Colliers Copenhagen Property Market Report 2019

Industrial & logistics – Market Report 2019

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The south corridor remains the top-performing district, but Amager/Kastrup is slowly catching up

Birkerød/Allerød/ Hillerød

Ballerup/Måløv

Brøndby/Glostrup/ Herlev

The south corridor

Avedøre

Amager/Kastrup

Location Efficiency Infrastructure Demand

Average performance

Below-average performance

Top performance

Above-average performance

Note: The strength profiles of individual industrial areas are based on performance scores on four selected framework criteria. Source: Colliers International

In January 2019, the Danish Government, the Municipality of Hvidovre and the City of Copenhagen presented their joint vision for nine new islands off Avedøre Holme, collec- tively dubbed Holmene. Envisaged to offer some 3.1 million sqm commercial floorspace, Holmene are to accommodate more than 350 businesses when fully developed in 2040. In response to the short supply of suitable last mile distribution facilities, the ancillary office units of many existing industrial properties are converted into storage/production facilities, reflecting that property market values based on the market rent/yield calcula- tions of such facilities exceed the conversion costs and the value of premises based on continued office use. The favourable trends in the industrial and logistics markets alike, including mounting occu- pational demand and resulting decline in vacancy rates, have translated into stable and slightly uptrending rent levels for both prime and secondary properties at Birkerød/Allerød/ Hillerød and Avedøre Holme. However, only prime rent levels have increased west of Copenhagen in Brøndby/Glostrup/Herlev and Amager/Kastrup. Overall, the south corridor is considered a top-performance industrial and logistics location, which is able to generate some of the highest rent levels observed, discounting airport logistics facilities with airside access. Nevertheless, prime rents remain flat in the district, with only secondary rents edging up slightly. Outdated facilities are vacancy prone Broadly speaking, the quality of the existing stock varies, and demand mainly centres on up-to-date and well-located industrial/logistics facilities with easy access to major arte- rial roads. In addition, the market for industrial/logistics facilities continues to be char- acterised by a high level of owner-occupation. As a result, available data may not reflect actual vacancy rates. Old and worn-down production and logistics facilities that fail to meet user demands in terms of location, flexible space, ceiling height, ramps and turning space are particularly vacancy prone.