retail market q4 2017 2 3

contents

summary 5

highlights 7

the retail market norway 9

key areas, 12

footfall 18

investment 22

shopping performance 25

shopping centres 26

food & beverage 29

data and figures 31

about colliers 34

Retail Market Report Norway Retail Market Report Norway 4 5

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. Colliers are here to help you to make the right and qualified decisions!

Retail Market Report Norway Retail Market Report Norway 6 7

highlights 2017

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

home renewal Norway´s capital The average Norwegian household Oslo, offers a variety spends approx EUR 3 500 per year on of shopping. 1, 5 million home renewal (decoration, furniture, people live in the Oslo appliances etc.) region.

shoes & clothing shopping habbits The average Norwegian household More than 35 % of all retail spends approx EUR 2 200 per year on sales in Norway take place in shoes and clothing. 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 Retail Market Report Norway 8 9

macro economy norway

The Norwegian economy is recovering well from the effects that the NOK will increase against most other currencies CPI of the oil downturn and the scarce growth in global demand. going forward in 2017 and especially in 2018. However, the Norwegian economy continues to be heavily reliant on the petroleum business and the “oil-fund” continues CPI to support a growing portion of the Norwegian fiscal budget. The CPI rate continuously surprised on the “upside” in 2016 as ended at 3.6 %, which was well above comparable data The economic downturn has now lasted for the better part for other Western European countries as well as way above three years. However, it is becoming increasingly apparent estimates from the start of the year. that the tide has turned and that Norway is set up for strong However, the rate has dropped quite significantly in 2017 and economic growth going forward. Most experts in the field as it is currently around 1.5 %. The estimation for the end of the well as new data that is continuously coming in support this year is close to 2 %, which is far below the figure from last view. year.

The expected GDP growth for 2017 is 1.8 % which is expected UNEMPLOYMENT to grow further to 2,4 % in 2018 and draws a very positive The unemployment rate is as of the start of October 4,2 % UNEMPLOYMENT image for the Norwegian economy. 2016 numbers showed a which is a steady decline since the turn of the year. The growth of 0.9 % in comparison. Other sources and experts overall trend is that the unemployment rate will continue to are frequently suggesting even higher growth in the coming decrease going forward, although at a rather slow pace. years. This underpins the perception that the Norwegian Economy has picked up the pace and that there are exiting This is due to factors such as a recovery in within the times ahead. petroleum sector as it is expected that the investment will bottom out in 2017. Also, the cost of developing an oilfield CURRENCY has sunk by 40 % compared to 2014. Also, mainland Norway The Norwegian NOK has in general been somewhat is projected to perform quite well in the year of 2017 in terms strengthened by the improving oil price and macro conditions. of investment and also a slight increase in exports. At year-end, the NOK was trading at roughly 9 against the € Euro and even below, which was for the first time in roughly The unemployment rate is expected to stay at the current 2013 (%) 2014 (%) 2015 (%) 2016 (%) 2017 (E´) (%) 2018 (E´) (%) 2019 (E´) (%) 2020 (E´) (%) 18 months. However, the NOK has decreased somewhat and level during the course of 2017 and further down into 2018 SOURCE as of mid-October, is currently trading at levels around NOK and 2019. Statistics NOrway 9.35 per 1 € Euro. GDP, MAINLAND 2,3 2,20 1,10 0,80 1,80 2,40 2,20 2,10 OILPRICE GDP 1,0 1,90 1,60 1,00 1,50 1,90 1,80 2,00 Furthermore, although not at peak levels, the NOK is currently The oil price increased quite considerably from the end of CPI (JAE) 1,60 2,40 2,70 3,00 1,70 2,00 2,00 2,00 very weak compared with the USD $ when reviewing it in a 2016 and has since remained between $ 50 and $ 60 per historical perspective. This is in part fueled by the Americans barrel. At the time being (medio October) the oil price is HOUSEHOLD CONSUMPTION 2,70 1,90 2,10 1,60 2,20 2,60 2,30 2,10 increasing their interest rates twice within a relatively short hovering around $ 55 - 60, after a recent increase after the PUBLIC CONSUMPTION 1,0 2,70 2,10 2,30 1,70 1,70 1,90 2,50 summer. period of time, as well as “Trumpism”, in addition to a INVESTMENTS (OIL & GAS) 19,3 -3,20 -15,0 -14,70 -7,0 -0,10 6,20 1,90 generally weak NOK. After OPEC and other major oil producing countries has EXPORT -1,70 3,10 3,70 1,2 0,50 2,00 2,20 3,10 engaged in several agreements as of late, the oil price is Before the recent fall of the NOK in the past month, an increase EXPORT (OIL & GAS) -5,50 1,90 3,2 3,80 0,40 -0,10 -0,10 1,60 was widely expected. Going forward, the road a head seems according to most experts within the field, likely to continue somewhat uncertain. Our main scenario however, remains to increase throughout 2017 and beyond. 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

GDP Mainland UNEMPLOYMENT 3,50 3,50 4,40 4,70 4,40 4,20 4,10 4,10

EMPLOYMENT (*LEVEL) 71,2 71 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

HOUSEHOLD (SAVINGS RATE) 8,2 10,4 7,1 7,4 6,8 6,40 6,20

MONEY MARKET (RATE LEVEL) 1,80 1,70 1,30 1 1,00 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 3,10 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 Retail Market Report Norway 10 11

We are already seeing this in a highly competitive area such the retail market norway 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. The traditional retail format is continuously under heavy scrutiny from the ever-growing e-commerce. Lately there Norway is currently one of the countries in the world with the has been several reports of shopping centres in the Unites highest density of shopping centres compared to inhabitants. States, which has been deserted in recent years due to new This is due to several factors, such as the weather and ways of doing and thinking of shopping. Al though generally Norwegians´ appetite for convenience being a few of several not to the same extent as we see in the US, this is also taking possible explanations. Consequently, the sheer amount of place elsewhere in the world, such as Norway. Shopping Centres and the strong competition because of that in the Norwegian market ensures that landlords has to In the context of the Norwegian shopping centre market, we address the issue of more e-commerce in order to survive. are especially concerned for the small and medium sized shopping centres. While the larger shopping centres generally However, especially in Oslo, there is one factor that is aiding has more means and possibilities to expand and make the shopping centres which are located outside of the city shopping centres more of a destination, smaller shopping centre. The municipality of Oslo is currently removing and centres will struggle to do so to the same extent and to take closing a very substantial amount of parking places for the part in the next generation of shopping centres. public. Within next year, there will be close to no public parking places left within the Ring 1 area (city centre). Combined with Admittedly, the smallest shopping centres which are often the Norwegian weather and the often necessity of transport local, will continue to serve more of a purpose in more densely while shopping, this could in many cases contribute to a populated areas of the country. However, the medium sized preference for shopping centres compared to high street shopping centres which to a larger degree are competing locations. with the large regional centres, will struggle. In sum, we believe that it is a challenging situation for We do believe that it will become something of “eat, or be both shopping centres and retail. With the emergence of eaten” in the shopping centre business going forward. What e-commerce, customers has endless options. The strongest we mean by that is that medium sized shopping centres will will survive, those that are able to adapt and perhaps might in many cases need to expand in order to achieve appropriate to be able take advantage of the new situation. Those that size. If they are unable to do so, they will generally fail to are unable or unable to make adaptions will find themselves attract customers and remain attractive for the public. struggling in this market.

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market outlook We see the same regarding centrally located shopping centres such as , Sandvika and Strømmen Storsenter. We are also experiencing the same with large shopping centres Our market view is that the prime rents have remained quite outside of the other larger cities in Norway. These, and a few stagnant during the course of the past year in the Oslo retail other shopping centres has an extended cue of prospective market. The highest prices are still found in Karl Johans tenants that wants to move into premises that are left Gate with recent contracts indicating a prime level of close vacant in these locations. For secondary shopping centres to NOK 23 000 per sqm for the best retail space within this and smaller local centres, the situation is quite different. street. This is slightly down compared to previous levels of Consumers are increasingly favouring larger shopping NOK 25 000 per sqm from a year ago. The drop in price is centres which increasingly can attend to all consumer not dramatic, and we believe that we will see prime premises needs and are increasingly viewing shopping centres as at Karl Johans gate let at NOK 25 000 per sqm within a “making a day out of it” and as an experience rather than not too distant future. The demand for these premises within “just shopping.” Consequently, the letting process is far more these locations continues to remain strong. Furthermore, top challenging for small and medium sized shopping centres locations in Oslo are gaining increasingly more attention from and landlords would be wise to expect a void period in order international retailers which are contributing to higher rental to obtain tenants. prices for landlords.

We believe that smaller and medium sized shopping centres One factor which is contributing to high rents in certain outside of city centres will experience turbulent times going areas is the influx of international brands and retailers in forward. 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, Øvre- retail performance and Nedre Slottsgate contributed to high rents. As of the start of November, the Norwegian retail market has The vacancy rate in the retail sector remains low for properties performed below expectations for several months. The latest located within the central Oslo region. In the most popular available data, which shows the retail index from August to streets such as Karl Johans gate with adjacent streets and September, indicated a fall of 0.8 %. Bogstadveien is experiencing close to 0 % vacancy. When there are vacant premises in these streets, it is usually down This followed a fall also in the previous month and an to frictional vacancy, the time from the previous tenant has expectation of a growth of .2 %. Sales from petrol stations as vacated the premises until the new tenant is able to move in well as sales of shoes and clothing were the main negative as most premises in these areas has a high demand for retail drivers. For the year as a whole however, the picture is more space. positive with an increase of 2.1 %.

As of the start of November, there are only a handful of For the Norwegian shopping centres, the outlook is slightly advertised properties in any of the main high street locations different concerning the past few months. In September, the in the Oslo city centre. Of the few available, close to 50 % increase in turnover was close to 4 % compared to last year. is located in the newly renovated Prinsens Gate which is an The increase in sales appears to be nationwide. In total, the area expected to garner considerable attention going forward. increase in turnover for the shopping centres in Norway has We believe that strong demand for prime high street locations been 2.1 % which is in line with the rest of the retail industry. in the larger cities in Norway generally, and Oslo specifically, Adjusted for new stock, the increase is 1.6 % (Kvarud Analyse, will continue going forward. September 2017).

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E I I K T E R G N A D Z V O ATE E E ' T NS G key areas oslo I I L BRU R E G AH N N ORD F A E G N H T T O E E A K R G N S S I L R E A B S C shopping streets S N G O E A I T E A E V M T

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A L 1. S T S T S E G E A L A E G G T B K B E G A A B E Karl Johansgate Y T T G R S D U E A E Ø R G Y L Øvre / Nedre Slottsgate A A G L LL T É Ø E Torggata M HEN E RIK IBSENS GATE T Kvadraturen A G

' Z NATIONALTHEATRET T S N T O A A R T 2. E R A T K G T I R T A N N G G TO Hegdehaugsveien I G S E S L G S L S A N TA O O T O TA Bogstadveien S D R R A T L B S IG E G Y Ø L F G R T S I A U V T A H 3. V A

F L R Thorvald Meyersgate A O O M T U A G N E N K N G Markveien E G A E D K D R A A E S M R L M T SV JO R EIE HA G S A N N R N S

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S R A G Å AT E K E T E B E The shopping centre stock in Oslo & Akershus R G V RÅDHUSGATA 17 E is approximately 2 million sqm and the figure IE N IA is increasing quite fast. Compared to other A K A L L Scandinavian cities, Norway has a considerably A V TR G EL larger share of shopping centres compared to its’ IN 1 D AS R T T O GATA NN IN population than Denmark and Sweden. During the G O EU PE F R EM past few years, a lot of new shopping centre stock A IA IA GA S A TA G K AT has been developed in Norway and especially in G E N A AR L UP the area around Oslo where we have seen several A S G AI AT DK E new shopping centres in the market, while othersTA PS LI have expanded and redeveloped existingFI 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.

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karl johans gate nedre / øvre slottsgate / akersgata christmas shopping oslo - karl johans gate

Karl Johans gate is Norway's parade street and runs from These streets are side streets to Karl Johans Gate. The area the Central Station to the Royal Palace. In Karl Johans gate has been transformed in recent years into the destination for and surrounding streets you can find all the major chain high end and luxury shops in Oslo and this development is stores, flagship stores and a wide range of luxury stores. Karl continuing steadily with more brands entering the area this Johans Gate has the highest retail rents in the country and is year. Meyer Bergman continues to be the dominant player an area where you find a large variety of shops. in this area through their company, Promenaden. The area has by far the highest density of luxury and high-end shops The best corner locations located in this street from in Norway and the density and actual numbers is steadily Egertorget and westwards can be let for NOK around 25 increasing. 000 per sqm for prime retail space (zone A). Due to the high rents, the stores present at Karl Johans Gate is not In the past year, brands such as YSL, Rag & Bone, and necessarily profitable, however, chains chose to locate to Balenciaga have located to the area and other entrants are Karl Johan because they “have” to and use their store in this rumoured to happen in this area in the coming years. The location as a show room and marketing tool. largest landowners in the area seems increasingly conform to embrace this development and encourage luxury and high The upper part of Karl Johans gate has also in recent years street shopping in the area in favour of lower scale retail undergone major transformations, Steen & Strøm Magazine establishments. has re-established itself as the leading fashion magazine, and along with fashion house Eger, this helps to create a more This area continues to attract tourists in large numbers, and attractive center with a bustling urban environment. recently a Global Blue Tax Free station opened up between the high-end luxury stores to accommodate tourists.The rent During the past year, Karl Johan has continued to strengthen levels in the area has risen quite significantly during the past its position as the most attractive shopping area in Oslo. 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 New entransts such as Nike and also a new H&M flagship 000 per sqm of grade A retail space which is in line with our store. The latter is scheduled to open in 2018. estimate from 2016.

Grensen

Karl Johans gate Grensen torggata

Akersgata

Øvre Slottsgate

Nedre Slottsgate

Møllergata

Akersgata Karl Johans gate

Kirkegata

Øvre Slottsgate

Nedre Slottsgate

Dronningens gate

Kongensgate Karl Johans gate

Kirkegata

3 - 6 000 6 - 12 000 nok/sqm/year nok/sqm/year 12 - 15 000 15 - 20 000 20 - 25 000 nok/sqm/year nok/sqm/year nok/sqm/year

Retail Market Report Norway Retail Market Report Norway RÅDHUSGATA 17 18 19

torggata hegdehaugsveien / bogstadveien markveien / thorvald meyersgate

Thorvald Meyers Gate and Markveien are areas that have become increasingly popular in the past 10 – 15 years. A while ago Torggata has been completely revitalized during the past ten The area of Hegdehaugsveien and Bogstadveien remain this area was full of independent shops and diversity. We are now however starting to see a larger influx of larger chain stores years. Initially, the half of the street closest to Stortorget and popular amongst retailers, however, are struggling to get back such as The Varner Group. H&M opened their stores of COS and Weekday during 2016 as well. The gentrification in the area has Karl Johans Gate was redeveloped initially and currently has to the popularity in the years prior to the financial crisis. The been strong in recent years and rents has risen quite strongly and also dramatically for several of the smaller independent shops a several large chain stores and broad, attractive cobblestone pavement and tramlines in the street was recently updated which are now being forced to vacate the area. The prime rents in Thorvald Meyers Gate and Markveien is currently around NOK pavements and façades. after a couple of years of redevelopment. 8 000 per sqm.

The street has been split by Arbeidersamfunnets Plass in For instance, the pavements now have under soil heating in the middle and the divide has been apparent when looking an effort to make the street more attractive for prospective at the various tenants. While the western parts of the street customers. We are now seeing that customers are returning had been revitalized, the eastern parts of the street up until to the area after being somewhat alienated from the prolonged recently were full of small serving shops, mainly kebab and development period. hamburger stores as a few small local shops. At nights, shady activity was highly present. Both Bogtstadveien and Hegdehaugsveien has a high density of large chain stores, the former more so than the latter During the last couple of years, also this end of the street has which has close to exclusively large chains present while been transformed with several of the most popular and hip Hegdehaugsveien has a larger influx of more exclusive restaurants and cafès in Oslo as well as several small, new shops. The prime rents in the area is rather stable, however, Markveien shops opening in the area. Most of the old kebab, hamburger we are currently seeing some property owners struggling to and telephone repair shops have been replaced. Prime rent recuperate their rent when the current contract expires. in Torggata is currently approximately NOK 10 000 per sqm Thorvald Meyers gate – a healthy increase compared to a few years ago. This area The current prime rents for Bogstadveien and is becoming an increasingly popular area for prospective Hegdehaugsveien is currently NOK 12 000 – 13 000 per new stores. New entrants within this area includes TGR and sqm which it has been for the past few years despite the Normal, in addition to several food & beverage alternatives, completion of the new pavements.

Koie Ramen being the newest one. Markveien

Kirkeveien BogstadveienValkyriegata

Thorvald Meyers gate Markveien

Bogstadveien 5 - 8 000 nok/sqm/year

thorvald meyers gate oslo

Hegdehaugsveien

6 - 8 000 8 - 12 000 nok/sqm/year nok/sqm/year

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karl johans gate and sorrundings

footfall

Historically, there have not been many measurements of This is finely correlated with most centrally located shopping footfall readily available in Norway and Oslo as a means of centres which reports of more traffic and turnover in autumn predicting retail performance. and winter months compared to the summer when there is much lower activity going on. Saturday is also generally Colliers International is currently working on systems in slightly better visited compared to Tuesdays with a 51.5 % countries such as the UK. This will hopefully become available share compared to Tuesdays 48.5 %. 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 Non-surprisingly, it showed that Karl Johans Gate has a very is Kvadraturen. However, according to Gehl Architects the heavy footfall with the street being frequently visited nearly footfall rate at Kvadraturen is very limited, despite its´ very at all times. What is more, the street is most often visited in central location. Especially when it becomes dark there is the summer with 42,7 % of total footfall, while the autumn very limited football in the Kvadraturen area as of yet and this accounted for 31.3 % and the winter the share of footfall had will need to change if there is any hope of a significant upturn dropped to 26 %. for the retailers that is located here. Source: Gehl Architects Source:

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louis vuitton oslo

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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 retail’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, Øyrane Torg in 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 % istock photo Big Box: 5.25 %

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OSLO CITY shopping centres oslo

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, outside of Oslo to the west remains the largest while Strømmen Storsenter to the east of the capital has overtaken in Bergen as the second largest.

Norway´s 20 largest shopping centres Source: Kvarud Analyse

RANK SHOPPING CENTRE PLACE GROSS TURNOVER Q1-3 2017 Q1-3 2017 Q1-3 2016 Change in %

1 SANDVIKA STORSENTER SANDVIKA 2196 2195 0,0

2 STRØMMEN STORSENTER STRØMMEN 2175 2113 2,9

3 LAGUNEN STORSENTER BERGEN 1964 2151 -8,7 BY SECTOR JAN-AUG 2017 (%) GROCERIES 1,7 4 AMFI MOA ÅLESUND 1943 1958 -0,7 MISCELLANEOUS 5,5 5 SØRLANDSSENTERET 1729 1679 3,0

6 OSLO 1584 1561 1,5 ALCOHOL -0,1 COSMETICS -4,4 7 KVADRAT 2) SAMDMES 1529 1458 4,9 TEXTILES 7,7 8 SARTOR STORSENTER 3) STRAUME 1497 1355 10,5 CLOTHES -3,7 9 ALNA SENTER OSLO 1472 1469 0,2 SHOES -7,0 10 CC VEST OSLO 1457 1470 -0,9 SPORTS EQUIPMENT -1,5 11 BODØ 1389 1331 4,4 FURNITURE 3,1 12 SKI 1379 1377 0,2

13 OSLO CITY OSLO 1347 1361 -1,0 ELECTRICAL HOME APPLIANCES 8,5

14 CITY LADE 1315 1324 -0,7 CONSTRUCTION 0,9

15 TRONDHEIM 1305 1282 1,8 BOOKS -0,2

16 JEKTA STORSENTER TROMSØ 1299 1272 2,1 FLOWERS & PLANTS 7,1

17 AKER BRYGGE OSLO 1293 1168 10,6 PHARMACY 4,9

18 JESSHEIM STOSENTER JESSHEIM 1199 1235 -2,9 JEWELERY -7,8

19 ÅSANE STORSENTER BERGEN 1146 1171 -2,1 GAMES & TOYS -2,3

20 VESTKANTEN STORSENTER BERGEN 1100 1095 0,4 E-COMMERCE 13,6

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fashion

It is very exciting things 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, the average income is significantly higher when compared to the rest of Europe and consumption is growing. Norwegians actually use 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 has already established themselves in Norway, and others is coming as well. International concepts are contributing to lift Norway as a shopping destination, which is also something that is also beneficial for the shopping centres. In sum, this is making Norway an increasingly appealing destination for new establishments.

There is considerable concerning the discussion regarding e-commerce and the threat it brings for the traditional business community in addition to the “Millennials” generation, which are increasingly demanding more. This means that shops within the fashion segment has to adapt, and adapt 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 survive.

The consumer can buy what he or she needs online. The consequence is that when you go to buy 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.

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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

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data & figures

Sources: Bank of Norway Colliers International AS Gehl Architects Statistics Norway

Retail Market Report Norway Retail Market Report Norway 34 35 The macro market Unemployment The macro market The macro Sales volume Sales volume Index Household Consumption The macro market The macro market The macro Base rate prediction Base rate Historical Yield levels Investment GDP growth The macro market The macro transaction volumes Historical Retail Investment CPI growth The macro market The macro

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retail contact norway

haakon reed-larsen head of retail [email protected] +47 482 99 834

jørn andersen senior advisor retail (food & beverage) [email protected] +47 934 69 729

stine bjørdal senior advisor retail (fashion) [email protected] +47 928 81 075

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Copyright © 2016 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