Colliers Copenhagen Property Market Report 2019

Office – Market Report 2019

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Changes in tenant demands and use of office space potentially speed up obsolescence rates, calling for earlier investments in major upgrades Continued office conversion trend for alternative uses due to high office refurbishment costs and favourable outlook for the housing and hotel markets 10% increase in volume of tenanted Copenhagen office leases over the past ten years

Office properties prone to accelerating obsolescence risk In the past, office properties were constructed and fitted out based on the assumption that they would remain contemporary and require only slight refurbishment prior to possible re-letting. Today, however, even properties built only 10-15 years ago are increasingly perceived as being functionally obsolete in the face of current tenant demands. If these tenant demands are not factored in when developing new premises, major rede- velopment and refurbishment prior to re-letting will be required, should the original tenant decide to move out. In particular, buildings dating from the 1980s and 1990s are at a disadvantage as they were designed in a period when the primary focus was on energy efficiency, with no consideration of future requirements. This type of office premises is therefore character- ised by low ceiling heights, relatively small window sections and low building depth – all features that are difficult to change even with heavy investment. Even properties built after the millennium, on the outside seemingly modern and well-main- tained, have certain shortcomings that require costly upgrades. For instance, indoor climate installations tend to be under-dimensioned, unable to cater to today’s workspace density increases. It is often not enough to increase the central capacity as the installations fitted throughout the building are not designed for scalability. As a result, large-scale replacement is typically required in order to scale up the installations to today’s demands. The new metro line, Cityringen, opens up new possibilities Following an almost decade-long construction period, the long-awaited new Copenhagen Metro line, Cityringen, is finally scheduled for opening in summer 2019. Whereas the first phase of the Metro, inaugurated in 2003, runs across Copenhagen, Cityringen is a circle line that effectively ties together most districts of Copenhagen. Districts formerly part of neither the S-train nor the metro grid are now connected with the rest of city. As a result, these districts will be better positioned to compete for busi- nesses thanks to their enhanced accessibility. In north-western Copenhagen, in particular the areas surrounding the square of Skjolds Plads, Nørrebro station and Vibenshus Runddel have seen the first signs of development activity in anticipation of Cityringen. These areas are expected to attract businesses that prefer more decentralised locations than the CBD. At Vibenshus Runddel, Vibenshuset is now fully let, following ten years of fluctuating vacancy rates. On the opposite side of Lyngbyvejen, ATP is currently preparing a site for mixed-use office and residential development. The district of Nordvest (Copenhagen NV) is already witnessing increased demand for office space on the border to the district of Nørrebro (Copenhagen N), with Nørrebro station being an important demand driver in the area as it is set to become a future transport hub for S-train and metro services.

MAP NEXT PAGE  The map overleaf shows the planned Copenhagen Metro expansion, pinpointing the stations of areas that may come into play when becoming part of the Copenhagen metro network