Colliers Copenhagen Property Market Report 2019

Special Feature: Aarhus – Market Report 2019

76

whereas the liberal professions have typically entered shorter-term leases in Aarhus N. Minimum annual rent adjustments are the norm in Aarhus N. Every single tenancy agree- ment included in our sample carries provisions for annual rent adjustments of minimum 1.25-2.50%, in Skejby averaging 1.44%. 3 Aarhus V – substantial spread in rent levels Relative to the remaining office districts, Aarhus V (western Aarhus) is the office loca- tion where letting activity is most sluggish, in the analysis accounting for a mere 6% of leases in terms of floorspace. But then, Aarhus V has a much smaller office stock than the other office locations. Similarly, Aarhus V commands a somewhat lower average rent than Aarhus C and Aarhus N, i.e. DKK 850 per sqm p.a., excluding operating costs and taxes. Today’s prime rent is estimated at DKK 1,100 and the secondary rent at DKK 750 per sqm. Business park Frichsparken, the Bredskifte Allé area and Zenit Company House are considered prime office locations in the district. Among the four main office districts, Aarhus N is characterised by the smallest unit sizes – 578 sqm on average – although some units extend to about 2,200 sqm. Occupational demand in the district is driven mainly by the liberal professions, financial service providers as well as trade and technology businesses. However, these three tenant cate- gories differ in terms of the rent they are willing to pay. The professions and the trade and technology businesses pay an average rent per sqm of DKK 773 and DKK 839, respectively, whereas financial service providers pay as much as DKK 1,300 per sqm on average, excluding operating costs and taxes, which is believed to tie in with their prefer- ence for prime locations and premises in the district. In Aarhus V, lease terms are normally shorter, with an average non-terminability of 42 months (3.5 years) across all business sectors. This average non-terminability, however, is driven by long-term commitments in the financial service sector (averaging 60 months or 5 years), exceeding the average of 31 months or so (2.6 years) of the remaining two tenant categories. In Aarhus V, 79% of the analysed leases have provisions for annual rent adjustments of minimum 1.74% on average, with some tenancy agreements stipu- lating relatively high minimum increases (2-3%). Parking is typically free of charge in this district. 4 Aarhus S – driven by cost focus Relative to the remaining office districts, Aarhus S (southern Aarhus) commands the lowest office rents, reflecting weak tenant demand for certain office premises situ- ated in old industrial locations, even if the premises have been comprehensively refur- bished. Nevertheless, letting activity in the district is strong. In the analysis, Aarhus S accounts for about 29% of leases in terms of floorspace and about 22% of total annual rent. The annual average rent per sqm in Aarhus S is DKK 655, excluding operating costs and taxes, with observed annual rents fluctuating between DKK 325 and DKK 1,025 per sqm, which is low relative to the prime and secondary rents achievable in top locations, viz. DKK 1,000 and DKK 700. In Aarhus S, one location stands out, namely the Sønderhøj area, where international dairy giant Arla Foods is based.

AARHUS V is a secondary office location but with pockets of prime office space PRIME RENT: DKK 1,100 per sqm p.a. SECONDARY RENT: DKK 750 per sqm p.a.

MAP NEXT PAGE  The map overleaf shows the location of main office districts, viz. Aarhus C (1), Aarhus N (2), Aarhus V (3) and Aarhus S (4) , including specifications of laydays and typical tenant profiles of individual districts, based on share of office space (sqm) in sample. Re-letting periods tend to be shorter in Aarhus C and N than in Aarhus V and S