Colliers Copenhagen Property Market Report 2019

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Copenhagen Property Market Report 2019

Turnover and visitor counts reflect diverging trends

LYNGBY STORCENTER (DKK/ANNUM)

2014 2015 2016 2017

1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 2,400

8.0 8.5 9.0 9.5 10.0

Turnover per sqm

50,088 48,853 46,588 44,647

Turnover per shop unit (mDKK)

14.3

14.2

14.4

15.0

Turnover per visitor

310

252

226

214

5.0 5.5 6.0 6.5 7.0 7.5

RØDOVRE CENTRUM (DKK/ANNUM)

2014 2015 2016 2017

Turnover per sqm

45,153

45,153

46,715 33,201 1

Turnover per shop unit (mDKK)

16.5

16.2

17.2

15.5

14

15

16

17

Rødovre Centrum, Turnover Lyngby Storcenter, Turnover

Rødovre Centrum, Visitor count Lyngby Storcenter, Visitor count

Turnover per visitor

265

265

271

259

Note: Left axis: Turnover, DKK million. Right axis: Visitor count, million. 1 Turnover per sqm (DKK/p.a.) at Rødovre Centrum saw a sharp decline from 2016 to 2017, attributable to an expansion scheme, increasing retail areas from 48,700 sqm in 2016 to 61,160 sqm in 2017. Source: ICP

This especially applies to shopping centres that compete with local high streets: It is much more profitable for both venues to create mutual synergies rather than to compete. By the same token, shopping centres and other shopping destinations are required to offer a varied range of leisure activities and experi- ences to attract customers. A strong F&B selection, a cinema, workout facilities, indoor play centres, specialty shops, etc. may therefore be a strong supplement to traditional anchor tenants such as grocery shops, chemists, etc. and/or large retail chains as they all improve attraction value and visitor counts. In addition, retail property owners do well to adopt a proactive approach to e-commerce by embracing the increasing number of major online operations that are starting to see traditional shops as potential showrooms. This is a common trend abroad, where Amazon is opening physical shops, many serving as showrooms, all attracting remarkably strong footfall. Provided the right tenant mix is in place, it is highly likely that retail tenants will experience an increase in sales, enabling them to pay market-conforming rent levels in the long term.

For shopping centres specifically, we believe that a competitive advantage may be achieved by means of critical mass in terms of number and selection of shops, making the shopping centre a one-stop shopping destination that caters to all shopping require- ments under one roof. These are distinguishing factors when comparing the perfor- mance track records of Lyngby Storcenter and Rødovre Centrum. It is quite remarkable that Lyngby Storcenter has seen an increase in visitors in recent years (2014-2017) but a decline in sales. This means that visitors to Lyngby Storcentre are spending a substantially lower amount per visit. The trend is different at Rødovre Centrum: Sales per visitor are levelling off or edging up slightly. In conclusion, it has become much more challenging to own, operate and develop up-to-date retail properties or shopping centres. However, if the assets are operated by an owner and/ or asset manager that understands the needs of the end-users and how to rein them in, there is less reason to fear budding ‘Darwinism’ in the retail sector.