingly advanced. A luxury watchmaker called idea of upcoming trends before they boom. They can Uniform Wares recently used 3D printing to create a also get an idea of when a trend is decreasing, as new titanium strap consisting of 4 000 tiny pieces. In the search words and hashtags will consequently be Austin, Texas, a company called ICON have unveiled observed less frequently. their version of a 3D printed house. The model is 60 sqm and consists of a living room, bedroom, bathroom, Another example of a disruptive technology important kitchen and shaded porch. It took less than 24 hours to mention is robot technology. In the past few years, to print the house and cost less than $10.000 to there has been growing concerns that robots may produce. This creates many new opportunities for the take over service related jobs currently performed future, imagine being able to print your own clothes by humans, especially in the retail sector. For and furniture. now, robot technology is just an enrichment of the customer shopping experience. Who knows what the Interactive mirrors are also on the rise, and one future holds, and to what extent robot technology will example of a company producing these is iMirror. These eventually affect the industry. Work tasks that are mirrors can be used in both dressing rooms as well already semi-automated such as storage work are as an in-store Omni channel. They provide immersive likely to be affected first. However, there is a great in-store experiences that allow customers to receive advantage in using robot technology as they can customized service and discover personalized perform tasks more accurately and efficiently, and offerings. The idea is brilliant for upselling as well as they can work 24/7. In addition to this, it is important giving the customer a fun shopping experience. The to remember that new technology does not only take mirror recognizes the clothes you have picked out and away jobs, it can also create more new jobs in the automatically brings them up on the screen. You can same process. see what sizes and colors are in stock, and even order them to your house. The mirror will also recommend There has been an inflation in doomsday predictions other clothing articles that will match the pieces you of which occupations that are most likely to disappear have already chosen. It is also possible to integrate in the years to come. In January, Google and McKinsey payment systems in the mirrors, giving the consumer predicted that 500 000 of current jobs in Norway will a seamless and convenient shopping experience. be gone within 10-15 years. However, it is important to remember that the jobs do not disappear; they only change as digitalization and automation also Artificial intelligence (AI) is a technology that creates new professions. Not too many years ago, it will definitely help physical retailers optimize their was predicted that the banking and finance industry stores as well as the customer experience. AI can would be a victim of job losses due to technology. be integrated in the retail industry within sales, This was partly right, as many branches have shut customer recommendations, manufacturing, logistics down in recent years. Nevertheless, there are now and payment. Particularly voice recognition will have more employees in this sector than ever before a great effect on the retail industry. Products within due to banks such as DnB who are actively seizing this field such as Alexa and Google Home will most opportunities brought on by technology. Ten years ago, likely continue to improve, and will possibly become a who would have predicted that social media would natural part of the interior in most houses in the future. create thousands of new jobs such as influencing and Imagine telling these devices what groceries you social media coaching? would like to purchase and have them subsequently delivered to your house with a drone later in the day. As Peter Drucker put it, “the best way to predict the future is to create it.” The opportunities are AI can also be used for gaining and learning useful endless and the new digitalized information-seeking information. A company called TrendAnalytics can consumers are craving for change. help retailers predict trends before they emerge, • helping them buy or produce the right products. The Author: Senior Advisor Stine Bjørdal

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23 Menu RETAIL MARKET NORWAY 2018 24 Menu Oslo offers a variety of shopping. Over 1.5 people live million in theOslo region. Norway’s The average Norwegian salary for employees all isEUR57562per year. Salary Area is8.1 %. unemployment rates inEurope. Theunemployment rate in the European The unemployment rate inNorway is3.9 %whichisamongst the lowest Unemployment Oslo offers a variety ofshopping. Over 1.5 peoplelive million in theOslo region. Norway’s 5 % to 17%. proportion offood andbeverage inshopping centers have increased from More retailthan 35%ofall sales inNorway take placeinshopping centers.The Shopping year throughout theirlife. of clothing,3.4 kilosofshoesand65furniture anddecorations every If the current consumption level persists, anaverage person buy will 14.6kilos Shopping highlights Report The average Norwegian salary for employees all isEUR57562per year. Salary Area is8.1 %. unemployment rates inEurope. Theunemployment rate in the European The unemployment rate inNorway is3.9 %whichisamongst the lowest Unemployment Capital Centers Habits Capital RETAIL MARKET NORWAY 2018 25 macroeconomic experts. towards amoderate economic boomaccording to 2.1 %and2.6for 2020.Norway is thus moving Norway. Predictions for 2019isexpected to be 2018 according to the latestupdatefrom Statistics 2.0 %in2017, anditisexpected to landat1.8 %in The GDPgrowth was international impetus. as wellweak positive the petroleum industry, increased investments in is mainly driven by The anticipatedupturn moderate goingforward. is forecasted to bemore krone isexpected to strengthen and the fiscalpolicy policy rate within the near future, the Norwegian Bank ofNorway continue will to increase the key On the other hand,itisexpected that the Central the upturn. higher wagegrowth are factors all that contribute to in the workforce, decreased unemployment rate and that this trend continue. will Anexpected increase has beeninamoderate upturn,anditisanticipated Since the beginning of2017, the Norwegian economy Macroeconomics based throughoutcountry. the shows that the decline in unemployment is broadly labor force survey prepared by StatisticsNorway, decrease from 4.2% in 2017 to 3.7 %in2020.The same time, the unemployment rate isanticipated to and is forecasted to increase going forward. At the The work force inNorway totaled 69.7 %in2017, Employment market [ expectedstrengthenand the to fiscal policy is forecasted to be more moderate goingforward. The Norwegian krone is Menu points by the endof2021in their economic forecasts. estimated sixinterest rate hikes of0.25percentage board in the Central BankofNorway decided to raise have increased sincemid-2016, and the executive 2016 untilSeptember 2018.Thelonginterest rates since 2012,andwasatarecord low 0.5 %from March The Norwegian key policy rate hasbeendecreasing Interest rate Norway. is also the inflationary target of theCentral Bankof % in2020before itincreases to 2.0%in2021, which forecasts show be1.7that CPIwill %in2019and1.5 energy pricesaswellspecialduties.Further be 2.8 % in 2018, mainlyCPI will driven by higher from 3.6 %in2016.StatisticsNorway expect that the average of1.9 %in2017, whichwasasignificant fall The Consumer PriceIndex (CPI)endedatayearly CPI change in the number ofemployed persons. decreased unemployment rate results inasignificant The combination ofanincreased workforce anda ] Statistics Norway has first quarter of2019. increased further in the rate most likely will be keyis thatthe policy 0.75 %.Their outlook in September 2018 to their recent assessment 0.25 percentage pointsin the key policy rate by RETAIL MARKET NORWAY 2018 26

GDP CPI Interest rate Employment market 0,0 % 2,0 % 2,0 4,0 % 4,0 0,5 % 0,5 Source: SSB 3,0 % 0,0 % 2,5 % 2,0 % 2,0 0,5 % 0,5 3,5 % 3,5 3,0 % 2,5 % 1,0 % 1,0 1,5 % 1,0 % 1,0 2,0 % 2,0 1,5 % 4,0 % 4,0 5,0 % 5,0 3,0 % 2,5 % 4,5 % 4,5 3,5 % 3,5 1,5 % 0,0 % 2,0 % 2,0 4,0 % 4,0 0,5 % 0,5 % 5,0 3,0 % 2,5 % 4,5 % 4,5 3,5 % 3,5 1,0 % 1,0 1,5 % Key policy ratepolicy Key Work force (right axis) (right force Work Consumer price index priceindex (CPI) Consumer Gross domestic product domestic Gross Menu 5 year Swap 5 Unemployment rate Unemployment Forecast 10 year Swap 10 year Forecast 69,0 % 69,0 % 69,5 70,0 % % 70,5 % 71,0 71,5 % % 72,0 72,5 % RETAIL MARKET NORWAY 2018 5. 4. Markveien 3. Hegdehaugsveien 2. Torggata 1. Key areas Oslo Barcode /Sørenga) (Torggata /Grønland and Areas under development Aker Brygge/Tjuvholmen Thorvald Meyers gate Bogstadveien Øvre/Nedre Slottsgate Karl Johansgate 4 Click here 2 Menu Click here 1 Click here 3 5 RÅDHUSGATA 17 RETAIL MARKET NORWAY 2018 28 as the mostattractive shopping area inOslo. Johans gatehascontinued to strengthen itsposition with fashion houseandshopping center EGER,Karl itself as the leadingfashion departmentstore. Along & Strøm DepartmentStore whohasre-established has alsoundergone major transformations, withSteen luxury shopping in Oslo.Theupper partof the street years to become the maindestinationfor highend and and Nedre Slottsgate have transformed inrecent streets to Karl JohansgatesuchasØvre Slottsgate all the major chain stores and flagship stores. The side Karl Johansgateandsurrounding streets, youfind will street. It has the highest retail rents in the country. In Station to the Royal PalaceandisNorway’s parade Karl Johansgaterunsall the way from the Central Karl Johansgate,Karl Øvre/Nedre Slottsgate 10 -15000 nok/sqm/year nok/sqm/year

3 -5000 Karl Johans gate Johans Karl 15 -20000 nok/sqm/year nok/sqm/year 5 -10000 20 -25000 nok/sqm/year

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Torggata the area. in Oslo with several small, trendy shops opening in of the mostpopular andhippest restaurants andcafés street hasalsobeen transformed comprising ofsome pavements andfacades. Now, the easternpartof the Glasmagasin and broad, attractive cobblestone stores including the departmentstore Christiania was redeveloped. Itcurrently hasseveral large chain closest to Stortorget square andKarl Johansgate past ten years. Initially, the western half of the street Torggata hasbeencompletely revitalized during the Karl Johans gate Johans Karl Back to map

Torggata RETAIL MARKET NORWAY 2018 29 The lower partofKarl Johansgate Menu RETAIL MARKET NORWAY 2018 30 Bogstadveien/Hegdehaugsveien of more exclusive shops. large chainstores, whileHegdehaugsveien consists openin2019.will Both streets have ahighdensity of to improve when the newValkyrien shopping center traffic. On theother hand, thissituationis expected an extensive redevelopment that resulted inless popularity decreased after the financial crisisand However the area regenerating isstill as the shopping area andremains popular amongretailers. This area israted asOslo’s second mostattractive nok/sqm/year 6 -8000 nok/sqm/year 8 -10000

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map Hegdehaugsveien Bogstadveien/Hegdehaugsveien The intersection RETAIL MARKET NORWAY 2018 31 shops to leavearea.shops to the quite strongly andforcing the smaller independent has beenstrong inrecent years, effecting the rents of larger chainstores. Thegentrificationin thearea diversity. However now, the area hasalarge influx non-chain store area ofindependentshopsand full 10-15 years. Prior to this, the area wasa typical have become increasingly popular over the past Thorvald Meyers gateandMarkveien are areas that Meyers gate/Thorvald Markveien nok/sqm/year 6 -8000 Menu Olaf Ryes Plass, Grünerløkka

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map Markveien

Markveien Thorvald Meyers gate Meyers Thorvald RETAIL MARKET NORWAY 2018 Stavanger Trondheim Bergen CENTER: SOUTH OFCITY Byhaven CENTER: CITY NORTH CENTER: OFCITY SC SHOPPING CENTERS: LEADING BUSINESS: CITY POPULATION: LOCATION: RANKING: 3 Vestkanten WEST CENTER: OFCITY CENTER: SOUTH OFCITY SC CENTER: CITY NORTH CENTER: OFCITY SHOPPING CENTERS: LEADING BUSINESS: CITY POPULATION: LOCATION: RANKING: 2 EAST CENTER: OFCITY Bystasjonen CENTER: SOUTH OFCITY CENTER: CITY SC, NORTH CENTER: OF CITY SHOPPING CENTERS: LEADING BUSINESS: Sandnes CITY POPULATION: SC LOCATION: RANKING: 4 32 Key areas Bergen, Trondheim andStavanger SC Trondheim Torg SC,Solsiden City LadeSC 5 Technology, Science Approx. 190000 Mid Norway Sartor Storsenter SC,Kleppesto SC SC,LagunenStorsenter SC Telegrafen SC,Kloverhuset SC,Galleriet SC Xhibition SC, SC Arken, AasaneSC,Horisont 12 Energy, Oil&Gas,Maritime,Marine,Tourism Approx. 280000 West CoastofNorway Kilden SC Madla SC,Kvadrat SC, Stavanger Storsenter SC Tasta SC 7 Energy, Oil&Gas,Maritime,Tourism Approx. 134 000 South West CoastofNorway

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PRINSENS GATE PRINSENS

OLAV KYRRES GATE KYRRES OLAV

SMÅLUNGEREN

CHRISTIES GATE CHRISTIES

MUNKEGATA

VASKERVEIEN

KLUBBGATA

DRONNINGENS GATE DRONNINGENS

VEITEN NORDRE GATE NORDRE

High StreetHigh shoppingarea StreetHigh shoppingarea High StreetHigh shoppingarea

OLAV TRYGGVASONS GATE

MARKVEIEN

SMÅSTRANDGATEN

KIRKEGATA BREIGATA

SØNDRE GATE

TORGET

SKAGENKAIEN

ØSTERVÅG STRANDGATEN Trondheim Stavanger

Bergen VALBERGGATA

HAVNERINGEN STRANDKAIEN

KJØPMANNSGATA

SKANSEGATA

BRYGGEN HAVNERINGEN RETAIL MARKET NORWAY 2018 33 Shopping centers e-commerce becomes increasingly more convenient. in smaller to medium-sizedshopping centers as However, we expect that several struggletenants will changing theirapproach towardsconsumer. the shopping centers providing additional servicesand As e-commerce iscontinuing to grow, we are seeing the city limitsofOslo(Økern). developing oneof the largest shopping centers within In addition to this, Steen & Strøm are currently years.past ten few have beendeveloped or rehabilitated during the Oslo region isjustabove 1.5 sqm,andquitea million centers (greater than 5000sqm)within the Greater visited by Norwegians. The total stockofshopping Swedish/Norwegian border, and therefore frequently Norwegians are strategically placed along the Some of the largest shopping centers visited by sales area greater than 2500sqm. across Norway andmore than 300of these have a There are more than 500shopping centers spread causing indoor shopping to become more attractive. principal reason mentionedis the weather conditions probably several reasons behind this fact. However, the density of shopping centers per capita. There are Norway is the country inEurope with the highest Menu Shopping performance Electrical homeappliances Sports equipment Flowers &plants Miscellaneous Games & toys Games Construction E-commerce BY SECTOR Cosmetics Pharmacy Jewellery Groceries Furniture Textiles Clothes Alcohol Shoes Books JAN-AUG 2018(%) Source: Kvarud Analyse -10.9 -16.5 -0.8 -5.0 -0.4 -6.2 -0.7 -2.3 13.8 5.2 0.3 3.2 2.9 4.9 3.3 3.9 1.1 RETAIL MARKET NORWAY 2018 34 Norway’s 30largest shoppingcenters RANK 20 22 24 30 26 28 25 29 23 27 10 21 12 14 16 18 15 19 13 17 11 2 4 6 8 5 9 3 7 1 Strømmen Storsenter 1) Vestkanten Storsenter SHOPPING CENTER Buskerud Storsenter Amanda Storsenter Bydel Aker Brygge Sartor Storsenter Gulskogen Senter Åsane Storsenter Sørlandssenteret Jekta Storsenter Vinterbro Senter Farmandstredet AMFI SteinkjerAMFI ALNA Senter AMFI Madla AMFI A CC Gjøvik City Lade Oslo City Herkules Horisont City Syd CC Vest Kvadrat MFI MoaMFI

Krokstadelva Kristiansand Haugesund Trondheim Trondheim Strømmen Hafrsfjord Drammen Jessheim Vinterbro Tønsberg Sandvika Steinkjer Sandnes Straume Ålesund Tromsø PLACE Bergen Bergen Bergen Bergen Gjøvik Skien Bodø Oslo Oslo Oslo Oslo Oslo Ski Menu GROSS TURNOVER (MNOK)EXCLUDED OTHER ACTIVITIES 2000 2840 2504 2308 2035 2825 2160 1408 1660 2109 1904 1940 1582 1438 1325 1992 1329 3194 2331 1583 1939 3271 1347 1897 1387 1379 1518 1431 1813 1721 2017 H1 2017 1 006 1 034 1 072 1 269 1 423 1 303 1 417 900 604 904 609 646 828 694 845 594 858 992 956 635 599 627 754 867 788 887 973 739 614 712 Source: Kvarud Analyse H1 1060 1029 1246 1446 1075 1275 1021 1412 1031 644 625 930 884 926 868 683 923 923 899 599 574 796 637 637 737 610 881 851 691 613 2018 RETAIL MARKET NORWAY 2018 35 completed during the year or inearly 2019. result, aswe donotknow if these transactions be will an estimateand that itmightdeviate from the actual within the endof2018.Note that this number isonly worthto NOK9billion ofretail property to besold volume at the endof the year. Our estimateis close course of2018,andwe expect ahigher transaction processes be completedthat might still during the is in line with the last two years.There are a few larger commercial property inNorway is close to 15%,which The retail sector’s share of the total forvolume YTD of the total transactionfor volume retailproperties. is the saleofAlna Senter that counts for about30% So far this year onelarge transaction standsout,which numbers from the sameperiodin2017. over Thisissomewhatlower NOK6billion. than the October this year we have seen retail transactions of not experienced anythingclose to this. By the endof investors. Inyears prior andin20172018,we have estate portfolio in central Oslo being bought by foreign sold, aswell the mostattractive HighStreet real one of the largest singlestandingshopping centers largest shopping center chains in Norway change hands, rare inNorway. In2015alone,we had the 2ndand3rd of highprofile salesin2015, these typesofsalesare however, the supply is very limited.Outsideofaflurry a very low yieldandhighprice.Thedemandis there, rarely upfor sale,and when they are, itisusually at portfolios. Highstreet properties ingoodlocationsare have oftenbeensoldas especially shopping centers, is that retail properties, seen in the lastfewyears What we have generally historical average ofbetween 15%-20%. transaction volume isnow more or less inlinewithan was fully expected, andretail’s share of the total at the nature ofseveral of the 2015 transactions this transaction volume hassince then decreased. Looking After whatwasarecord-breaking year in 2015, the during the sameperiod. with transaction levels onpar ofwhatitwaslastyear Webillion. might be seeing something similar this year, transaction volume for the retail sector ofover NOK13 two monthsof the year. Theendsummary shows a size due to afewlarge transactions towards the final retail transaction volume endedupnearly doublingin After the publicationoflastyear’s retail report, the Investments [ within theretail ishighly sector The current market transaction fragmented Menu our expectations going forward. supply isalsohighly limited.Thisisalsoinlinewith remains relatively high for primeproperty, while the yield normally liesbetween 6%-6.25%.Thedemand - 5.25%.Thesamegoesfor bigboxes, where the often have asomewhathigher yieldofbetween 5% increase for the shopping center segmentwhere the stable the pastyear. We dohowever noteasmall The primeyieldsin the retail sector hasbeenquite transactions remain onhistorically acceptable levels. consuming to close,we see that the actualnumber of buyers. Although some transactions are more time amount of transactions sofar this year withforeign has declinedduring2018,as there hasbeenalimited international interest inNorwegian retail properties the market relatively quickly. Italsoappears that the than high street properties, which tend to be taken off properties are leftin the market substantially longer sector ishighly fragmented. We see that anumber of The current transaction market within the retail ] “regular” shopping centers shopping centers and that number is for prime to keep in mind that this It ishowever important compared to 4%in2017. prime yieldisnow 4.25% RETAIL MARKET NORWAY 2018 36 Menu Prime Yield Levels 2018 4.25 % 5.25 % 3.9 % Shopping Centers High StreetHigh Big Box Source: Colliers International RETAIL MARKET NORWAY 2018 37 Data andfigures 20 4,0 % 4,0 40 % -2,0 6,0 % 6,0 8,0 % 8,0 5,0 % 5,0 3,0 % 30 25 45 7,0 % 7,0 35 10 -1,0 % 15 0,0 % 2,0 % 2,0 4,0 % 4,0 5,0 % 5,0 3,0 % 0 1,0 % 1,0 5 2007 2012 2013 2008 2014 2013 Historical retailHistorical transaction volumes 2009 High Street High 2015 2010 Historical prime 2014 2011 2016 Exports Big Box 2012 2015 2017 - yield levels 2013 Shopping centre Shopping 2018 (e') 2018 2014 - 2016 NOK Billion Menu 2019 (e') 2019 2015 2017 2016 2020 (e') 2020 2017 2021 (e') 2021 2018 2018

Historical prime Historical retail transaction Exports yield levels volume NOK Billion RETAIL MARKET NORWAY 2018 38 Data andfigures 100 102 104 20,0 % 0,0 % 40,0 % 40,0 106 108 2,0 % 2,0 30,0 % 4,0 % 4,0 6,0 % 6,0 25,0 % 5,0 % 5,0 3,0 % 35,0 % 35,0 10,0 % 1,0 % 1,0 15,0 % 15,0 90 86 92 88 94 96 98 0,0 % 5,0 % 5,0 2013 2012 2014 Historical retailHistorical transactions 2013 2015 Retail Index 2014 2016 - Imports Seasonally adjusted 2017 2015 - sharevolume total of 2018 (e') 2018 2016 Menu 2019 (e') 2019 2017 2020 (e') 2020 2021 (e') 2021 2018

Source: Historical retail transactions Total retail sales volume Imports share of total volume index Colliers International VOL. 3 | NOVEMBER 2018 ISSUE

Retail clients Norway

Food & Beverage

Retail

Fashion

39 Menu VOL. 3 | NOVEMBER 2018 ISSUE

Haakon Reed-Larsen Head of Retail Mob. +47 482 99 834 E-mail: [email protected]

Jørn Andersen Senior Advisor Retail Mob. +47 934 69 729 E-mail: [email protected]

Stine Bjørdal Senior Advisor Retail Mob. +47 928 81 075 E-mail: [email protected]

Kari Gro Herrem Senior Advisor Retail Mob. +47 913 81 950 E-mail: [email protected]

Petter Platou Head of Valuation & Research Mob. +47 913 18 115 E-mail: [email protected]

Pernille Ender Real Estate Analyst Mob. +47 482 17 291 E-mail: [email protected]

Jonna Alexandra Harding Head of Marketing Mob. +47 473 49 289 E-mail: [email protected]

Caroline Bjørdal Marketing Coordinator Mob. +47 941 32 284 E-mail: [email protected]

40 Menu VOL. 3 | NOVEMBER 2018 ISSUE

Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $25 billion of assets under management from the world’s most respected institutional real estate investors. 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.

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41 Menu Selected retail brands in Oslo

Menu ABOUT THE COVER Stylized Lorem ipsum dolor sit amet, consectetuer CLOTHING MAG adipiscing elit, sed diam nonummy nibh euismod tincdunt ut laoreet dolore magna 3010 Round Table Drive, West Chester, OHIO aliquam eratvolutpat. Ut wisi enim ad minim 513-777-6885 veniam, quis nostrud exerci tation ullamcorper [email protected] suscipit lobortis nisl ut aliquip ex ea commodo clothingmagazine.com consequat. Duis autemx vel eum iriure dolor in hendrerit in vulp utate velit esse molestie consequat.

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