If we look at it with a longer time perspective, we are in the beginning of a conversion of the labour market many analysts
claims to have an impact as profound as the industrialization. This time, its based on a new wave of digitalization
enabling a more powerful and intelligent data processing in combination with gigantic amounts of information, (called the
second machine age). According to SFF (Swedish foundation for strategic research), around 450 000 jobs disappeared in
Sweden between 2006 and 2011 due to automation in industry, trade and administration and 50 percent of all white-collar jobs
is likely to disappear in the next 20 years, (revision, banking, control, monitoring and investigation services etc.). Problem
solving tasks is also at risk and the only way to have a well-paid employment in the future is probably to get a job with
a certain degree of creative experimental and innovative thinking. There are different opinions on how rapid this second
machine age will develop and how many other jobs its going to create but it does not change the fact that a big proportion
of the white-collar middle class as we know it will come under serious pressure.
At the same time, we see a continuous improvement of space efficiency through rationalization of industry production and inventory
management. Today, a new office is built to offer roughly half the area per employee compared to an office built in the 80-ties.
As the value of location increases, due to city densification and a grown importance of public transport, office and commercial
buildings has to utilize properties in favorable locations optimally. The ability to be more flexible and work from home,
in another city, in your vacation house, at a client, when travelling or in office hotels, restaurants and cafés is merging
workspace with both public and private space, which altogether contributes to an improved space efficiency. As a counter effect,
properties in less favorable locations, with a limited modernization potential, or ability to transform to other use, is phased
Recent growth in population and private consumption usually create sound fundamentals for a growing demand of commercial buildings
but new technology and changing consumer behavior forces retail chains to rethink. Last year, e-commerce grew 16 percent when
traditional retail went up 1.5 percent. Swedbank expect e-commerce to grab 40 percent of the total retail market by 2024 and
many retail analysts believes this year to be the first were e-commerce alone stand for the total growth in retail trade.
Some home developers has already embraced this development by offering solutions that enable large deliveries when no one
is home. Nevertheless, new conditions also require investments, in IT-environments and efficient distribution, but also in
buildings. Qualities like entertainment, restaurants and cafes plays an increasingly important role when choosing where to
go shopping. New commercial buildings becomes larger and lavish in the same time as more than 80 shopping centers in Sweden
are struggling, (mainly city malls and residential centers).
Germany is a country which seems to be in a similar situation as Sweden, were the construction of new private non-residential
buildings has remained low and relatively unchanged despite an output gap above zero since 2014. But to be fair, we also have
a good GDP development in combination with growing investments new private non-residential buildings in Hungary and Ireland.
In addition, investments in new private non-residential buildings in Belgium and Switzerland has remained comparably high
despite a relatively weak economic development since the financial crises. These differences and similarities shows the complexity
in this transformation. Future developments will depend on the unique conditions that exists in each country, which highlights
the importance of local knowledge and insights in regional differences.
So is Sweden leading the way? In a short time perspective, (within our forecast period) Europe is diversified enough to generally
say no. The industry climate has also improved in Sweden and office vacancy rates has dropped to very low levels in CBD areas.
Things dont change overnight in the construction market and the amount of new industry and office buildings might reach
higher levels the coming years than we expect today. We may also underestimate the initial property investments required to
be successful in a world were e-commerce dominates, automation has made your neighbor the air traffic controller unemployed
and an average employee only spend one or two days per week at the office.
However, this does not change the fact that technical developments, consumer behavioral changes and the transformation of
the labour market already has a negative impact on the demand for new private non-residential buildings in Sweden. The annual
sqm building start between 2015 and 2019 expects to be only about 8 percent above the previous 20-year average, despite an
unusually strong growth in population, employment and private consumption. We need to understand these driving forces because
they are relentless, they will only grow stronger and national borders will not stop them.
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Mr. Bengt HenricsonEUROCONSTRUCT SwedenPrognoscentret is solely responsible for the content and any images on this page.