The impact of COVID-19 on the office market in Skåne

COVID-19 has affected us all, one way or another. 

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The real estate market and office segment have also been affected, but expectations are considerably more positive at present than they were at the start of the second quarter of 2020. Croisette has mapped the actual level of vacancies for offices in Helsingborg, Lund and Malmö. This list was compiled in August 2020, and the figures have been compared with a similar list from December 2019.

 

In Lund, the central office locations have merely seen a marginal increase in vacancy levels, and vacancy levels in the area around the central station have actually fallen. However, in general the vacancy level for class A locations has increased from 6.3% to 8.1%. Ideon, where the vacancy level has increased from 7.5% at the end of 2019 to 10.3% in August 2020, is a strong contributor to this. Relatively similar figures are reflected in the office segment in class B locations, where vacancy levels have risen from 6.2% to 7.6% in the same period.

 

Vacancy levels for offices in Malmö have also generally increased. This can be explained by COVID-19 to an extent, but it can also be explained by a large number of new offices that were completed in 2018-2019. The range of modern premises creates relocation chains from all the premises; so in other words, the increased vacancy levels are not being seen at the modern office premises. This relocation has meant that the vacancy level for offices in class AA locations in Malmö has increased from 7.1% to 8.4% since December 2019. The figures for offices in class A locations, where Västra Hamnen in particular saw high vacancy levels, are showing an improvement. The total vacancy level in class A locations has seen only a marginal increase, from 11.1% to 11.4%. The vacancy level for offices in class B locations in Malmö is showing an increase from 8.3% to 10.9% between December 2019 and August 2020.

 

Offices in central Helsingborg are bucking the trend and are seeing higher occupancy rates than before the pandemic. The vacancy level in class A locations has fallen by just under one percentage point, from 5.4% in December 2019 to 4.5% in August 2020. The vacancy levels in more peripheral areas have increased slightly instead. PEAB has announced that they will be leaving their offices in Väla just as Berga has taken on a number of new rentals, which means that marketed premises in the area have risen to 17%. However, in general the vacancy level is relatively comparable with 2019 for office premises in an assessed class B location in Helsingborg, with an increase from 8.0% to 8.4% in the same period.

 

But it is difficult to predict the long-term effects of the pandemic on the office market. However, one observation is that companies are largely avoiding taking on larger spaces on long leases and instead demanding smaller, flexible solutions. This may be linked to office hotels and the co-working concept, which it is thought may undergo a small upturn in the immediate future.

 

 

To summarise, we can state that COVID-19 has had a certain impact on the office market, although other segments have probably been hit harder. It is also possible to state that city centres have fared best in 2020. However, we should point out that there should be a certain amount of delay in vacancies for the office segment. The pandemic has prevented companies expanding, but the effect of relocating from larger premises to smaller ones has probably not had much impact on the market as yet. Therefore, it is not impossible that we will be able to distinguish even greater impact from COVID-19 in the office segment going forward, while at the same time the extreme fear of the pandemic will start to decline and people will work less and less from home, which means that companies will be able to start planning for a future returning to normal.

 

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