Commercial Buildings Rising Rapidly
Demand for commercial real estate in Iceland is high, according to Þorvaldur Gissurarson, CEO of ÞG Verk, which currently has tens of thousands of square meters of such real estate under construction. In the metropolitan area, the company has a total of 41,000 square meters (441,000 sq ft) of commercial real estate under construction, to be delivered within a year. In addition, two parking garages of 10,000 square meters (108,000 sq ft) each, are being constructed, Morgunblaðið reports.
Þorvaldur reports that 50-60 percent of the building the company is constructing in downtown Reykjavík has been rented out. One of the projects, located in Urðarhvarf in Kópavogur, began in 2006, but was halted following the financial crisis in 2008. Its forthcoming completion, he notes, is an indication of the financial boom in recent years. The building stood empty for a decade, following the financial crisis. Economic growth now calls for more space for businesses.
“A certain lack [of commercial real estate] has been created, since next to no construction of commercial buildings has taken place for all these years since the financial crisis … After 2014, residential construction picked up … In general, there is a lack of commercial housing, both offices and industrial buildings,” Þorvaldur relates.
He expects an increase in state projects, including the construction of a new Landspítali National University Hospital, as well as traffic-related projects. He notes there are indications that large price increases in residential housing are now behind us, and that numerous residential buildings are under construction. The cost of construction of residential housing in the metropolitan area has, however, increased considerably in recent years, partly due to stricter demands and regulations, a higher cost of land, and new fees, Þorvaldur concludes.