Policy Suggestion on urban planning and gentrification to Stavanger Kommune, politicians and developers

While on a field trip from Nytorget to Badedammen, I noticed a street lined with similar-looking shops. This street, about 800 meters long, was Pedersgata, an area dense with traditional wooden houses. Even though I had no prior information about this area, I immediately sensed that gentrification was underway. The presence of similarly designed restaurants and cafes, along with multiple homes being remodeled or rebuilt into commercial spaces, made it evident. The gentrification of Pedersgata is both “ordinary” and extraordinary at the same time. It's ordinary because gentrification is a global phenomenon, but it's extraordinary due to the blatant monopoly occurring here.

Pedersgata Utvikling, a company funded by the London-based investment firm Smedvig, has acquired 65% of the residential properties and 75% of the commercial spaces on the street. While the rapid growth of real estate capital is a common global issue, it is rare for a single company to own over 75% of the buildings on one street. While individual buildings may be privately owned, the street itself is a public space created by many people. As a result of this monopolistic control, the exteriors of all the shops look similar, giving the impression of being on a movie set. However, the similarity in building facades may not be the biggest issue.

In any free economic country, when a single entity occupies more than 50% of a market, it is considered a monopoly. Because monopolies are among the greatest threats to a market economy, almost all countries in OECD and the U.S. have enacted antitrust laws. Despite the problems caused by monopolistic control over a street, Pedersgata Utvikling has been praised with rhetoric like “revitalizing an old street” or ”saving the city from crime.” It is interesting to note that many people were positive about Pedersgata Utvikling purchasing houses, especially since some of the properties were vacant or in poor condition.

However, tenant displacement, rent increases, and an unstable rental system became significant issues. In the case of Jacobsen Blomster, a flower shop that had been in business on Pedersgata for 75 years, they were forced to leave Pedersgata in 2020 after Pedersgata Utvikling became the landlord, raised the rent, and imposed a controlled revenue system (Storhaug Bydelsavis, 2022). Other businesses, such as the African supermarket, were also unable to renew their leases and left the street. Through 21 in-depth interviews including Pedersgata Utvikling's CEO Anders Ohm, I was able to summarize the current issues related to monopolistic practices.

Picture1. Red buildings are owned by Pedersgata Utvikling, Design: Listen to the City, 2024, Source: Pedersgata Utvikling - You can see the bigger map here

Through interviews and research, it became clear that Pedersgata Utvikling’s approach of renovating commercial spaces and replacing tenants is a typical example of unjust dislocation of tenants. This is not just a problem specific to this company. There is a significant loophole in commercial lease agreements in Norway.

In Norway, commercial leases are regulated by the Norwegian Tenancy Act (Husleieloven), but the law allows parties significant freedom to negotiate their lease terms. As a result, certain lease terms may be considered unstable and risky, for tenants, if they create financial uncertainty or an uneven balance of power between landlord and tenant.

Norway does not have a fixed lease period for shop tenants; agreements are made between the parties involved. It is from 3 months (sometimes even shorter) to 2-3 years or more. However, the short lease terms can often disadvantage tenants. The law needs to be fixed to protect tenants at least 10 years or more.

Pedersgata Utvikling argues that short lease terms can provide opportunities for businesses that need short-term experiments, however, most shop tenants invest a lot of money to start their business including fixing facilities, and exterior and interior work. Thus tenants need enough time to return their investment.

In contrast, in South Korea, commercial leases are typically signed for 2 years, with the option to renew for up to 10 years. This protection was not naturally guaranteed but was achieved through the determined efforts of numerous citizens. Before 2018, commercial tenants had only a 5-year protection period, which did not allow them sufficient time to recover their investments. The short protection period led to many disputes. The protection period was extended to 10 years in 2018. Lease renewals are done annually, and rent can only be increased by a maximum of 5%.

POLICY SUGGESTION
• The Norwegian government must protect tenants for at least 10 years. The Norwegian government must start investigations into the unjust eviction of tenants in Stavanger and the Pedersgata monopoly case. Specifically, the side effects of short-term rentals, monopolies and fix the unjust shop tenant policies and laws.
• The Stavanger Kommune must investigate tenant turnover in Pedersgata and the city center and find ways to protect shop renters.
• Building owners, developers and Pedersgata Utvikling should have stable contracts with its tenants.

One of the problems observed in Pedersgata was that in Norway, landlords were able to evict tenants because of renovations. In contrast, in Germany, Japan, South Korea, and many other countries, landlords cannot evict tenants for the sole purpose of renovating buildings. Some landlords requested evictions for repairs, started their own coffee shops, or transferred the lease to a family member or relative to start a new business. In addition, there were cases where landlords requested evictions under the guise of renovations, but did not carry out the renovations. In Pedersgata, where most buildings are over 100 years old, tenants found it difficult to contest eviction notices based on renovations. Without technical knowledge, it is extremely difficult for ordinary people to prove the safety of a building, leaving them little choice but to comply with the landlord's orders.

POLICY SUGGESTION
• The Norwegian government needs to ban eviction of tenants for remodeling.
• The Stavanger Kommune must investigate cases of displacement due to renovation and establish a policy to protect tenants.
• Building owners, developers and Pedersgata Utvikling must stop displacing its tenants based on remodeling.

Pedersgata Utvikling and landlord's commercial leases include provisions for rent adjustments based on factors such as market conditions, inflation (CPI-indexed rents), or changes in turnover (turnover-based rent). While turnover-based rents align rent with business performance, It leads to tenants' instability.

POLICY SUGGESTION
• The Norwegian government and Stavanger Kommune must abolish CPI-indexed rents and turnover-based rent.

In Norway, there is a system called Nabovarsel, which requires homeowners to notify their neighbors when they are going to rebuild their homes. However, it has been argued that monopolies are making this system ineffective. For instance, Pedersgata Utvikling doesn't have to notify their neighbors because they are the neighbors themselves. Currently, Pedesgata Utvikling argues they are actively informing residents, but even if they do, it is difficult to complain to the owners who own most of the street. Also, there are many residential tenants in Pedersgata, So the law needs to be changed so that they have to notify the tenants in the development, not just the homeowners.

POLICY SUGGESTION
• The Norwegian government and Stavanger Kommune must supervise whether a proper Nabovarsel is carried out in Pedersgata and Stvanger. The law must be changed so that the Nabovarsel applies not only to homeowners, but also to tenants.
• Building owners, developers and Pedersgata Utvikling must do their best to respect the Nabovarsel system and give information to the tenants, not just the owners.

Another issue that emerged from the interviews is the ambiguity of the renovation standards for Stavanger's historic wooden houses. Many expressed concern that the criteria are too vague and subject to the discretion of public officials, leading to a perception of unfairness. The municipality allows only minor changes, and while ordinary residents cannot easily get permission to change their house, some developers, including Pedersgata Utvikling, have been able to make windows bigger, add more windows, or build new houses after demolishing old wooden houses (Pedersgata 7 changed to Fly Chicken).

Although there is regulation stating that new constructions extending from existing wooden houses must not exceed the size of the original structure, issues have been raised regarding Pedersgata Utvikling's redevelopment. For example, some newly constructed buildings are taller than the other buildings, reaching four stories, and some buildings feature larger windows compared to the original.

Picture 2. Pedersgata 7 in 2014 and 2024. The wooden houses were demolished and a higher building was built (Source: Listen to the City, 2024)

POLICY SUGGESTION
• The Norwegian government and Stavanger Kommune must make clearer and more consistent rules for the protection of wooden houses.
• Building owners, developers and Pedersgata Utvikling must do their best to protect wooden houses.

Picture 3. Kongsteinsgata 7, 9, Brødregata 20 owned by Stavanger Kommune, Photo: Eunseon Park

I have seen several old, empty wooden houses near the center, including Kongsteinsgata 7, 9 and Brødregata 20, and surprisingly, they were owned by Stavanger Kommune. If the house is empty, the area becomes dark and bad for the community. If you leave houses empty, you have to pay higher taxes in the UK. If the municipality cares about preserving these wooden houses, they should not allow them to remain empty. In many Western European countries, some developers buy listed houses and deliberately let them decay until they collapse. Once that happens, they get permission to demolish the buildings and then profit from the redevelopment. In the UK, laws have been passed to prevent this. In the British context, the Stavanger Kommune should pay more tax.

1.6. POLICY SUGGESTION
• The Norwegian government and the municipality of Stavanger need to fix the law that prevents houses from sitting empty and unmaintained by charging a fine or more tax for the empty house. It will limit the speculation and the proliferation of summer cottages in nature in Norway.

Svankevigå and Badedammen are located near the coast, not far from the city center of Stavnager. Historically, this area was a typical working-class district with fish canning factories and grain warehouses. Since 2020, it has gained popularity among locals with the establishment of several nonprofit spaces, including the Storhaug Snekkerforening (a woodworking workshop), Sykkel Service (a bicycle repair shop), and DAMP (an outdoor sauna). Additionally, the area hosts artist studios such as KRA and Consulatet, as well as the independent dance theater RIMI/IMIR SceneKunst. However, there are plans for high-rise apartment redevelopment, and residents are currently resisting these changes. Stavanger, despite being one of Norway's four major cities, is often criticized for lacking cultural diversity and artistic foundations. In this context, the Storhaug Snekkerforening, although a relatively new organization, has established itself as a creative space where citizens can make their own items and prototypes.

Table 1. What do you need most in the Svankevigå/ Badedammen area?

Although new cultural facilities in Svankevigå are energizing the city and creating spaces for socializing even with limited funds, politicians have deemed the purchase of these buildings not worth the investment and have rejected the acquisition.

This decision is considered a significant obstacle to the public value of Stavanger's urban development. In a survey conducted by Listen to the City in July 2024, which targeted Stavanger residents, 53% of respondents felt that the city's communication regarding the redevelopment of the Svankevigå, and Badedammen area was not democratic. This indicates significant concerns among citizens about the democratic nature of the communication in the development process. When asked about the facilities needed in Svankevigå and Badedammen, the most common responses were parks and green spaces (28%), cultural places (24%), and meeting spots (23%). Housing was mentioned by only 3% of the respondents.

POLICY SUGGESTION
• The Stavanger Kommune and the politicians must consider cultural values of the area and restricting building more residential buildings. Once you get rid of cultural assets, you can never get them back.
• The Norwegian government must provide a budget to protect the local cultural assets.

Suggestion to Nordr and OBOS
• OBOS, and Nordr should reconsider the high-rise development planned for the Svankevigå area. Storhaug Snekkerforening, RIMI/IMIR SceneKunst, Sykkel Service, and DAMP Sauna all provide significant social value to the community. As foreigners from Seoul, we found this area to be the most interesting part of the city. Don't erase its urban culture and history. History is not solely defined by the passage of 100 or 200 years. The current efforts of these individuals to promote the public good are, in themselves, the living history of the city. According to our survey the majority of citizens prefer cultural spaces, meeting places, and green areas over new apartments. Only 3% of citizens expressed a desire for apartments at Dokken.

Therefore, we strongly recommend prioritizing the creation of community-centered spaces and green areas over the construction of additional apartments, while preserving the city's history by retaining as much of the original building structure as possible. Additionally, we strongly urge the maximum incorporation of the alternatives proposed by the citizens.

The urban planning system in Stavanger has been criticized for being overlapping and unclear by the interviewees. Especially, the sentrum plan has been outdated; it has not reflected current realities, as some plans were made 15 years ago and have not been updated to address present conditions.

Some of the Pedersgata residents want the monopoly to stop and argue that the developer must not displace houses to restaurants and shops and expand more after K2 restaurant. According to Anders Ohm (the owner of Pedersgata Utvikling), Bravo is the only case where shops have been replaced by restaurants. However, the company is trying to convert residential buildings into restaurants. For example, Pedersgata 65- 67 will be turned into a restaurant after demolishing the beautiful tree houses.

Picture 4. Pedersgata 67, Illustration by Sigmund Trageton Source: Storhaug Bydelsavis

Picture 5. Pedersgata 67 Source: Pedersgata Utvikling

Without proper urban planning and zoning, it will be difficult to regulate the private developers who control the street. Nytorget is also at risk of massive displacement of shop tenants, as Pedersgata Utvikling wants to replace the Syrian market (Nytorget 4) with a bar or restaurants. Stavanger Municipality must therefore hurry to rezone the area and develop a sustainable plan for Pedersgata and the central area together with the citizens.

POLICY SUGGESTION
• The Stavanger Kommune must make coherent, sustainable sentrum plans with citizens and urban planning experts not only the politicians and developers. Making a sustainable plan with its citizens along the Pedersgata is an urgent task.

In July, 2024 I conducted a survey on communication about urban planning in Stavanger. 158 citizens of Stavanger participated. I asked: "How clearly and openly do you think Stavanger Municipality communicates information about development plans?" 69% of the people marked 1 (very poor) and 2 (poor).

Table 2. On a scale of 1-5, how clearly and openly do you think Stavanger Municipality communicates information on development plans?

And I asked, "To what extent do you think Stavanger Municipality respects and listens to citizens' opinions on urban development?" 76% of people answered 1 (very poor) and 2 (poor). It was a surprisingly negative answer and the city planning must be advanced in communication.

Table 3. On a scale 1-5 what degree do you think Stavanger Municipality respects and listen to citizen opinion on urban development?

POLICY SUGGESTION
• Stavanger Municipality should develop more democratic ways of communicating with its citizens about urban planning.

There is serious concern that current urban planning is being driven by private developers and investors rather than by the City of Stavanger and the citizens themselves. The city must make every effort to ensure that urban planning is citizen-centered rather than developer-centered in order to maintain the public nature of the city.

POLICY SUGGESTION
• The city of Stavanger should find a democratic and sustainable way to plan the city with its citizens and not give all the power to private developers.

There are strikingly low number of public housing was found in Norway. Norway has only 5% of public housing. While Austria has 24%, Denmark 20%, Sweden 18%.

Public housing is a buffer zone for the middle and lower income classes or younger people. Instead of giving all the power to private developers, the government and the municipality must increase the number of affordable public housing for the future.

Table 4. Public housing ratio

POLICY SUGGESTION
• The Norwegian government and Stavanger Municipality must increase the number of affordable and decent public housing units for the future.