Colliers Denmark Market Report 2024

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OFFICE - COLLIERS MARKET REPORT 2024

Low Copenhagen rent - methodology is part of the explanation

HOTEL INDUSTRIAL & LOGISTICS RETAIL RESIDENTIAL OFFICE

Tenants in Copenhagen have long benefited from low rents for prime office space compared to other European capitals. One of the reasons is that while other capitals – such as Stockholm and Oslo – are running out of building land, Copenhagen still has plenty of development sites. Even the Copenhagen CBD is growing as the Nordhavn (north harbour) development area has effectively become part of the central and most desirable office district.

In the other two Scandinavian cap itals, the demand for prime central locations is so high – and the availabil ity of land almost non-existent – that the two cities have significantly higher office rents than Copenhagen. While the best locations in Copenhagen cost DKK 2,250 per sq m p.a., the level in Oslo is around DKK 3,900 per sq m, and in Stockholm the price level is even higher at around DKK 5,450 per sq m. Two years ago, the price dif ference was even higher, but since then, both the Swedish krona and the Norwegian krone have depreciated significantly, so the rent gap in Danish kroner is currently smaller. However, another contributing fac tor of the large rent gap between Copenhagen and Stockholm is related to methodology, or rather dif ferences in the way the lettable area is calculated in the leases. There is no

international standard in this respect, and Denmark and Sweden in particu lar apply highly different methods. In Denmark, almost every conceiv able area is included in the calcula tion, such as external walls, columns, access areas, common parts and IT rooms. In Sweden, on the other hand, the area is calculated solely according to usable floor space for offices and lobby areas. As a result, there can be major dif ferences in the area statements, and two seemingly identical leases in Denmark and Sweden will often have different ”real office areas”. The difference in the area statement can be as much as 20-30%. In reality, this means that a lease will automatically be more expensive per square metre in Sweden, even though the rent may be the same for the two leases.

While differences in floor area may partially explain the wide range in top rents when comparing Copenhagen to other capitals, rents in Copenhagen are much lower. This is best illustrated when comparing the Danish capital to Oslo, as Norway has the same guidelines for calculat ing area as Denmark. There is no doubt that rents in Copenhagen are lower than in many other major cities, but the described differences in the area calculation can muddy the picture of the real difference. Nevertheless, Copenhagen is still inexpensive compared to most other capitals, and we believe there is still room for substantial rent increases mainly on prime Copenhagen CBD prop erties, especially once the availa ble land in central Copenhagen has been developed.

CASE

Great difference in how lettable space is calculated

THE NETHER- LANDS

RICS NIA (UK)

DENMARK

FINLAND

FRANCE

GERMANY

NORWAY

SPAIN

SWEDEN

+

+ + + + + + + + + +

+

+ + +

+ +

+ + +

+ + + + + + + + + -

+ + +

+

Office area

- - - - - - - - -

- -

- - - - - - - -

Building common parts

- - - - - - -

Building main IT rooms

+

- - - - - -

- - -

- - -

Toilets

- - - - - -

Stairs

Lifts

+

+

+

+ + +

+

Floor lift lobby

- -

External walls

Columns

+

-

Ducts & risers

Note: Building parts included in lettable space. Source: Colliers