County of Stockholm office market 2030

The development of office space in the county of Stockholm has varied between 1.6 and 2.6 million square metres per decade since the 1960s, equivalent to an average annual increase of around 3 per cent. The portfolio amounted to 15.7 million square metres in 2019. Despite this, the selection of attractive offices on offer is well below demand, and this has driven rent levels and yields to record levels over the last few years.

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Croisette’s list of planned construction of office premises over the coming decade indicates that development is on a par with the historic growth in the region, despite major urban development projects. So going forward, can we still expect the situation to remain unchanged, where the properties on offer are unable to meet demand? And what other aspects do we have to take into account after the pandemic? Are there any differences between various sectors?

 

The Stockholm region will be growing in the long term, adding eight new regional city centres in order to relieve the strain on the central parts of the city. In accordance with this vision, planning work is in progress on districts such as Flemingsberg, which will include 50,000 homes, the same number of workplaces and shops, experiences and culture. Homes and workplaces are also being developed in Hagastaden and its environs. Gullmarsplan will link the northern and southern parts of the inner city with the areas outside.

 

 

In the early 2000s, the office market in the county of Stockholm consisted of around 12 million square metres, but since then the portfolio has grown by 32 per cent until 2019. The increase in office space expected by 2030, totalling 2.2 million square metres, is on a par with development over the last few years in terms of capacity utilisation levels, the need for premises and the growth of the city. The most attractive office locations have been in the city centre for a long time, but the question is whether the pandemic will change opinions of what constitutes an attractive office. If travel patterns change significantly, with less load on public transport, could the peripheral parts of the city close to people’s homes, where there is no congestion, become more attractive? It is important to take into account the fact that no less than 60 per cent of future office space is situated outside the congestion zone.

 

Companies working in fields such as finance, IT and media are of the opinion that they are open to the option of allowing their staff to carry on working remotely, either full-time or part-time, if they want to after the pandemic is over. Accelerated digitalisation in industries that were already at the cutting edge should mean that this type of tenant will probably be most inclined to reassess the need for office space in future. Remote working has also proven to be possible in the public sector. Employees at the Swedish Public Employment Service and the Swedish Tax Agency have been able to work from home in the spring. Therefore, continued remote working in a leading digital industry such as IT or telecoms, where many companies are situated in Kista, could lead to an increase in vacancies in similar areas,

 

while the public sector is considered merely to have 45 per cent digital maturity, which means that the risk of major vacancies on premises held by tenants in this sector should be considerably lower. Older offices with separate cubicles, now with additional plexiglass walls, are described as the safest as regards infection-control, unlike modern, activity-based offices. The question is whether the demand for safe workplaces means that the trend for a reduction in the number of square metres of office space per employee will turn, as one-way movement patterns and social distancing will make new demands on design. It is predicted that offices will play a social and innovation-inspiring role in most organisations in future, and greater demands for flexible working hours, work environments and working methods will be made as the workforce is replaced by generations that have grown up in a digital world. It goes without saying that trends have a part to play, and the transition to activity-based offices would mean a decrease in the amount of space required for each employee. Looking back to the 2010s, we can see the highest population growth in the county in a century, while at the same time the growth rate for office premises fell compared with previous decades.

 

Another question is whether we will be able to see the consequences of the pandemic in the planning of our workplaces in future as we set greater store by greater flexibility, more emphasis on health and travelling minimal distances to work. This may result in more stringent requirements and greater demand for co-working spaces, even in more peripheral parts of the city, which in turn may lead to increasing vacancies in what are the most attractive parts of the city at present. There is also a risk that we will be able to perceive a trend involving postponed or cancelled projects, or projects that are re-planned in favour of other forms of usage, perhaps for residential purposes for the most part. The discussions held of late concerning the future of offices divide opinion into two camps: people who believe that we will return to normal and people who believe that offices will cease to exist. Perhaps neither camp will be wrong. Office design will probably change, with flexible solutions and contracts so that we can return to offices, while some companies are already making the switch to fully digital workplaces. However, the demand for office space in itself will probably not change radically if we look at all office-intensive sectors. If any of the planned projects are postponed or cancelled due to uncertainty, we will probably see a shortage of attractive offices going forward as well.

1 According to the Swedish Center for Digital Innovation report entitled Digital mognad i offentlig sektor 2020
*Värtahamnen, et al. also includes Hjorthagen and Frihamnen
**Hammarby Sjöstad, et al. also includes Slakthusområdet, Sjöstadshöjden and Marievik