MARKET REPORT 2019 VOL. 4 |OCTOBER 2019 ISSUE RETAIL MARKET NORWAY 2018 RETAILRETAIL FOOD & BEVERAGESHOPPING TRENDS MALLS Veganism, social resposibilityWhat and food quality do the - What will the future of Foodconsumer & Beverage look like? need them for? FROM LEASING TO WHAT’S DEVELOPMENT How to understand the new SHAPING shifts in consumer’s demand COMMERCETHE HOTTESTNOW We have interviewed Bror William Stende from Virke PROJECT IN We spoke with Olav Line at Mustad Eiendom about his new project, Lilleakerbyen PROP TECH Summary

“Today’s implementation of new Please enjoy our fresh and newly produced Retail This created an even more demanding customer report covering the Norwegian Retail Market. In this and changes the shopping pattern and expectations report we say something about trends and market towards the experience of purchasing. Shopping technology involves the shoppers in development within general retail and F&B, rent Centre industry faces the same challenges and levels in Norway and also the Shopping centre sector. we ask; how is the way forward. Never before has We hope this report will give you and your company a insight, the ability to look ahead into the future and a very different way than earlier, and valuable insight of the Norwegian Retail Market. think new been more important in order to take part in these enormous developments and changes. That In short, the challenging part is that Retail meets is why Colliers now steps up and increase their digital solutions changes customer enormous changes in the way and speed it is focus on Retail covering services as Leasing, Brand developing. Today’s implementation of new technology representation and Shopping Centre Management. involves the shoppers in a very different way than patterns.” earlier and digital solutions changes customer Our Retail team in Norway are here to secure your patterns. Consumers are more knowledgeable and decision making and accelerating success. can at any time and place seek vital and accurate product information and easily decide from whom and Enjoy your reading! which channel they chose to buy the products from.

Sørenga and Havnepromenaden - one of the newest retail/office/residential areas in Oslo

2 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 3 In this issue: The retail trade is changing 6 Food & Beverage trends 10 Lilleakerbyen - Interview with Olav Linne 14 From leasing to development 20 The shopping centres; What do the consumer need them for? 24 Why should new chains (Brands) set up business in Norway 28 Report highlights 32 Macroeconomics 34 LILLEAKERBYEN OSLO

We interviewed the man behind the curtain at Oslo’s Key areas Oslo 36 hottest real estate project in Lilleaker, Olav Line. 14 Key areas , , 42 Shopping centers 44 20 10 24 Investments 48 Data & figures 50 Retail clients Norway 52 Retail contacts Norway 56 FROM LEASING TO FOOD AND BEVERAGE THE SHOPPING CENTRE: DEVELOPMENT TRENDS WHAT DO THE CONSUMER About Colliers 57 NEED THEM FOR? Our Director Leasing, Our Food & Beverage Specialist, Shopping Centre Specialist, Stian Charlotte Christensen, explains the Design by Colliers International AS Photo credit: iStock, Patricks Dronetjenester, Nyebilder, and Colliers International AS Jørn Andersen, comments upon Kjellhov, investigates whether the I new shifts in consumer’s buying the most important trends for the danger is really over for shopping pattern and new demand. industry. centres.

4 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 5 “The stores need to meet the customers on their terms and be present”

PROFILE In many branches the ‘market is saturated’. When NAME: supply exceeds demand, the result is often a price war. Three areas that are experiencing this are groceries, HAAKON REED-LARSEN sport and electronics. The same applies to the textile WORKS AS industry, with many struggling with stagnating sales and weakened profitability. HEAD OF RETAIL TENANT REPRESENTATION When there is a price war and margin pressure, we will see winners and losers. The winners will be those ABOUT who are able to create volume, improve margins and 25 YEARS OF EXPERIENCE FROM thus divide the costs over several units. THE RETAIL INDUSTRY In the competition for winning customers’ attention, it will become ever more important to expand service and product knowledge. By this, we mean giving the customer that special experience apart from the goods themselves – something that the customer will appreciate and that will strengthen the customer relationship. Another approach is to invest in innovation: to come up with something new that the customer needs and is willing to pay for.

The number of stores in some branches of the trade will fall. This is due to weak profitability and the increase The retail trade in online trading. Entire branches of the trade may be The retail trade is changing. Digital development in danger of disappearing because of convergence. means that more or less all branches of the trade The future of trading will be a combination of physical will need to make use of new channels. The retail stores and online shopping. The stores need to meet trade needs to think innovatively, change its business the customers on their terms and be present and is changing! models and adjust its communications and customer represented on the digital platforms and channels experience. Time after time, online shopping is shown used by the customers. In the competition for winning customers’ attention, it will become ever more to be growing much faster than the physical store. important to expand service and product knowledge. By this, we mean giving the Nonetheless, we are seeing an overall marginal High levels of value added tax and other special customer that special experience apart from the goods themselves. Our Head of growth in the retail and shopping centre sector. charges, such as the sugar tax, weigh heavy on trade. Tenant Represenation Haakon Reed-Larsen explains why and how. The Norwegian krone is weak, which is one factor The retail trade is an important industry, accounting that is making many vital aspects of trading activities for ten per cent of Norway’s economic growth and demanding. And, when changes occur unpredictably, providing employment to 360,000 people in over it is difficult to pass the costs on to the customers. 40 branches of the trade. The retail trade will soon This rapidly leads to poorer margins and weakens the amount to NOK 500 billion, of which NOK 50 billion is ability to compete and survive.

6 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 7 Norwegian shopping centres are now growing marginally. Unsurprisingly, online shopping has been identified as one of many challenges faced “Many shopping centres have to invest by shopping centres. The framework conditions for running a physical store have deteriorated.

One trend that has long been evident in a number of countries is the death of the shopping centre and the significant amounts resultant empty premises. We have not reached that stage in Norway, but we are seeing a shifting trend where shopping centres are experiencing margin pressure, decreasing profitability and stores that are having to renegotiate rental rates. This could be the start of a trend that will last for a number of years.

Many rental contracts are in the middle of their terms, which are often five years or more. In many to attract cases, these represent a higher rental rate per square metre than the actual current market would the same customers as they did before” warrant. Any market adjustment to rental prices throughout Norway will therefore take some time and will happen gradually as existing rental contracts expire/are renewed. The exceptions are where tenants are obliged to renegotiate before the expiry of their contracts as a result of failing earnings.

The property investors behind the shopping centres have been forced to change the way they think. Many shopping centres have to invest significant amounts to attract the same customers as they did before. They need to invest in experiences to keep customers at the centre for a longer period of time than previously. This kind of investment – for the same earnings as before – is not necessarily a model that appeals to the finance market.

For many tenants, increasing online trade may lead to a reduction in the space they require. On average, no fewer than 80 per cent of physical clothing, sport and electronics stores in Norway also offer online shopping. Online shopping will be at the expense of – not in addition to – sales from physical stores. Previously, it was relatively simple for shopping centre businesses to fill these superfluous areas with new tenants. The major players need not necessarily go bankrupt; they could simply ‘downsize’ before things become more drastic for the shopping centres.

The shopping centres are being forced to become more innovative in their communication with the customers. Businesses need to be willing to change and adaptable, and to help create good new business models with a fresh, profitable and sustainable growth. With their strong purchasing power, Norwegian consumers are capable of contributing to such growth.

8 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 9 “We will eat more food that does not contain PROFILE

meat” NAME: JØRN ANDERSEN WORKS AS SENIOR ADVISOR FOOD & BEVERAGE ABOUT SPECIALIZED WITHIN THE FOOD AND BEVERAGE SEGMENT

In the USA, over 50% of the population eat their meals outside the home. Here in the Nordic countries, around 30% of all food is consumed outside the home. This figure is expected to rise but, with many new establishments opening, competition is tough. So, what distinguishes the ones that will survive and are ‘geared’ for the future?

Here in Norway and the other Nordic countries, all indications show that the biggest trend from 2018 will only be reinforced further in the years to come: namely, that we will eat more food that does not contain meat.

We became more familiar with the word ‘flexitarian’ in 2018, as more and more Norwegians opted to have meat-free days as part of the weekly menu. Among other things, the vegetarian burger has enjoyed an enormous rise in popularity. Vegetarian burgers that taste like meat. Supermarkets have reported a doubling of sales of vegetarian burgers so far in 2019 compared with last year. In the future, we will not only see an ever-greater choice of vegetarian burgers, but

10 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 11 Norwegians’ eating habits. The Swedish company, Max Hamburger, has found that vegetarian burgers account for approx. 40% of food sales in a number of its restaurants. We predict that plant-based food is “The 2019 trend towards clean the start of a revolution, and that in the future we will see a strong decline in meat consumption as a result. eating food without additives will Each inhabitant of Norway throws away an average of approx. 42 kg of edible food in the course of the year. That is a lot of food – food that, with slightly continue to increase in 2020” better planning, could have been consumed. Throwing away edible food is neither environmentally friendly nor good for the climate, and it does not make sense economically. We would therefore like to see measures such as better planning, ‘leftover days’ and – not least – more focus on correct portion sizes as means to achieve a reduction in food waste. Originality within food waste management will be important in the future.

We continue to delight in street food, which is the new tapas. ‘Street food’ is a generic term for small dishes from all corners of the world, and in this field, there is still a never-ending range of undiscovered dishes.

These small dishes from various exotic destinations are usually bought from food trucks, stands, food courts or informal restaurants. In the last few years there has been a focus on Mexican, Indian, Asian and ‘crossover’ dishes. The popularity of Asian food continues, with especially Filipino food on the rise.

The 2019 trend towards “clean eating” food without additives will continue to increase in 2020. Today’s food trend is all about making eating healthy as easy as possible whereas more shelf space is reserved for pre-chopped fruits and greens. We also see that the choice of alcohol-free drinks continues to develop in restaurants and bars. The trend indicates that it is becoming increasingly popular to choose alcohol- free drinks. Ginger shots, matcha lattes and green juices are all examples of healthy drink options with a naturally low sugar content that have exploded in popularity in recent years. Think more natural, few- ingredient beverages compared to traditional sugary mineral waters.

Furthermore, we will see restaurants continue to ‘go their own way’ and create new and authentic experiences for consumers. It will become more trendy not to be trendy. Sharing food pictures on social media is also a trend set to stay, making the visual presentation of the food more important than ever.

12 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 13 Oslo’s hottest project: Lilleakerbyen Mustad Eiendom is a family owned real estate company with a long-term sustainable perspective on the local development of the area between Lilleaker and Lysaker. Colliers have interviewed Olav Line from Mustad who believes that his new project, Lilleakerbyen, will become a staple for sustainability and urbanisation.

Interviewer: Haakon Himle Skandsen Advisor at Colliers International AS

14 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 15 Oslo’s hottest project:

Lilleakerbyen

What is your background within real estate?

I studied at NTH and BI. Originally, I envisioned myself to work within the oil and gas industry, because I graduated as an engineer. However, after working 2 years in the offshore segment, I decided in 1985 to start working for one of the first property development companies in Norway, called Tor Andnæs, which was later renamed Avantor.

After my first CEO position, leading the transformation of NSB real estate into ROM Eiendom, I started in Steen and Strøm.

This was a pivotal point in my career as it made me realize the business to consumer concept. If you understand the magnitude of B2C it will make you realize the importance of being customer oriented. This will assuredly help any business reach success. Since then I have worked in almost every branch of real estate, which in turn has provided me with a spectrum of experience.

Additionally, something that characterizes my career, is the fact that I have been part of different development projects in many different companies. Olav Line Regardless of the magnitude of the challenge, I have CEO Mustad Eiendom AS welcomed it with open arms. Photo by Estate Nyheter

16 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 17 CC Vest works very well as it is today, with the highest average shopping basket (i.e. around NOK 900) in all of Can you explain the vision behind Norway. Many find it precarious to Lilleakerbyen? demolish everything to build something completely new. Can you share your Here in Mustad, we have characterized three thoughts on this? main changes that will be detrimental for future success. These are sustainability, urbanisation and Firstly, I think it’s important to underline that CC Vest digitalisation. To be adequately adaptive and meet the won’t be demolished, on the contrary, just moved to current and future demand of the market, we need a another location. It will be sustained, just in another dynamic portfolio. As of today, we have a successful form. Some might say that it’s daring, but we are portfolio, nevertheless, we believe that the current convinced that commerce in its current form won’t structure does not comply with these three factors, at be able to sustain a commercial shopping mall in the least not to the extent we envision for the future. For future. That’s why we want to create a larger open instance, with the rent level in Lysaker where many of space area that offers something unique and special, our offices are located, the nominal value in kroners for all target groups. has been constant since I started working with property in 1985. Other areas such as Oslo Centre, -Secondly, Norwegian shopping malls have been Skøyen and various urbanized areas, on the other caught up with the “one size fits all” term. With a limited hand, has increased in rent levels. Urban qualities imagination of what concepts apply to the needs of promote growth and value creation. Hence, Mustad our customers. That is why we are focused on making Eiendom wants to transform the office park and the conceptual changes to adapt to the changing needs There are a lot of people who are under the customer in the right frame of mind. Finally, we shopping centre into a vibrant and future-oriented and desires of our consumers. As a result, giving the the impression that we are moving need to understand who the customer is, by doing city that will become a new destination in Oslo - consumer a broader selection of shops and facilities towards a retail apocalypse. What are both demographic and physiological analyses. Before, Lilleakerbyen. This decreases risk and increases that create an “experience” for all hours of the day, your thoughts on this? it was easier to match all target groups, but nowadays value creation. With urban and sustainable qualities, will be value generative. Additionally, establishing a its seemingly more difficult as the consumer is more the new city will be constructed on the area’s existing variety of streets, parks and green areas to connect I don’t think we are nearing an apocalypse, we’re complex and demand a larger array of goods and qualities and the site’s historical identity. The green it all will enhance the experience, making it both rather seeing a changing consumer landscape. services. Lilleakerbyen as a destination of work, life, surrounding landscape with the Lysaker River as the sustainable and pioneering. The only thing we can do is change with it. The experience and inspiration, will offer exactly this. main element, are key highlights and identity-creating E-commerce market has assuredly affected the qualities that the new city is built around. How has the cooperation with the retail industry, and the physical stores can at best What retail concept do you think will municipalities been during the complement it, because it’s here to stay. On the other be most popular in the future? Can you explain how the idea of process? hand, the physical stores need to give consumers a Lilleakerbyen came to be? reason for why they should want to go there. They I don’t have a specific concept in mind. I think it’s The cooperation with both municipalities has been need service, knowledge and an experience that more about understanding that the consumers’ needs There are several elements that led to the idea. Before good. Nonetheless, we have encountered complications makes the trip worthwhile. Back when I worked with are changing. If you only offer stores, the visit will be I started in Mustad, there was held an architectural along the way. In principle, the municipality of Oslo the development of Aker Brygge, we used to talk a brief. Therefore, health & well-being, leisure and f&b competition to draw solutions for both sides of the wants to be a regulatory authority in the process. The lot about creating the right mix and selection for the will play a larger role in the future of retail. Lysaker river (The Oslo side and the Bærum side). tricky part is the fact that we own and regulate 99% destination. In order to do that, we looked at it as a However, the problem was the two sides didn’t of our own property, which naturally creates some watch. Matching the needs for all times of the day, What part of Lilleakerbyen is your correlate. It was after this process proved to be dispute in how we should conduct parts of the zoning week and months. We need to change along with favourite and why? unsuccessful, that the municipalities of Oslo and process. There are other principle elements that are the seasons, and therefore it won’t be enough to Bærum started to define exactly what they wanted also difficult to solve, mainly concerning the number look at the shopping centres experience as a simple That’s a good question, I don’t think I can say any from these areas, as well as how to make them collide of parking spaces and who should own squares transaction. It needs to offer something for all hours part that appeals more than the other. That’s what’s with one-another. They concluded they wanted to and streets in the area after completion. However, of the day and deliver a suitable atmosphere that puts so special about it. Each area is different and unique. create an urbanized area that was accessible and politically, we have received positive feedback on our We have refrained from having voids and tried to be attractive to use for everyone. Furthermore, as we proposals. One of our strengths during this process is area-efficient. Being area-efficient is not the same as started cooperating, we encountered a problem with how we have encountered and handled problems and building and exploiting each square meter. To us it the process, which proved to be our reluctance to complications that have arisen during the process. “Urban qualities means preserving the wilderness as well. That’s why tear down our «Holy cow» CC vest, being one of the We have managed to turn problems into possibilities. we have chosen not to build around the Lysaker river most profitable shopping malls in Norway. We had to To name a few; energy use, circular construction promote growth and maintaining historical buildings and elements like restart the process and think innovatively. Therefore, methods and red listed species, are things we have “Mølletorget” and “Trehusrekka”. Lastly, it’s important we concluded that the key to the development of taken into consideration and we will continue to do so to note that the municipality of Oslo has decided to Lilleakerbyen is to move the trade from today’s for future reference. Our solution-oriented mindset and value plant 100.000 trees in the area, and Mustad Eiendom introverted shopping centre into street structures has undoubtedly created enthusiasm in all parts of will plant 1000 of them. This will be a city with the without car traffic. the project. creation” perfect combination of sustainability and urbanisation.

18 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 19 “I don’t think we are nearing an apocalypse, we’re rather seeing a changing consumer landscape. The only thing we can do is to change with it.” Olav Line CEO Mustad Eiendom AS

20 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 21 PROFILE

NAME: CHARLOTTE CHRISTENSEN WORKS AS DIRECTOR LEASING ABOUT EXTENSIVE TRACK-RECKORD WITHIN COMMERCIAL DEVELOPMENT AND LEASING OF SHOPPING CENTERS “Landlords need to go into more detail and understand what kind of offering will be attractive enough in From leasing to the future“

Everyone in the industry is talking about the massive The changes we are seeing places new pressure on changes retail is currently undergoing. Owners of landlords to maintain profitable operations as well as development commercial properties face increasing challenges a sufficiently attractive and relevant offering for their when attempting to find new tenants for their vacant customers. The focus needs to shift from a classic premises. This even applies to main shopping streets. management and leasing perspective to a clear-cut Shifts in consumers’ buying patterns are drastically changing The days when retailers fought for market share and development perspective. The latter, especially for the retail industry, placing entirely new demands on today’s it was most important to have the highest number of shopping centre owners, means that landlords will retail establishments as well a physical network of have to take greater responsibility for the further physical stores. So how should we adapt to these new stores are well and truly over. The bottom line is what development of their overall concept and also be changes? Our Head of Landlord Representation, Charlotte counts, and an increasing number of retailers make it willing to bear a greater financial risk. This means that Christensen explains. crystal clear that loss-making stores cannot continue landlords need to go into more detail and understand trading – no matter how good their location may be. what kind of offering will be attractive enough in the

22 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 23 future for consumers to visit their centre in person are able to create the basis for a win-win scenario. and spend both precious time and money there. They When will we see the major established shopping will also have to identify what it will take to ensure centre owners in Norway enter the ownership side of “Now the time has come that consumers come back again and again. well-established and forward-thinking retail concepts that need additional financial muscle to succeed? for landlords to invest in Many landlords have to redefine/reinvent the purpose of their shopping centre. This is not an easy task, and A well-run shopping centre is a small community in it requires detailed insight and knowledge as well as itself and a natural meeting place for us to make our retail” a robust understanding not only of retail as we know daily purchases and find inspiration. But in a world it, but of new forms of trade, service, experiences where everything is moving faster and faster, we and technology. This will undoubtedly place great will also increasingly want the opportunity to find demands on the ability of landlords to innovate. energy, peace and ‘me-time’ and simply recharge our batteries. Retailers have long invested in property. Now the time has come for landlords to invest in retail. This will Shopping centres have a great deal to work with and ensure a strong foundation for success. After all, both new opportunities are in the pipeline. In addition to parties are chasing the same wallets! an increased focus on F&B concepts and strategies, many new commercial health, fitness and wellness In the United States, we are already seeing many concepts are on the rise. We are also seeing that exciting examples of shopping centre landlords hospital concepts are beginning to signal their interest meeting these new challenges in unconventional to shopping centre owners. ways. Acquisitions and partnerships between major national shopping centre owners and failing stores This, of course, places greater demands on landlords with promising (forward-looking) retail concepts who will be required physically to adapt their ensure that landlords avoid an increase in vacant properties to these new tenants and create an oasis in premises while retailers are given the opportunity to which customers can enjoy themselves. What kind of adapt to the changes they are facing. Together, they feelings do customers have in their particular centre? We have to play to all the senses.

In cities, landlords need to focus on the offerings desired by those working on the floors above retail level. The ground floor of city office buildings is an important competitive factor in attracting the best tenants for the floors above. Traditionally, landlords set the rent for centrally located ground-floor premises in cities at a high level, but the resulting challenge is that they get fewer exciting players to choose from. We need to start thinking the other way around; what would happen if the ground floor offering was so attractive and exciting that it increased the value and attractiveness of all the premises above?

Future success stories will be the result of strategic alliances and collaborations. Retailers and landlords have to sit down together to identify what customers want, what they should offer, what the offering should look like, how it should feel and how it should be experienced. What is the required wow factor? And what is it that will make customers come back time and time again?

On the whole, it boils down to people, personal encounters and experiences. Tomorrow’s winners have to think outside the box and dare to invest – and even join forces in new and productive constellations.

24 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 25 great example of a company suffering at the hands of disruption. After 100 years on the market, they disappeared overnight because of a reluctance to evolve with the rapidly changing industry. Is it only a matter of time before the centres have their ‘Kodak moment’?

If shopping centres are no longer the actual market squares, what are they? Even if the answer is not obvious, that is the question we need to answer: What should shopping centres be, and for whom?

The underlying drivers: If the centre is to be part of the customer’s everyday life, we need to know what actually drives the customer. The list is a long one, but these are some of the drivers PROFILE that are becoming more and more important:

NAME: 1. Time – You cannot create more of this, and we are STIAN KJELLHOV finding that more and more companies are competing for time the customer has available. Time is perhaps WORKS AS our most important scarce commodity. As people HEAD OF RETAIL become ever more impatient, so the value of time increases. REAL ESTATE MANAGEMENT

ABOUT 2. Social relationships – Opportunities to create meaningful, personal relationships become more MAIN FOCUS ON OPTIMIZING important as an increasingly greater part of everyday RETAIL LOCATIONS life becomes more impersonal. There is a vital need for natural places to meet outside work and the home, places where we can share commonplace experiences. This need will become even more vital in the future.

3. The best – The best experience. The best quality. As consumers, we are becoming more and more used s a retail real estate manager I could write A to having things exactly the way we want. Expectations about proptech, cost savings, increasing elements are rising, and mediocre experiences are rewarded of service-based offers in the store mix, machine with the cold shoulder treatment. Customers talk, and learning of marketing and green buildings. However, their stories spread ever further. let us instead look at the basics.

Even with the «death of the mall» called off there is The shopping centre: little evidence to suggest that we are experiencing ‘business as usual’, there are major changes coming What do the consumer to the shopping centre industry. As a place to go shopping, the shopping centre has need them for? grown naturally by offering a large choice and better product knowledge all in one place. Up to now, this Over the past few years, the death of retail and mass closure of has been the main rationale for the shopping centres – a modern version of the old market square. shopping centres has been predicted. These predictions may now have been called off, but is the danger really over? Our The development of online shopping is changing this shopping centre specialist, Stian Kjellhov investigates. position. The online shelves are considerably deeper and wider. As is the product information. Kodak is a

26 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 27 them to the ones that were there the previous month. On the table, there is a menu not only for the food, So what does this mean in practical terms? but also for everything around them. With three clicks and a scan, she has now ordered new lounge chairs. Do not retain the customer Now she hopes that her husband will be pleasantly surprised when the chairs arrive at the door. The One of the unique things about shopping centres is furniture store packs and dispatches the items on the perhaps not something that immediately springs to following day. Miriam: ‘This will be exciting. I wonder mind – tempo. what Tom will say.’ Christine: ‘I think perhaps you should cook his favourite meal tomorrow evening.’ Consumers are taking ever greater control of what they want, when they want it, and how they want It is not certain that consumers need more attractions, it. One of the biggest trends we are seeing that or expect every shopping centre to have a cinema. In influences the design of buildings and facilities for the their battle to turn themselves into the ‘Third Place’ – public at shopping centres is the removal of friction. the place outside work and the home where we share Consumers dislike anything that steals time. Just our everyday lives with others – let the shopping think how you feel when you have to take your place centres play on what they know best: Products. Allow in a long queue in the grocery store because only one consumers to interact with the products, update them checkout is open and there is no self-checkout option. regularly, and ensure that they can be ordered then and there – and, not least, delivered directly to the As a father of small children with little time available, I customer’s home. am a great fan of shopping for everyday items online, but I still find myself having to make a quick trip to Fewer campaigns the centre because I ‘need’ something immediately. Yesterday, for example, my young daughter was not Can shopping centres attract more customers in the mood to wait for her nappies to be delivered to with less marketing efforts? It is an old-fashioned the door. A quick trip to the nearest shopping center concept, but yes: Make it a shopping experience was the solution. worth returning to. Consumers today have every tool available to promote the store and the centre via We will continue to see an increased priority for social media. Give them reason to do so. making the shopping experience easier with less friction. Services such as click and collect, home When was the last time that you were positively delivery, and easy parking and exit from the centre. surprised by an experience in a store? In other words, the shops are going from working to retain consumers to helping consumers on their way My old lecturer in marketing used to say: ‘There is no to their next task, as quickly as possible. point being the world’s best lover if no-one knows it!’ The problem is simply that most stores are not good Do retain the customer enough at loving their customers.

People who invest their time at the shopping centre Switch half of the centre’s marketing budget over to expect a return on that investment. This is where the developing the staff in the stores and the customers shopping centres have a fantastic advantage: The will see to it themselves that word gets around about tactile advantage. Here, consumers can touch, smell their surprisingly positive experience. Just as they do and feel the product. if they have a negative experience.

“One of the unique things Imagine Christine. She is 31 years old, and today she has arranged to meet her friend Miriam at the In brief about shopping centres shopping centre (her ‘alone time’ this week). When she meets Miriam, the pair sit down in the centre’s We are seeing a change in perspective in the industry, eatery, pleasantly located in the middle of the centre. centres that provide the customer with more than just is perhaps not something The chair on which she is sitting has been supplied by a collection of stores will probably draw the long straw. the furniture store, the flowers on the table are from As for how to make shopping centres frictionless for that immediately springs the florist, and the coffee cup is from the glassware those with little time, and at the same time engaging store on the floor above. for those who do have time, this is something that the to mind – tempo” retail industry will probably be working on to a great Miriam notices that the chairs are new and prefers extent in the 2020s. Let us begin now.

28 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 29 common traits, they are all independent countries, Although the landlord and the independent setup each with its own language and, to an extent, consultant serve different interests, a mutual a different culture. The Scandinavian countries understanding and respect ensures that landlords, (Norway, Sweden and Denmark) have languages too, can see the benefits of the chains having that are largely mutually intelligible. Generally, engaged a setup consultant. The landlord can then international chains initially consider one or more of feel reassured that the tenant knows which shopping the Scandinavian countries when deciding whether centres and locations are best suited to the chain in or not to expand into the Nordic region. question in terms of their line of business, profile, etc. A setup consultant is also aware of where similar or Many choose to set up first in Sweden, as, with its other chains succeed or fail, and is thus able to assist population of around 10 million, this is the largest of the new chain in choosing the right location first time. the Nordic countries. Some opt to start in Denmark Ultimately, it is the chain’s concept and operation that with its population of 5.7 million, perhaps because the determine its success, but the importance of the country lies furthest south bordering Germany and correct location and a sensible lease contract must PROFILE has a more central European culture than those of not be underestimated. Norway and Sweden. Very few international setups NAME: take place initially in Norway, with its population of Norway is an exciting and attractive country in which EIVIND PREUS 5.2 million. Another reason why many initially ignore to set up business. Norwegians travel widely in the Norway is that the country is outside the EU. The USA, UK, southern Europe and Asia, and they see WORKS AS economy of Norway is better than those of Denmark many exciting concepts in all lines of business that SENIOR ADVISOR RETAIL and Sweden, with a higher consumption per capita they would also be glad to see in Norway. etc., which to a certain extent compensates for the ABOUT lower population figure. EXTENSIVE EXPERIENCE AND There have been examples of both successful and KNOWLEDGE OF THE NORWEGIAN failed setups in Norway recently. I will not mention RETAIL MARKET any specific names as the reason for this may be the concept itself, the setup strategy or some other factor, but what everyone is agreed on is that the first stores or restaurants to be established must “The economy of be a success if the expansion is not to come to a halt before it has even started. Good research, and Norway is better than fastidiousness in choosing the location of the first he populations of the Nordic countries may be store or restaurant, are therefore extremely important. T Using an independent business setup consultant can those of Denmark and small compared with those of the larger European nations, but they share a number of common features make good financial sense. that make them attractive to international chains: Sweden, with a higher A particular feature of the Norwegian market is the »» The purchasing power in all the countries is strong concentration of ownership on the landlord consumption per capita above the EU average side. Around 40% of all trade takes place in shopping »» Low unemployment centres, and three companies control 37 of the 60 etc., which to a certain »» Stable economies largest shopping centres in Norway. One of these »» Political stability alone controls nine of the ten largest shopping centres »» A highly educated population in Norway. The same company is also among the extent compensates for three landlords that control a significant proportion The Nordic countries also come out on top in many of the best commercial premises at street level in the the lower population international statistics when it comes to: capital, Oslo. »» Happiness figure “ »» Health Such a concentration on the landlord side means that »» Environmental awareness most international chains, and many national chains, »» Transparency engage independent consultants to assist in drawing up the setup plan as well as finding the best premises However, although the Nordic countries – Norway, and negotiating the right lease contracts. Sweden, Denmark, Finland and Iceland – share many

Oslo - Karl Johans gate 30 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 31 Hegdehaugsveien / Bogstadveien

“Norway is an exciting and attractive country in which to set up business. Norwegians travel widely in the USA, UK, southern Europe and Asia, and they see many exciting concepts in all lines of business that they would also be glad to see in Norway “

32 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 33 VOL. 4 | OCTOBER 2019 ISSUE 34 Highlights Report Norwegian shoppingcentresdateback several largecentreswerebuilt.Today to the1950s.However,explosion didn’t startuntilthe1980swhen Shopping Centres Norway hasover500centres! Oslo offersavarietyofshopping. Over 1.5 millionpeople liveintheOslo unemployment rateintheEuropean is 3,4%whichamongstthelowest unemployment ratesinEurope.The Norway´s Capital The unemploymentrateinNorway Unemployment Area is7.3%. region.

quality. Environmentalissuesarealso an importantpartoftheirshopping Norwegians oftenchoosedomestic products andarewillingtopayfor Shopping Habits year. Forallmaleemployeestheaverage Norwegian salaryisEUR58102peryear. The averageNorwegiansalaryforall female employeesisEUR50603per habits. Clothing, shoes,homeelectronics, mediaproducts, what Nordic consumers typicallybuy online from beauty products aswellsportsand leisureare Salary Online Shopping other countries. 2019 35

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 36 impact on the labour demandin the years to come. haveinternational demandwhichwill negative The maindriver behind this prognosis is the lower and then increase with 0,2 percentage points until 2022. expected that unemployment be at 3,6 % in 2019 will public administration, hasbeenstrong. Itis therefore construction and several service industries, excluding Over the past6months the growth inemployment within see amore stabilisedunemployment rate goingforward. drop inunemployment is likely to beover and that we will Norway’s prognosis suggests that the previous significant % in2020andremain unchangeduntil2022.Statistics the forward prognosis is increasethat itwill to about70,6 was 70,2%in2018,and The Norwegian work force Labour 2022. 1.9 %in2021and1.4 %in 2020 before decreasing to % in2019and3.3 %in GDP isexpected to be1.6 Norway’s latestupdate, the GDP growth was1.3 %in2018,andaccording to Statistics neutral until2022. the Norwegian economy remain will close to cyclically Norwegian economy asof2020.Overall, this implies that international demand is likely to dampen growth in the and industrialinvestments. At the same time, reduced continuewill this year asaresult ofhighoilprices The outlookis that the upturnin the Norwegian economy to beover withinayear due to lower internationalgrowth. economy isfacing achangeofpace.Theupturn islikely Statistics Norway isnow promoting that the Norwegian Macroeconomics

market [ economy willcontinueinthe the upturn in the Norwegian the upturninNorwegian The outlooksuggeststhat current year. in 2018. contracts on the property market, wound upat3.50 % November-November inflation,whichadjustsmost rental 1.8 %in2020before risingslightly towards 2022. expected fallthat CPIwill to 2.2%in2019anddown to at alower level than whatwaspreviously forecasted. Itis expected that fallthe CPIwill in the upcoming years, but 2018. According to StatisticsNorway’s forecast, itis The consumer priceindex (CPI)endedupat2.7 %in CPI betterassumed. than developments in the internationaleconomy could be Brexit prove to benotasdramatic asexpected. Thus, interest rate mightbecome necessary if the currency prospects for the international economy. Lowering the interest rates in the years ahead,despitedeteriorating unnecessary for the central bankofNorway to reduce The weak Norwegian currency level make will it 2022.inflation target until close tothe the coming years, asaresult to this inflationwill remain growth rate andaroughly unchangedwagegrowth in reached itspeakandwithaslightly risingproductivity According to StatisticsNorway the interest level has Interest rate ] that the consequences of trade tensions desistand in the future if,for instance, room to raise interest rates Similarly, there also be will real exchange rate. equilibrium level for the strengthenagainst the exchange rate should Source: SSB

GDP CPI Interest rate Employment market 0,0 % 0,0 % 0,5 % 1,0 % 1,5 % 2,0 % 2,5 % 3,0 % 3,5 1,5 % 1,5 % 2,0 % 2,5 % 3,0 % 3,5 % 4,0 % 4,5 % 5,0 0,0 % 0,0 % 0,5 % 1,0 % 1,5 % 2,0 % 2,5 % 3,0 % 3,5 % 4,0 % 4,5 % 5,0 0,0 % 0,0 % 0,5 % 1,0 % 1,5 % 2,0 % 2,5 % 3,0 % 3,5 % 4,0 Key policy rate policy Key Work force (right axis) (right force Work Consumer price index (CPI) index price Consumer Gross domestic product domestic Gross 5 year Swap year 5 Unemplyment rate Unemplyment Forecast Forecast 10 year Swap 10 year 69,0 % 69,5 % 70,0 % 70,5 % 71,0 % 71,5 % 72,0 % 72,5 % 37

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 38 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 Hegdehaugsveien 4 2 Bogstadveien Hegdehaugsveien Bogstadveien 4 2 Øvre/Nedre Slottsgate,Torggata Karl Johansgate, 1 Sørenga/Havnepromenaden Area underdevelopment Grünerløkka 3 39

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 40 downtown shopping –like inmosteuropean maincities. landlords andstores are concerned about the future of to restrictions to useprivatecars in the city centre many gate due to the owner’s aquisition of more property. Due Johan butislikely to getanentrance from Karl Johans & Strøm issituatedin the surrounding streets ofKarl luxury shopping inOslo.Thedepartment store Steen years to become the maindestinationfor highendand Slottsgate andPrinsensgatehave transformed inrecent streets to Karl Johans gate such as Øvre and Nedre 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 Palace andisNorway’s parade Karl Johansgaterunsall the way from the Central Karl Johansgate,Øvre/Nedre Slottsgate nok/sqm/year

5 -10000 Akersgata gate Johans Karl 10 -15000 nok/sqm/year Øvre Slottsgate Akersgata

Nedre Slottsgate Øvre Slottsgate 15 -20000 nok/sqm/year

Nedre Slottsgate

Kongens Gate Grensen 20 -25000

nok/sqm/year

Karl Johans gate Johans Karl Stortorvet Grubbegata

Møllergata small, small, trendy shopsopeningin the area. and hippest restaurants andcafésinOslowithseveral transformed comprising ofsome the mostpopular Now, the easternpartof the street has alsobeen Fashion stores seemnot to perform well in the street. broad, attractive cobblestone pavements andfacades. the departmentstore ChristianiaGlasmagasin and currently has several large chain stores including square andKarl Johansgatewasredeveloped. It the western halfof the street closest to Stortorvet completely revitalised during the past ten years. Initially, to the west side(Karl Johansgate).Torggata hasbeen Torggata connects the eastsideofOslo(Grünerløkka) Torggata

Torggata Karl Johans gate Johans Karl 1 Karl Johansgate 41

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 42 Bogstadveien/Hegdehaugsveien Valkyrien openFebruary will 2020. probably improve when shoppingthe small centre than itwasseveral years ago.Thesituation will stores moved in,makingBogstadveien less attractive gate andsurrounding streets whilemore «ordinary» traffic. Many high-end stores moved to Karl Johans redevelopment of the street that resulted inless the popularity decreased duringanextensive and remains popular amongretailers. However, as Oslo’s second mostattractive shopping area Valkyriegaten in each end of the street is rated Bogstadveien including Hegdehaugsveien and nok/sqm/year 5 -8000

nok/sqm/year 8 -10000

Bogstadveien Hegdehaugsveien The H&Mbuildingishighly popular 2 residentials. stores andcaféshave beenboycotted by the local to prefer local businesses and some nationwide hipsters and young professionals. These people tend area for younger peopleincludingstudents,artists, to leave the area. Grünerløkkaisapopular residential strongly andforcing the smaller independentshops been strong inrecent years, effecting the rents quite chain stores. ThegentrificationinGrünerløkka has However now, the area hasalarge influxoflarger chain store area of independent shopsandcafés. full years. Prior to this, Grünerløkkawasa typical non- has become increasingly popular over the past15 the river that divides the city east/west. The area Grünerløkka isanarea situatedon the eastsideof Grünerløkka nok/sqm/year nok/sqm/year 6 -8000 4 -6000 3

Olaf Ryes Plass, Grünerløkka

Markveien

Markveien Thorvald Meyers gate Meyers Thorvald 43

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE Stavanger Key 44 Bergen Trondheim EAST CENTER: OFCITY CENTER: SOUTH OFCITY CENTER: CITY NORTH CENTER: OFCITY LEADING BUSINESS: CITY POPULATION: LOCATION: RANKING: 4 CENTER: SOUTH OFCITY CENTER: CITY NORTH CENTER: OFCITY LEADING BUSINESS: CITY POPULATION: LOCATION: RANKING: 3 WEST CENTER: OFCITY CENTER: SOUTH OFCITY Kloverhuset CENTER: CITY NORTH CENTER: OFCITY LEADING BUSINESS: CITY POPULATION: LOCATION: RANKING: 2 areas Mid Norway Bergen, Trondheim Kilden Amfi , Kvadrat, Bystasjonen, Amfi Vaagen Arkaden Torgterrassen, MagasinBlaa Tasta Energy, Oil& Gas,Maritime,Tourism Approx. 134000 South West CoastofNorway Trondheim Torg, Solsiden,Byhaven City Lade,Sirkus Technology, Science Approx. 190000 Sartor Storsenter, Vestkanten ,LagunenStorsenter Xhibition ,, Telegrafen, , Galleriet Aasane, Horisont Energy, Oil&Gas,Maritime,Marine,Tourism Approx. 280000 West CoastofNorway and

Stavanger

OLAV KYRRES GATE KYRRES OLAV

SMÅLUNGEREN

CHRISTIES GATE CHRISTIES

VASKERVEIEN

PRINSENS GATE PRINSENS

KLUBBGATA

VEITEN

MUNKEGATA

DRONNINGENS GATE DRONNINGENS

MARKVEIEN

NORDRE GATE NORDRE

KIRKEGATA SMÅSTRANDGATEN BREIGATA

OLAV TRYGGVASONS GATE

SKAGENKAIEN

ØSTERVÅG

TORGET

STRANDGATEN VALBERGGATA

HAVNERINGEN SØNDRE GATE

STRANDKAIEN SKANSEGATA High StreetHigh shoppingarea StreetHigh shoppingarea High StreetHigh shopping area

KJØPMANNSGATA

HAVNERINGEN BRYGGEN Trondheim Stavanger Bergen 45

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE survival of the fittest applies. a technical-industrial revolution, and needless to say, On the contrary, we think that we findourselves within many closures. believe that we are facing aretail apocalypse,despite optionally sending the goodsback in return. We don’t the goods, you can have the opportunity to try and point for e-commerce. Here, in addition to pickingup shopping centre in the country to offer apick-up Examples of this are SandvikaStorsenter, the first along withe-commerce rather than contending it. number are of malls shiftingfocus towards playing than more stores. Inaddition, we see that an increasing such asentertainment, f&bandexperiences rather strategies. Nowadays, they offer additional services We see that more are malls beginning to change their it flattens out. constitutewill alarger share than itcurrently does,until countries suchas the UK.Thisimplies that e-commerce approx. 17%.Nevertheless, Norway isfar behindother stronger inrecent years, andhasanannual growth of Furthermore, E-commerce hasgrown increasingly already regulated for suchpurposes. states bill that shopping canonly malls bebuiltinareas increasingly difficultdue toalawpassed in2008.This The development ofnewshopping centers isbecoming a newshopping centre isalsobeingbuiltatMajorstuen. shopping within malls the city limitsofOslo(Økern), and & Strøm iscurrently developing oneof the largest or rehabilitated duringlastdecade.Additionally, Steen square meters, and several of these have been developed in the Greater Osloregion isslightly above 1.5 million The total shopping area (over 5,000 square meters) by Norwegians. Swedish/Norwegian border and therefore often visited Norwegians are strategically locatedalong the Some of the largest shopping centers visited by square meters. than 300of these have asalesarea larger than 2,500 more than 500spread throughout Norway andmore an importantrole for these establishments.There are reasons for this, nonetheless weather conditions play density ofshopping centers per capita.There various Norway is the country inEurope with the highest Shopping centers: 46 Shopping centers 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-JULY 2019 (%) Source: Kvarud Analyse -0,2 10,3 -3,5 -3,4 -4,1 0,2 0,5 5,2 4,8 5,6 2,3 3,8 4,3 2,7 4,7 2,1 1.7 Norway’s 30largest shoppingcenters RANK 20 22 24 30 26 28 25 29 23 27 10 12 14 21 16 18 15 19 13 17 11 2 4 6 5 8 3 9 7 1 1) SHOPPING CENTER Vestkanten Storsenter Strømmen Storsenter Lambertseter Senter Storsenter Bydel Aker Brygge Sartor Storsenter Åsane Storsenter Sørlandssenteret Jekta Storsenter Vinterbro Senter Farmandstredet AMFI AMFI ALNA Senter Metro Senter AMFI Madla AMFI A CC Gjøvik City Lade Herkules Horisont City Syd CC Vest Kvadrat MFI MoaMFI Krokstadelva Trondheim Trondheim Strømmen Hafrsfjord Jessheim Vinterbro Tønsberg Sandvika Steinkjer Straume PLACE Ålesund Tromsø Bergen Bergen Bergen Bergen Skårer Gjøvik Bodø Oslo Oslo Oslo Oslo Oslo Oslo Ski GROSS 1st half2019 1009 1046 1409 1039 1016 1419 1 308 1 384 1 178 840 660 622 626 825 888 607 683 874 581 581 591 917 690 930 845 886 883 874 733 571 TURNOVER

(MNOK) 1st half2018 1 060 1 029 1 032 1 246 1 446 1 075 1 275 1 021 1 412 880 690 930 882 928 625 562 868 923 643 923 638 899 599 567 796 637 737 610 614 851 EXCLUDED OTHER % change Source: Kvarud Analyse -0,6 -0,5 -6,0 -2,6 10,4 -6,9 -3,3 -1,0 -1,4 -1,3 -1,9 -4,4 -5,3 0,5 5,0 2,6 3,6 3,4 3,7 -1,3 -1,4 -1,3 0,2 8,6 0,4 0,9 9,6 0,7 0,7 -1,1 ACTIVITIES 47

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 48 thus making it Norway’s sixth-largest shopping centre. with salesin2018 ofNOK2.36 (3.7 billion million visitors), In terms ofsales,Oslo’s largest shopping centre isStoro, are first and foremost travelling, rather thanshopping. S Shopping receive andØstbanehallen many visitors who centres. Themain reason for this is that Byporten, Oslo proportion ofretail outletscompared to other shopping is onfood andbeverage, with their significantly smaller million visitors) (6million visitors) andØstbanehallen eateries. ThemainemphasisatOsloSShopping (55 and Byportenbothoffer a variedchoiceofstores and sales ofNOK1.91 andNOK1.2 billion OsloCity billion, 12.5 million visitors per year, respectively, andrespective Station withhigh visitor numbers andsales.With11 There are several shopping centres around OsloCentral 1. Oslo Key areasshoppingcenters E18 West ofOslo 2

E6 Oslo E18 1 Oslo South-east of Oslo 4 E6

centres that primarily cater for the localpopulation. Oslo’s suburbshave medium-sized or smaller shopping to retail compared to normal shopping centres. Mostof of restaurants andbars andasmaller proportion devoted neighbourhood, as the owners it–withalarge call number that isnow apopular shopping andeatingdestination–or the centre of the city, Aker Brygge isaformer shipyard than mostshopping centres. Adjacent to the OsloFjord in 2.5 million visitors andasalesper visitor figure far higher incomes are among the highestinNorway. CC Vest has mainly for residents in the western partofOslo,whose Storo in terms ofsalesbuthasfewer stores andcaters bordering to Bærummunicipality, isalmostaslarge as of the city. CC Vest, located furthestwest in Oslo and attracts customers from both the west andeastside Storo is locatedapprox. 5kmfrom the city centre and RV4

E6 E18 North-east of Oslo 3 E6 1. 2. West ofOslo by car. by car. is located26 km southof the city centre, approx. 30minutes 2018, withsales ofNOK2.1 and 4.7 billion million visitors. Ski Ski Storsenter wasNorway’s tenth-largest shopping centre in housing prices. work in the city butchoose to live inSkibecauseoflower east. Skiisa town south-eastofOslowhere many residents Oslo, the city is growing towards the south-east and north- Due to the highresidential housingpricesinOsloandwest of had salesofNOK1.9 and6.2million billion visitors in2018. town to the airport is Jessheim, where Jessheim Storsenter airport and18kmfrom the central stationinOslo.Thenearest largest shopping centre. Strømmen islocated35kmfrom the tre overtook SandvikaStorsenter inJune2019asNorway’s sales ofNOK3.2 and5.8million billion visitors. Thecen- was Norway’s second-largest shopping centre in2018,with north-east of the city centre ofOslo.Strømmen Storsenter city and Oslo’s Gardermoen airport,whichis located 48km Many whowork inOslo choose to live in the area between the 3. area that wasformerly the site of Norway’s main airport. it is taking longer than expected to buildnewhomesin the were well below expectations, dueinpart to the fact that environmental standard. At salesin2018 NOK783million, shopping centre in the world built to the BREEAMOutstanding Fornebu S.Whenitopenedin2014,Fornebu Swas the first wider region. Another popular shopping centre inBærumis centre attracts customers from both the localarea and the The area hassomeof the highestincomes inNorway. The with 6.3 million visitors andsalesin2018ofNOK3.3 billion. west ofOslo,isNorway’s second largest shopping centre, Sandvika Storsenter, locatedinBærummunicipality 15km

South-east North-east

of of

Oslo Oslo 49

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 50 will becompletedwill during the year or early 2020. actual result, as we donotknow if these transactions is only anestimateand that itmightdeviate from the to besoldwithin the endof2019. Note that this number estimate isclose to NOK9bnworth ofretail property a higher transaction volume at the endof the year. Our be completed during the course of2019, andwe expect years. There are afewlarger processes that mightstill %, whichissomewhathigher compared to the last two forYTD commercial property in Norway isclose to 20 properties. Theretail sectors share of the total volume for about40%of the total transaction volume for retail is the saleof the ground floors inBjørvika that counts So far this year onelarge transaction standsout,which the sameperiodin2017. over NOK7.5 bn.This is higher than the numbers from August this year we have seenretail transactions of experienced anythingclose to this. By the endof In years prior andin20182019, we have not Oslo beingboughtby foreign investors. attractive highstreet real estateportfolio incentral standing shopping centers sold,aswell the most in Norway change hands, one of the largest single had the 2ndand3rd largest shopping center chains types ofsalesare rare inNorway. In2015alone,we Outside ofaflurry of highprofile salesin2015, these demand is there, however, the supply is very limited. it is most often for a very low yield and high price. The good locationsare rarely upfor sale,andwhen they do, often beensoldasportfolios. Highstreet properties in that retail properties, especially shopping centres, has What we have generally seenin the lastfewyears is historical average ofbetween 15%-20%. transaction volume isnow more or less inlinewithan was this fully expected, and retail’s share of the total at the nature ofseveral of the 2015 transactions transaction volume hassince then decreased. Looking After whatwasarecord-breaking year in 2015, the during the sameperiod. with transaction levels onpar 14 bn. We might be seeing something similar this year, transaction volume for the retail sector ofover NOK two monthsof the year. Theendsummary shows a in sizedue to afewlarge transactions towards the final the retail transaction volume endedupnearly doubling After the publicationofour retail report from lastyear, Investments

of whatitwaslastyear [ forward. limited. This is also in line with our expectations going high for primeproperty, while the supply isalsohighly and lower rent levels. Thedemandremains relatively pressure, asinvestors seeariskofhigher vacancy lies between 6%-6,50%.Theyieldlevels are under The samegoesfor bigboxes, where the yieldnormally 5,75 %-6,50%. cities oftenhave asomewhathigher yieldofbetween centers and that “regular” shopping centers innearby keep inmind that this number isfor primeshopping prime yieldisnow 4,25%.Itishowever important to increase for the shopping center segmentwhere the stable the past year. We dohowever noteasmall The primeyieldsin the retail sector have beenquite on historically acceptable levels. see that the actualnumbers of transactions remains transactions are more time consuming to close,we so far this year withforeign buyers. Although some as there hasbeenalimitedamountof transactions Norwegian retail properties hasdeclinedduring2019, It alsoappears that the international interest in the market relatively quickly. than for highstreet properties, which tend to come off properties are leftin the market substantially longer sector ishighly fragmented. We see that anumber of The current transaction market within the retail shopping centreshasoftenbeen retail properties, especially sold asportfolios. ] Prime Yield Levels2019 Normal Prime Prime Normal Prime Normal Shopping Centres High Street Big Box 6,00 %-6,50 5,75 %-6,50 5,25 % 4,25 % 3,9 % N/A Source: Colliers International

51

VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 52 Data andfigures 10 15 20 25 30 35 40 45 -2,0 % -2,0 % -1,0 3,0 % 3,0 % 4,0 % 5,0 % 6,0 % 7,0 % 8,0 0,0 % 0,0 % 1,0 % 2,0 % 3,0 % 4,0 % 5,0 0 5 2012 2007 2013 2008 2013 2014 2009 Historical retail transaction volumes 2015 2010 High Street High 2014 Historical prime 2011 2016 2015 2012 Big Box Big Exports 2017 2013 - yield levelsyield 2016 2018 (e') 2014 Shopping centre Shopping - NOKBillion 2015 2019 (e') 2017 2016 2020 (e') 2018 2017 2021 (e') 2018 2019 2019 2022 (e')

Historical prime Historical retail transaction Exports yield levels volume NOK Billion

Historical retail transactions Total retail sales volume Imports share of total volume index 100 102 104 106 108 10,0 % 15,0 % 20,0 % 25,0 % 30,0 % 35,0 % 40,0 % % 0,0 % 1,0 % 2,0 % 3,0 % 4,0 % 5,0 % 6,0 86 88 90 92 94 96 98 0,0 % 0,0 % 5,0

jan.11

mai.11 2013 2012 sep.11 jan.12 2014 mai.12 Historical retail transactions 2013 sep.12

jan.13 2015

mai.13 Retail Index 2014 sep.13 2016 jan.14 mai.14 - Imports 2015 Seasonally Seasonally adjusted sep.14 2017 jan.15 - 2018 (e')

share totalof volume mai.15

2016 sep.15 jan.16 2019 (e') mai.16

2017 sep.16

jan.17 (e') 2020 mai.17

2018 sep.17 2021 (e') jan.18 mai.18 Source: 2022 (e')

2019 sep.18

Colliers International jan.19 mai.19 53

VOL. 4 | OCTOBER 2019 ISSUE Retail clients Norway

Food & Beverage RETAIL MARKET NORWAY2018 Retail

54 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 55 Colliers International Norway Retail Team

56 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 57 Haakon Reed-Larsen Head of Retail Tenant Representation Mob. +47 482 99 834 E-mail: [email protected]

Charlotte Christensen Director Leasing Mob. +47 970 62 399 E-mail: [email protected]

Stian Kjellhov Head of Retail Real Estate Management Mob. +47 411 07 238 E-mail: [email protected]

Jørn Andersen Senior Advisor Retail Mob. +47 934 69 729 Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate E-mail: [email protected] services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning more than 40% of our equity, have delivered Eivind Preus industry-leading investment returns for shareholders. In 2018, corporate Senior Advisor Retail revenues were $2.8 billion ($3.3 billion including affiliates), with more than Mob. +47 922 66 952 $26 billion of assets under management. E-mail: [email protected]

Learn more about how we accelerate success at www.colliers.no

Stine Bjørdal Colliers International – Accelerating Success 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]

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

58 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 59 OSLO Wergelandsveien 7 0167 Oslo +47 22 06 62 80

STAVANGER Nordbøgt. 4 4006 Stavanger +47 51 59 80 70

MOSS Bernt Ankersgate 1534 Moss +47 69 24 96 70 www.colliers.no

Copyright © 2019 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. www.colliers.no