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Rising Warehouse Rental Cost's in Primary Nordic Locations: Secondary Locations the Next Alternative

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by Sujen G George
29 September 2015

The old industrial spaces in the prime locations (Oslo, Stockholm and Copenhagen) of the Nordic regions have been charging rent as competitive as new build to suit models, majorly because availability of quality spaces are low and even if new spaces are found time taken to develop these are around 15- 18 months, while the tenants desire to occupy the same within 6-8 months. This sudden development of demand has been the result of recent improvement in consumption rate and GDP of the Nordic region with low unemployment favoring the consumer industry. This long time gap in developing a warehouse is forcing the procurement organizations to occupy the old existing warehouse in the prime locations almost at the same rental rates as the new one in the prime areas or move to secondary areas where modern spaces are available at low rental rates. Economic Condition Driving the Consumer Market The Nordic countries have been top rated by the major credit rating agencies, such as standard & poor and moody, and are generally considered as safe economy. Majorly owing to the financial stability of these regions, they have seen higher development compared to other regions of Europe in the last year. GDP of these regions has been on the positive note since 2013 and in 2014 these countries had an overall growth rate of 2.1% (Sweden toped growth rate chart with 2.8 followed by Norway at 2.0 and Denmark with 1.5 %). On considering the industrial production of Europe, Nordic region has one of the highest industrial production growth rates of 2.3% per annum in 2014. These economic situations have been improving the consumer confidence in the Nordic regions and can be witnessed as the consumer spend rate have also grown at about 2% in 2014.   Author: Sujen G George

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