Oslo’s ambitious Bjørvika urban scheme, the largest development in Norway, will provide a vibrant mixed-use district overlooking the city bay.
Real estate private equity firm Madison International Realty has announced it is in the final stages of acquiring and consolidating 38,000 m2 of assets in Bjørvika, the new urban infill development in the centre of Oslo and the country’s largest urban project. Property company Oslo S Utvikling (OSU) has developed a substantial part of the assets.
‘The area has all the prerequisites for becoming Norway’s most attractive urban district,’ said Derek Jacobson, co-chief investment officer at Madison.
The Bjørvika development is composed of six distinct development stages – Sørenga, Sørengkaia, Munch Brygge, Barcode, Bispevika North and Bispevika South. To bring the assets together under one management platform, Madison has acquired Sørenga, Sørengkaia and the associated parking facilities at Sørenga, as well as entered into an unconditional SPA to acquire Munch Brygge.
OSU has also accepted a bid from Madison for the ground-level commercial assets in Barcode and the northern part of Bispevika. OSU will continue the development of Bispevika South, which is not included in the transaction. With these transactions, Madison has secured ownership and control of the majority of the ground floor properties in Bjørvika.
Bjørvika’s beginnings
In the early 1980s, the Oslo municipality started to develop a vision of Oslo as a fjord city. Bjørvika, the city’s natural bay which had become a segregated commercial port over the centuries, was central to this development. A regulatory plan was drawn up in 2003, and by the end of 2018, approximately 50% of it had been redeveloped into an ambitious, 825,000 m2 masterplan. Comprising around 5,000 apartments, plus offices, retail and leisure and cultural buildings, Oslo’s ‘new CBD’ includes the Oslo Opera House, which opened in 2008, and will also be home to the Munch museum and a new public library by 2020.
‘Bjørvika is right next to Oslo’s central station – its connectivity is second to none – and just 18 minutes by train from the airport,’ Jacobson told PropertyEU. ‘The office developments are thriving in the Barcode area and the northernmost part of the quarter, while the residential that’s being developed is also extremely compelling. Oslo municipality is considering a significant pedestrianisation of the city, but that won’t include Bjørvika, which we think is really interesting. What we really liked too was executing a really “Madison-like” deal, coming in and recapitalising and restructuring the ownership.’
Experiential retail goals
An integral part of Madison’s strategy is to create a lively, open and inclusive ‘urban floor’ with a focus on the growing F&B segment. The ‘urban floor’ assets are at ground level and will include retail, F&B, leisure and other services and amenities for Bjørvika, while separately-owned and -managed offices and residential units will be located on higher levels. When fully developed, the total area will host approximately 12,000 residences and more than 20,000 employees.
Matthias Cordier of Madison explained: ‘We’ve pieced together the ground-floor commercial space from various owners to make one, homogenous concept. We’re working on attracting the best retail and leisure – not just traditional retailers, but going heavy on F&B, tourist offerings, experiential concepts – all those things that bring success these days when retail as a whole is more challenged’.
‘There’s a clear appetite globally for these kinds of concepts, where divergent buildings are managed in such a way that they are thought of as one entity,’ Jacobson added. ‘Think of it as a Covent Garden-style scheme, which is full of diverse offers but has been curated and put together by a single management team. There’s an idea to brand our ownership as Oslo Bay District, although that is still to be decided. We’ll have the benefits of a high-street without multiple ownership, which is compelling from a management and leasing perspective.’
Madison’s plan
The new company, Oslo Bay District, has through the acquisitions of Sørenga, Sørengkaia and the associated parking facilities at Sørenga and the planned acquisition of Munch Brygge, secured control of 11,000 m2 of gross lettable area and 270 parking spaces in Bjørvika. The Barcode and Bispevika North portfolios will add an additional 27,000 m2 of gross lettable area to the portfolio, leading to a total lettable area of 38,000 m2.
The development of Sørenga, Sørengkaia and Barcode was completed over a period from 2016 to 2018, Munch Brygge will be completed in Q1 2019, while Bispevika North will be completed in four stages from Q1 2019 to Q4 2020. Acquisitions of assets under development (Munch Brygge and Bispevika North) will be structured as forward transactions. Carucel Eiendom, owned by Carl Erik Krefting and his family, will oversee the asset management of the assembled properties. Out of the total lettable area, 25,000 m2 is either occupied or pre-let. The latest addition includes Maaemo, Norway’s first and only three-star Michelin restaurant, which according to lease agreements with OSU will take up 1,600 m2 in Bispevika North.
Said Krefting: ’International trends show that consumers prefer to spend money on experiences rather than consumer products, and we would like Bjørvika to be a place where visitors, local residents and employees can enjoy a wide range of dining, shopping, cultural and outdoor experiences at the doorstep of the Oslo fjord.’
Norwegian history
The investment represents Madison’s third acquisition in Norway, all facilitated by the Norwegian investment bank Arctic Securities. ‘Madison was actually one of the first big international investors to enter Oslo, back in 2012, debuting with an office building and then acquiring the retail property, Promenaden,’ Jacobson added. ‘Norway may be a relatively small country, but its fundamentals are extremely attractive.
‘We have worked closely with Arctic Securities since 2012 in connection with our previous transactions in Norway, and were very pleased that earlier this fall they presented us with the business idea of securing ownership of the urban floor in Bjørvika, which we believe will be value enhancing for the area’s future development. ‘
OSU’s role in Bjørvika
Developer Oslo S Utvikling (OSU) has been a driving force in Bjørvika’s transformation into a key urban centre over the past decade. Established in 2001, OSU is owned by Entra ASA, Linstow AS and Bane Nor Eiendom AS. It is responsible for developing 380,000 m2 out of the total property stock in Bjørvika of 900,000 m2, with a focus on Barcode, Bispevika North and Bispevika South.
‘Our vision is to develop Bjørvika into Norway’s most attractive city area, and we are pleased to sell the urban floor to a buyer who will continue the process of bringing this vision to life,’ OSU CEO Rolf Thorsen told PropertyEU. ‘OSU continues to develop residential units and offices in Bjørvika, as well as commercial assets located at other land plots that we control in Bjørvika. Until the execution of the share purchase agreement, we will also continue the leasing process in Barcode and Bispevika North.’
Thorsen added: ‘Through the development of the now iconic Barcode buildings we changed the face of Oslo by giving it a new skyline. With Bispevika North, we laid the foundation for a whole new area of the inner city, creating a true sense of community and place. As our focus now shifts away from these two projects, we will continue the work we have started, using learnings and implementing expertise gained in the last 18 years to make Bispevika South the most exciting development yet. By its completion in 2025, Bjørvika will have gone through transformation on a monumental scale, but – perhaps more importantly – Oslo will have been forever transformed as a city.’
