Colliers Denmark Market Report 2024

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INDUSTRIAL & LOGISTICS - COLLIERS MARKET REPORT 2024

HOTEL INDUSTRIAL & LOGISTICS RETAIL RESIDENTIAL OFFICE

ing logistics centres, such as STC near Køge and MG Park Greve Distribution Centre near Greve. At Solrød Strand, E20 Park Copenhagen is under construction. When fully developed, it will be one of Denmark’s largest logistics parks. When opportunities for further development in the south corridor are exhausted, modern logistics prop erties here are expected to command higher rent levels in the long term. In Jutland, the Triangle Region has seen a significant increase in logistics newbuilding over the past 12 months, and more is on the way in the near future. Nevertheless, most locations here have also seen rising rent levels. The location is attractive because, among other things, goods transported by truck to/from Germany or overseas via the Port of Fredericia can be unloaded and reloaded at a location that is strategic for further distribution to/from several major Danish towns and cities. In the Triangle Region, Taulov southwest of Fredericia is considered the most attractive and well-developed logistics location, fol lowed by Kolding and Vejle. A mapping conducted by Colliers shows that multiple development sites are still available in Taulov for logistics newbuilding, which is also the case in Kolding and Vejle. This could put a damper on long-term rent increases in the Triangle Region. The upcoming Fehmarnbelt link, scheduled for commis sioning in 2029, may cause a shift in transport patterns in northern Europe, making the Triangle Region rela tively less desirable than it is now, while industrial and logistics properties in eastern Denmark may become correspondingly more interesting. However, the effect

is associated with substantial uncertainty because of multiple unknowns, including the fees charged for using the link. Brisk newbuilding defies high construction costs The cost of new construction – both labour and materials – is at an all-time high. Since the end of 2020, when the price increases for building materials really kicked in, it has become roughly 20% more expensive to build. This is mainly due to geopolitical unrest, significant supply chain disruptions and high inflation. Especially energy-inten sive materials such as concrete and steel have been hit by sharp price increases. Despite high construction costs, there has been an increase in industrial and logistics newbuilding. The high demand and low vacancy rates have encouraged devel opers and investors, as it has often been possible to find tenants in advance. But developers and investors have also dared to build speculatively, i.e. without having ten ants in place at the start of construction, especially in good locations with motorway proximity, etc. Examples include Panattoni, which is one of the largest develop ers in the industrial segment in Europe and as part of its strategy develops on speculation, or Verdion, which also has a strategy of speculative construction. For well-located newbuilds, the value of the completed property exceeds construction costs by an attractive margin. This has allowed financial leeway and time for developers and investors to find tenants and still make a reasonable return on investment.