Market situation and economy
The economy stagnated during the year and has not yet managed to rebound. However, inflation has decreased, as have interest rates, which have returned to 2022 levels. Accordingly, in time, there will be a decrease in the pressure on the property sector, which has been impacted for several years by higher financial expenses, combined with value decline. The improving situation provides favourable conditions for the industry going forward, but also to enable growth in the economy in general to regain momentum. My hope is that we will remember 2025 as the year in which the tenacious recession finally rebounds.
Stable end to the year
Net operating income for 2024 decreased as a natural consequence of divestments compared to the previous year. However, in a comparable portfolio, income increased by 3 per cent and net operating income by 1 per cent. Profit from property management amounted to SEK 914 million for full-year 2024.
The value changes amounted to SEK –1,244 million in the fourth quarter, which was primarily due to value adjustments related to transfers and increased yield requirements in the US due to high long-term rates of interest.
As a result of the year’s interest rate reductions in conjunction with our implementation of a number of refinancing measures and interest hedges in the fourth quarter, we are now seeing how the effects of these are impacting our average rate of interest, which decreased from 5.0 per cent to 4.6 per cent during the quarter.
Positive net letting despite market challenges
In the logistics segment, there is continued healthy demand for well-located warehouse and logistics properties. However, we are seeing a somewhat more cautious office rental market, primarily in Stockholm, where the offering of vacant offices is growing and rent increases are slowing. Some companies are reviewing their premises requirements and in some cases, are also reducing their floorspace. However, the demand for attractive premises in the right locations remains strong and although we are seeing changes in the tenants’ needs and priorities in some areas, we succeeded in achieving positive net letting of SEK +61 million for full-year 2024. This is a real show of strength in a somewhat challenging market and something we are very proud of. The fourth quarter was impacted by a termination of some of Ericsson’s spaces in Kista, which resulted in negative net letting in the last quarter of SEK –38 million. This is a natural aspect of being a property owner; we often adapt premises to the tenants’ changed requirements, but sometimes tenants choose to move out and we then work proactively in our management to find new tenants. Our primary focus is always to fill vacant space and to be able to offer flexible and sustainable solutions that meet the market’s changed requirements, which is made possible through active management and close dialogue with our tenants.
Through a number of excellent lettings in the US during the year, we substantially increased the occupancy rate in both of our project properties. During the year, 19 new leases were signed, of which seven for a total of 4, 700 square metres in the fourth quarter. This entails occupancy rates of 95 per cent and 77 per cent, respectively, in the 28&7 and 1245 Broadway projects. Since the end of the year, the final spaces in 28&7 have also been let, meaning that it is fully let, which is, of course, highly satisfying.
In total, Corem signed a full 699 new leases and 160 leases were renegotiated during 2024, an impressive number that evidences our skilled organisation’s effort and commitment. Among the major lettings during the year were 3,500 square metres to the Swedish Coast Guard in Gothenburg, and three large lettings in Kista in Stockholm to OHB Sweden, Mycronic and Transcom, which amount to a combined total of nearly 12, 000 square metres.
