Bengt Alden's sales stall in a shopping mall around the corner from Ericsson AB's offices in the industrial complex of Kista overflows with everything from Charlie Parker records to Jamie Oliver cookbooks.
"Business is down, but who knows?" said Alden, who has peddled his wares in the north Stockholm complex in the five weeks before the holidays for the last three years. "Maybe with so many people getting fired, they'll have more time to read."
Ericsson, the nation's biggest company, has axed 2,000 of its 12,000 employees in Kista, known in Sweden as the "Wireless Valley." Bankruptcies among Swedish technology-related companies are up 89 percent this year, crimping demand for space at the complex, which is half the size of Minnesota's Mall of America.
Kista, once a symbol for the rise of the technology industry in Sweden, now shows the ripple effects of the worldwide slump in mobile phones and computer gear. With more offices lying idle, rents have tumbled 20 percent in six months. It could get worse, analysts said, as builders such as NCC AB add space.
"It has the makings of a classic property bubble, at least in the short-term," said Johan Einarsson, an analyst at property consultant CB Richard Ellis in Stockholm.
Paying the Price Kista, and Sweden, are paying the price for their over-reliance on Ericsson and its off-shoots, analysts say. The phone and technology industries, the nation's biggest single category of exports ahead of paper and cars, account for 7 percent of the country's economy, leaving it vulnerable to this year's slump.
While the economy expands at the slowest pace for five years, vacancies are mounting at the fastest rate since Kista opened its doors in 1976, when Stockholm's municipal government lured Ericsson to the former army training ground.
Nokia Oyj, AT&T Corp, Intel Corp and Sun Microsystems Inc followed. In the 1990s, dozens of Swedish technology companies such as Dynarc AB, A Brand New World AB and Cellpoint Systems AB, also set up at Kista.
Last July, Wired magazine named Kista the second-most important technology cluster behind Silicon Valley. Within four months, the vacancy rate had tumbled to 0.4 percent, while rents climbed to 2,500 kronor (US$236) per square meter, the most expensive in Stockholm outside the city center.
Biggest Tenant Ericsson is still Kista's biggest tenant, occupying 300,000㎡ or 40 percent of all office space in the sprawling concrete jungle bordered by the airport highway and the uninviting suburb of Akalla. But it's expanding no longer. "When many of the spaces came free, Ericsson just snapped them up," said CB Richard Ellis's Einarsson. "Then suddenly the phone just stopped ringing this spring." Burdened by debt they amassed to buy third-generation phone licenses, phone companies such as Royal KPN NV and France Telecom SA began scaling back investment in new equipment last year. At the same time, consumers started reining in spending on handsets amid rising unemployment and slowing economic growth, hurting Kista tenants like Nokia and Ericsson.
Facing its first annual loss since at least 1947, Ericsson Chief Executive Officer Kurt Hellstroem is firing a fifth of the 104,000-strong workforce. Some 20 percent of its Kista-based staff, accounting for 7 percent of all the workers at the complex, are losing their jobs.
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