Market Report – Newsec Property Outlook

Description

Written off again – and wrong again

As interest rates rose and remote work reshaped expectations, offices across the Nordics and Baltics were widely expected to empty out. But a quarter-century of leasing data tells a steadier story: the office is not disappearing – it is being sorted. Vacancy has stopped measuring weakness and started measuring quality, while tenant commitment is no longer a market average but a function of size. These patterns are not accidental – they are a direct result of how each market allocates space, prices quality and rewards scale.

“The obituaries were premature. The office is not dying.” Max Barclay, CEO, Newsec, on how the workplace is instead becoming smaller in some places, more specialised in others, and – at its best – more human.

The Nordics and the Baltics: one leasing record – seven different stories

Stockholm is the most polarised office market in the region, with prime vacancy running roughly a third of the market average, a pattern Helsinki mirrors at similar scale while Oslo and Copenhagen show a smaller but still visible gap. Sweden’s own 25-year leasing archive – the deepest in the region – shows that tenant size, more than sector or location, is the strongest predictor of renewal, and that the median office has shrunk by around 15% since the early 2000s as occupiers increasingly keep their address but hand back space. Norway confirms the pattern from another angle, with average lease sizes roughly halved since 2007 even as the median has held steady, concentrating the downsizing among the very largest tenants. In the Baltic capitals, Vilnius stands out for growing from the region’s smallest modern office market in 2000 into its largest today, so its higher vacancy reflects a wave of new supply rather than weak demand, while Riga and Tallinn continue to anchor a five-year lease norm despite a brief post-pandemic dip.

Outlook: office markets are being sorted

As occupiers increasingly ask not how much space they need but what they need that space to do, it becomes clear that office resilience is no longer a market-wide average but a question of building quality and tenant scale. This year’s Newsec Property Outlook shows that the winners of the next cycle will not be the markets with the least space, but the buildings that can still win five-year-plus commitments from large occupiers.

The latest Newsec Property Outlook provides an in-depth analysis of the structure, risks and opportunities across the office markets – equipping investors, developers and decision-makers with the insights needed to navigate an increasingly selective phase of the cycle.