Colliers København Delrapport 2023 UK

Colliers Market Report

Local market report 2023

Accelerating success. Copenhagen

Local market report Copenhagen

Contents Intro Office Residential Retail Industrial and logistics Transactions

We have compiled various further information on Danish key property markets to supplement Colliers Market Report Denmark 2023, which offers a detailed review of key trends in the Danish property market. This local market report describes the commercial property market in Copenhagen. If you would like to learn more about the markets for office, retail, industrial and logistics as well as residential property in Aarhus, Odense, Aalborg or the Triangle Region, please visit Colliers’ home- page to view the local market reports:

5 8

26 36 46 52

colliers.com/en-dk/mr23

All reports provide you with local market insight, including historical rent developments along with key transaction data. In addition, we give a brief introduction to key development areas in the residential segment.

Colliers Denmark | colliers.com | +45 70 23 00 20

Colliers Market Report 2023 as well as all local market reports are based on market data that Colliers believes to be reliable. Whilst every effort has been made to ensure that the information provided in the reports is both accurate and complete, Colliers accepts no liability for factual errors. Published by Colliers. Reproduction or citation of Colliers Market Report 2023 as well as the subject local market report only with full acknowledgement of source. Please note that photos may be copyrighted.

3

Contacts

Contact

Any questions about data and contents?

Copenhagen

Jacob Baum Associate jacob.baum@colliers.com +45 23 95 69 90

Muhamed Jamil Eid Director and Head of Valuation & Advisory, Copenhagen muhamed.eid@colliers.com +45 22 36 64 03

Or do you require local market assistance, investment or leasing?

Contacts

Residential Ditlev Juul Senior Certified Commercial Real Estate Advisor ditlev.juul@colliers.com +45 51 22 35 31 Office Martin Østengaard Director and Head of Office Leasing, Copenhagen martin.østengaard@colliers.com +45 20 40 02 55

Copenhagen Local market report to Colliers Market Report 2023

Retail Peter Bech Senior Commercial Real Estate Advisor peter.bech@colliers.com +45 30 66 46 41 Industrial & logistics Helle Andersen Senior Commercial Real Estate Advisor helle.andersen@colliers.com +45 61 15 46 28

Colliers Copenhagen Toldbodgade 33 DK-1253 Copenhagen K

5

Intro

In recent years, Copenhagen has attracted substantial worldwide acclaim, for instance on the architectural scene, as UNESCO has named the city World Capital of Architecture 2023. The same applies to the global gastronomical scene as the city can muster all of 14 Michelin-starred restaurants, including Geranium and Noma, recently named the world’s best and second-best restaurant, respectively, both boasting 3 Michelin stars. Moreover, Copenhagen is northern Europe’s economic growth centre, reflected e.g. in the number of global organi sations with head offices in Copenhagen, and reflected also in solid demand in the property investment market, with foreign investors accounting for the largest share of transac tion activity. Shift in demographic trends Over the past decade, Copenhagen 1 has seen strong popula tion growth of approximately 11%, equalling an annual nom inal increase by some 13,500 inhabitants. Population growth has been the strongest in Copenhagen proper (Københavns by 2 ), driven mainly by 25-29 year-olds. Copenhagen environs Copenhagen is the capital of Denmark and also the largest urban area with approx imately 1.4 million inhabitants across 18 municipalities. At the centre lies the City of Copenhagen, with more than 650,000 inhab itants the most highly populated municipal ity, having almost twice as many inhabitants as Denmark’s second-largest municipality, the City of Aarhus. Copenhagen remains Denmark's dynamo

Copenhagen Local market report to Colliers Market Report 2023

1 Copenhagen in this context denotes Copenhagen proper (Københavns by) and Copenhagen environs. 2 Defined as Copenhagen, Frederiksberg, Dragør and Tårnby.

have seen a similar strong growth rate, with 25-29 year-olds and 30-34 year-olds being the main growth drivers here. Broadly speaking, we have seen population growth virtually across the board, reflecting the pull of the city. However, during the pandemic, population growth slowed, with the net inflow of inhabitants turning into a net outflow unlike previous years. Apart from the pandemic, the former Danish government’s plan to decentralise student places has dampened the prospects of population growth across various age groups. Nevertheless, Copenhagen is expected to see a continued substantial rise in inhabitants, with fu ture growth driven mainly by young families with children and 60-69 year-olds. Statistics Denmark predicts population growth of approximately 5% between 2022 and 2032, equal ling a nominal increase of some 66,500 inhabitants. As Denmark’s leading science centre and home to the high est ranking university, Copenhagen has an overrepresenta tion of students and employable 30-49 year-olds. Like most of Denmark, the average age of inhabitants is climbing at a steady pace in Copenhagen. Seniors (60+ years) are ex pected to account for the largest percentage share of the projected population growth.

Copenhagen, along with Aarhus, has the highest educa tion levels in Denmark, with all of 20% of inhabitants here having completed medium- og long-cycle further educa tion, greatly outperforming the national average. This is re flected in Copenhagen income brackets, as Copenhagen has a pronounced overrepresentation of high-income residents relative to Denmark in general. Similarly, average income levels are significantly higher in Copenhagen relative to Denmark in general, in particular in Copenhagen environs, where the number of employed graduates is higher, unlike Copenhagen proper with its high concentration of students. For a number of years now, the infrastructure of Copen hagen proper has improved considerably, in part to ac commodate the city’s growing population, but also to re tain its position as a green frontrunner with some of the most ambitious climate goals in the world. The extension of the metro system, which is a hub for public transport in Copenhagen and has been named the best in the world on multiple occasions, is scheduled for completion in 2024. Further lines to connect the city in all directions are now being discussed. Reaching as far ahead as 2035, the plans involve the proposed expansion by an additional nine stations.

7

Demographics, 2020-2022 1,375,710 60% -51% 91% Birth-rate surplus Inhabitants, 2022

Migration patterns 1

Inflow of inhabitants Outflow of inhabitants

29%

-19%

20%

-19%

20-24 year-olds

20-24 year-olds

Net migration (domestic)

Net immigration (from abroad)

25-29 year-olds

25-29 year-olds

Population growth, 2012-2022 1

What age groups have driven population growth?

What age groups will mainly account for negative growth?

25-29 year-olds

30-34 year-olds

65-69 year-olds

35-39 year-olds

Copenhagen Local market report to Colliers Market Report 2023

28%

28,478

19%

19,146

-6%

-6,103

-2%

-1,607

Population forecast, 2022-2032 1

What age groups will drive future population growth?

What age groups will mainly account for negative growth?

45-49 year-olds

35-39 year-olds

0-4 year-olds

10-14 year-olds

23% 15,596

23% 15,003

-6% -4,044

-18%

-11,920

871,200

2.95% 27% 289,844

Number of employed

Unemployment rate

hold a bacherlor’s degree as a minimum

Average disposable annual income

Note : Data for City of Copenhagen. 1 Based on aggregate population growth in the period. Source : Colliers, Statistics Denmark.

OFFICE

Robust office letting market

Because of the city’s diversity, supply and demand are highly heterogeneous, reflected in a substantial spread in rent lev els. Most of all, this applies to central Copenhagen, the CBD (Central Business District), where demand is exceptionally strong. Held together with the limited supply in the CBD, this has rendered it difficult for businesses to find the right premises in a central location. The businesses in question, operating mainly in the liberal professions or knowledge-in tensive industries, demand a central location as they con sider this to be a key parameter to attract and retain young skilled talent. Historically low office vacancy In 2022, employment figures continued to accelerate at a high pace, now hitting new highs. Despite heightened mar ket uncertainty, employment levels have helped to sustain office occupational demand in most of Denmark, but in Copenhagen in particular, as the city is Denmark’s premier centre for economic growth and office-intensive industries. However, user requirements have changed along with market conditions. For instance, the increased need for flexibility has triggered a stronger push for short non- terminability periods. In addition, sky-high inflation has prompted many tenants to demand a cap on rent adjust ments. Similarly, lockdowns and restrictions during the coronavirus pandemic have reshaped the office workplace in terms of more flexible office landscapes, with activity- based working coming to the fore, including the possi- bility of shared workstations. Despite a year of widespread market un- certainty and to some extent deteriorating conditions, the Copenhagen office market continues to be characterised by massive demand.

Whereas businesses relatively swiftly can shift their strategic focus to growth and new hires, the supply in the office mar ket is not equally equipped to allow for short-term adjust ments. In addition, Copenhagen has a natural cap on supply in some city districts, in the sense that even periods of brisk newbuilding, as currently witnessed, only have a modest ef fect on the supply and demand balance of the office market. Along with continuously mounting demand, this has served to drive down overall vacancy rates in Greater Copenhagen. Existing vacancies are predominantly found in outdated and functionally obsolete premises and/or in more secondary locations. Bright outlook defies changeable times On the back of a year of exceptionally favourable market conditions and limited supply, 2022 was characterised by general rental growth across all Copenhagen districts, in terms of both prime (first-rate) and secondary premises. Furthermore, rent levels in the most sought-after districts are expected to come under upward pressure due to rent indexations setting new market rent standards. Historically, international investors have viewed a CBD loca tion as a categorical investment criterion. However, the re quirement has gradually softened due to brisk development activity in several non-CBD office areas that offer exception ally good accessibility. In 2023, this trend is expected to con tinue, with investor demand expected to increase for Valby and Sydhavn. In both districts, metro stations are scheduled for commissioning in 2024. In the past and to this day, the Copenhagen office invest- ment market differs from office markets in the rest of Den- mark as the Copenhagen market is driven by e.g. domestic pension funds and foreign investors with a long-standing appetite for Copenhagen. This appetite is supported by high market transparency, low vacancy risk and the yield premium that Copenhagen offers relative to comparable

9

Historically low office vacancy rates

10% 11% 12% 13% 14% 15%

4% 5% 6% 7% 8% 9%

12

13

14

15

16

17

18

19

20

21

22

CBD

Greater Copenhagen

Capital area

Note : Vacancy rates, office, Copenhagen. Source : Colliers, Ejendomstorvet.dk.

Copenhagen Local market report to Colliers Market Report 2023

European metropolises. Demand in the invest- ment market for office property was record- high in 2021; held together with the change in market conditions and heightened caution in 2022, it was anticipated that demand would cool off slightly as 2022 wore on. However, demand remains strong, although the buyside is now in a better position to dic tate transaction terms. Massive capital place ment requirements also remain intact among domestic and international investors alike, with the latter now expected to zoom in on non-CBD office properties, which may be ex plained by the stronger appeal of non-CBD locations due to improved infrastructure and urban densification. Between 2018 and start-2022, yield require ments for prime and secondary office prop erties have compressed, both in and around Copenhagen. However, stricter financing re quirements, heightened caution in response to a changeable market along with record-low re turns have driven up yield requirements in 2022.

Upward pressure on office yield levels

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

18

19

20

21

22

23

CBD Prime

CBD Secondary

Non-CBD Prime

Non-CBD Secondary

Note : Net initial yields, office, Copenhagen. Level in 2023 indicates Colliers' estimation at year-start. Source : Colliers.

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Copenhagen Local market report to Colliers Market Report 2023

Copenhagen CBD

Typical rent levels Office

Change

2020

2021

2022

2023

2022-2023

(1) Government District 1

Prime

na na

na na

na na

na na

Secondary

(2) Pedestrian District

Prime

1,600 1,100 1,750 1,350 1,750 1,400 1,650 1,250

1,650 1,150 1,850 1,400 1,800 1,450 1,700 1,300

1,700 1,200 1,900 1,450 1,850 1,500 1,750 1,350

1,750 1,250 1,950 1,500 1,900 1,550 1,750 1,350

2.94% 4.17% 2.63% 3.45% 2.70% 3.33% 0.00% 0.00%

Secondary

(3) Banking District

Prime

Secondary

(4) Frederiksstaden

Prime

Secondary

(5) Rosenborg District

Prime

Secondary

(6) City Hall and Central Station District

Prime

2,050

2,100

2,150

2,200

2.33%

Secondary

1,200

1,200

1,250

1,350

8.00%

(7) Kalvebod Brygge/ Havneholmen

Prime

1,850

1,900

1,900

1,900

0.00%

Secondary

1,450 1,650 1,300 1,550 1,000 1,850 1,350

1,450 1,700 1,300 1,650 1,050 1,950 1,400

1,450 1,750 1,350 1,700 1,100 2,000 1,450

1,450 1,800 1,400 1,750 1,150 2,050 1,500

0.00% 2.86% 3.70% 2.94% 4.55% 2.50%

(8) Christianshavn

Prime

Secondary

(9) Islands Brygge

Prime

Secondary

(10) Nordhavn

Prime

Secondary

3.45%

Note : Rent levels quoted in DKK per sq m p.a., exclusive of operating costs and taxes, office, Copenhagen. Level in 2023 indicates Colliers' estimation at year-start.

1 na = not available as the district has a high prevalence of public-sector tenants, with a letting market in the ordinary sense virtually non-existent. Net market rent projections are based on the assumption that the potential future increase in operating costs will be the same in all locations, thereby not impacting net market rental prices. However, it cannot be ruled out that significant increases in operating costs may cause businesses to discard specific locations and opt for other, less expensive locations. This may cause a shift in overall demand and, by extension, the net market rent in the areas in question.

Source : Colliers.

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Metro station Train station

Nordhavn

Pedestrian District

Rosenborg District

Frederiksstaden

Christianshavn

City Hall/Central Station District

Copenhagen Local market report to Colliers Market Report 2023

Banking District

Government District

Kalvebod Brygge/ Havneholmen

Islands Brygge

Copenhagen CBD The following is a brief introduction to the central Copenhagen office market, Copen- hagen CBD (Central Business District).

The Government District near the parliament buildings

The Government District houses a prominent stock of his torical landmark buildings, almost exclusively used by pub lic authorities and agencies as well as several ministries and government agencies. An actual letting market in the ordi nary sense is therefore virtually non-existent, and the va cancy risk is limited due to the potential number of public- sector tenants in the downstream of central government.. The Pedestrian District Comprising the Copenhagen high-street area and the medi eval city centre, the Pedestrian District is characterised by a predominance of smaller office premises, often with ineffi cient space layout reflecting the design and age of the build ing stock. Despite its central location in the CBD and easy ac cess to Nørreport station, a hub for public transport, most of the office stock in the district is lacking in functionality, flexibility and cost efficiency. In addition, there is a signifi cant shortage of available parking spaces in the district. As a result, the district is not considered a prime office location compared to other CBD districts, which is reflected in rent levels.

15

Frederiks Plads Rosenborg District Surrounding Rosenborg Castle and the King’s Garden, the Rosenborg District offers both large-scale office premises and smaller leases in older town houses with a relatively space-efficient layout and modern exterior. Both Nørreport station and the Kongens Nytorv metro station are in the Aarhus Ø The district is predicted to transform in the coming years as it is becoming an increasingly popular location for serviced offices, restaurants and shops. For instance, there are plans to convert the Danske Bank head-office buildings into a new mixed-use building complex, including a hotel, offices, shops and residential units, when Danske Bank relocates, presum ably in 2023. Frederiksstaden Centred around the Queen’s residence, Amalienborg Palace, Frederiksstaden is considered a prestigious CBD office loca tion with an imposing building stock consisting of mansion and palace-style buildings with a modernised layout. Both historically and today, the district is preferred by law firms, professional and business service consultancies, financial in stitutions and shipping companies, including the A.P. Moller - Maersk Group, which is headquartered in Frederiksstaden. In addition, the district attracts art dealers with the street of Bredgade housing quite a few galleries. In 2019, access by public transport improved greatly in the district with the opening of the Marble Church metro station. The availability of parking facilities is fairly good in the area considering its central location, not least thanks to new underground parking facilities in the district. The Banking District Located east of the Pedestrian District and just north of the Government District, the Banking District encompasses the areas surrounding Holmens Kanal and Kongens Nytorv. The district was traditionally among the preferred locations for banks and other financial institutions, including the Danish central bank, Danmarks Nationalbank. The district benefits from easy access to public transport at Kongens Nytorv offering multiple bus services and a metro station providing access to all metro lines. The area is hampered by scarce parking facilities, but the diversified building stock, easy access by public transport and diverse urban life give the district character, appealing to a wide range of busi nesses in pursuit of small and medium-sized office units.

immediate vicinity of the district, with Nørreport offering regional and S-train as well as metro and bus services. Park- ing is scarce at street level, but several underground park ing facilities are available. Traditionally, the district has been preferred by the media as well as government and quasi- government organisations, but the growing presence of shops and restaurants has had a positive effect on the dis trict’s overall appeal. The City Hall and Central Station District Situated near City Hall Square (Rådhuspladsen) and Copen- hagen Central Station, this district has transformed in recent years, spearheaded by the spectacular and brand-new Axel Towers office complex. Together with Industriens Hus on the corner of Vesterbrogade and H. C. Andersens Boulevard, Axel Towers has consolidated the district’s status as one of the most expensive office locations in Copenhagen. In 2021, the complex known as The Square, a Copenhagen landmark situated next to Copenhagen City Hall, at Rådhuspladsen 4, etc., was sold to German investor AM alpha. The property is currently undergoing comprehensive upgrade works. Today, the district offers a varied mix of relatively efficient large-scale office domiciles with underground parking facili ties and small to medium-sized offices in older multi-tenant buildings. The district benefits from excellent access by pub lic transport, with Copenhagen Central Station serving as an important hub. Opening in 2019, the City Hall Square metro station further improved connectivity. Considered a classic city-centre location, the district is home to major law firms, trade unions, industry associations and financial institutions. In addition, governmental and municipal agencies account for quite a large proportion of office users. One of the largest and most prominent construction schemes in the district is the Postbyen (“post city”) devel opment of some 238,500 sq m residential and commercial space by a joint venture of pension funds Danica and ATP on the former post office site at Bernstorffsgade. The first stage involves the new Danske Bank 73,000 sq m head of fice, scheduled for completion in 2023. Among other things, the second stage involves the addition of a 34,000 sqm office building,The Stamp, accommodating some 2,000 workplaces. When completed, presumably in 2027, the Postbyen devel opment is expected to expand the CBD as well as enhance the district’s position as a central Copenhagen office location.

Copenhagen Local market report to Colliers Market Report 2023

17

Copenhagen Harbour Districts The Copenhagen Harbour Districts are characterised by prestigious buildings, offering large-scale and up-to-date office facilities. In the past, the Harbour Districts were coveted by large-scale office users, including financial institutions, but this is expected to be changing.

Christianshavn Christianshavn, located on the Amager side of the harbour, is a popular mixed-use residential and office area with a special ambience due to scenic canals and the old fortifica tion line. Redeveloped old warehouses and modern office buildings blend together. Major occupiers include ministries, banks and other financial institutions as well as creative businesses, including architects and advertising agencies. Islands Brygge Similarly located on Amager, opposite Kalvebod Brygge and Havneholmen, this former industrial area has over the past 20 years been redeveloped into an attractive city district with housing and offices. The area benefits from easy access to both the city centre, the motorway grid and Copenhagen Airport. The office stock is characterised by repurposed for mer industrial buildings. Nordhavn Still under development, the vibrant and prestigious new city district of Nordhavn houses several financial businesses and law firms, valuing the up-to-date, space-efficient and flexible office premises in the area and its ample parking facilities. With its proximity to the city centre and attractive water front location, Nordhavn has evolved into an extension of the existing Copenhagen CBD in competition with Kalvebod Brygge and Tuborg Nord further north. The district benefits from proximity to Nordhavn S-train station, and with two metro stations opening, access to the entire Greater Copen- hagen area has improved considerably. In addition, the new Nordhavnsvej has improved access to the northern part of the motorway grid. Nordhavn is home to spectacular office buildings such as the highly sought-after Portland Towers and Svanemølle- holm.

Whereas the southern districts enjoy easy access to both the motorway grid and Copenhagen Airport, the northern districts are less fortunate, although motorway access has improved. However, all districts benefit from relatively cen tral locations with fairly good public transport links, includ ing metro, S-train and bus services. The building stock of these districts is of a more recent date compared to other CBD locations, typically offering also on- or underground parking facilities. Kalvebod Brygge/Havneholmen This location is one of the most attractive waterfront loca- tions, today commanding the highest rent levels in the Harbour Districts. The district enjoys easy access to the motorway grid, Copenhagen Airport and the Copenhagen city centre. Swedish investor Genesta has redeveloped the former DSB freight terminal at Kalvebod Brygge 32 into more than 30,000 sq m office space. Anchor tenant is law firm Poul Schmith/Kammeradvokaten (the Legal Advisor to the Danish Government) relocating its various branch offices to this new central head office. Havneholmen, developed mainly by Skanska, has in recent years been successful in attracting several corporates such as MSD, Pandora and Aller Media, making it a popular mixed-use office and residential district. At Havneholmen, development includes the 16,500 sq m Cph Highline mul ti-user office building, acquired by UK pension fund Aviva in 2021. At the time of the acquisition, more than 93% of floor- space in the building was let to SAS Institute and Global- Gonnect, among others.

Copenhagen Local market report to Colliers Market Report 2023

Copenhagen non-CBD

Typical rent levels Office

Change

2020

2021

2022

2023

2022-2023

Østerbro

Prime

1,650 1,150 1,450

1,650 1,150 1,450

1,700 1,200 1,500

1,750 1,250 1,550

2.94% 4.17% 3.33% 5.56% 0.00% 0.00% 6.35% 8.33% 2.70% 3.70% 3.13% 3.85% 5.88% 5.00% 7.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.57% 5.56% 2.94% 3.70% 3.45% 4.76% 0.00% 0.00% -3.23% -5.00% 10.00%

Secondary

Nørrebro

Prime

Secondary

850

850

900

950

Frederiksberg

Prime

1,500

1,550

1,550

1,550

Secondary

900

950

950

950

Hellerup

Prime

1,500 1,150 1,750 1,250 1,550

1,500 1,150 1,800 1,300 1,550

1,575 1,200 1,850 1,350 1,600 1,000 1,300

1,675 1,300 1,900 1,400 1,650 1,100 1,350

Secondary

Tuborg Havn

Prime

Secondary

Lyngby

Prime

Secondary

950

950

Gladsaxe

Prime

1,200

1,250

Secondary

775 950 650 950 600 900 650

775 950 650 950 600 900 650

850

900

The north corridor

Prime

1,000

1,050

Secondary

700 950 600 900 650

750 950 600 900 650

Birkerød

Prime

Secondary

Allerød

Prime

Secondary

Ballerup

Prime

1,100

1,100

1,100

1,100

Secondary

675

675

675

675

The west corridor

Prime

1,150

1,200

1,250

1,250

Secondary

625

650

700

700

Valby

Prime

1,250

1,350

1,400

1,450

Secondary

800

800

900

950

Carlsberg City District

Prime

1,600 1,300 1,300

1,600 1,350 1,350

1,700 1,350 1,450 1,050 1,500

1,750 1,400 1,500 1,100 1,500

Secondary

Sydhavn

Prime

Secondary

900

950

Amager

Prime

1,450

1,500

Secondary

850

850

900

900

Ørestad

Prime

1,550 1,000

1,550 1,000

1,550 1,000

1,500

Secondary

950

BOLIG Note : Rent levels quoted in DKK per sq m p.a., exclusive of operating costs and taxes, office, Copenhagen. Level in 2023 indicates Colliers' estimation at year-start . Source : Colliers

19

The north corridor

Hørsholm

Allerød

Birkerød/Allerød

Lyngby/Gladsaxe

Herlev/Ballerup

Copenhagen Local market report to Colliers Market Report 2023

Lyngby

Hellerup (incl. Tuborg Nord)

Nørrebro

Østerbro

The west corridor

Copenhagen

Frederiksberg

Amager/Ørestad

Høje-Taastrup

Valby

Sydhavn

Greve

Airport

Copenhagen non-CBD The following is a brief introduction to the office market outside the Copenhagen CBD (Central Business District), including the districts encircling the city centre. Østerbro Located just west of Langelinie and north of the Copen- hagen CBD, the district of Østerbro offers a wide variety of office premises. In this district, the prime office loca tion stretches mainly along Dag Hammerskjölds Allé and Strandboulevarden, featuring several impressive mansion- style buildings. The area is favoured by embassies and non-profit organi sations as it benefits from relatively close proximity to the Copenhagen city centre. Containing several large-scale of fices built in 1960–1980, the area around Lyngbyvej/Lersø Parkallé is generally considered a less prestigious office location. Office leases in the area often fail to meet today’s tenant requirements in terms of space efficiency and flexi bility. However, this may be remedied by the new improved access to public transport, as the new metro line CityRingen includes several new stations at Østerbro. Nørrebro Situated north-west of the CBD, Nørrebro is first and fore most a mixed-use residential and retail district rather than a characteristic office area as the office premises in the dis trict are of diverse quality with no distinctive office clusters or centres. When it comes to parking, Nørrebro faces some of the same challenges as other Copenhagen city districts, with fairly scarce parking considering the building density of the area. In terms of public transport, accessibility has improved with metro stops at Nørrebro S-train station and Nørrebros Runddel.

um-sized creative businesses, including office users in the media and music industries.

Copenhagen Science City (CSC) is spearheading the devel opment of a new science centre in the district with a focus on health and life sciences, cleantech as well as informa tion and communication technologies (ICT). Anchored by the University of Copenhagen, the Metropolitan University College and the Copenhagen University Hospital, CSC strives to create a strong knowledge and innovation community. As part of the masterplan, the stretch of Jagtvej between Tagensvej and Lyngbyvej/Nørre Allé is currently undergoing extensive redevelopment. In the more run-down parts of Nørrebro and the north- western city district of Copenhagen NV, old industrial build ings are on a large scale being converted for up-to-date office use, with the buildings typically retaining their orig inal industrial-style exterior. This has given new life for in stance to the Rentemestervej area of Copenhagen NV and Titangade/Sigurdsgade at Nørrebro. However, complete urban redevelopment will take time, and the process is projected to be ongoing for years to come. Frederiksberg Encircled by the City of Copenhagen, Frederiksberg con- stitutes a municipality of its own and is predominantly a vibrant residential district. It enjoys a location close to the CBD and is well serviced by all metro lines. Another advan tage of Frederiksberg is the ample availability of parking facilities relative to other central city districts. Frederiksberg contains several pockets of office premises, with the area around Flintholm station establishing itself as a prime office location in recent years housing for instance the EY head office at Flintholm, Flintholm Company House II, developed by NCC. Other areas include the Frederiksberg City Hall square with the Rialto landmark building serving as centrepiece and Gammel Kongevej/Vodroffsvej near the Copenhagen Lakes with Codanhus as the most prominent office building.

While office premises generally fail to meet today’s tenant requirements, Nørrebro appeals to many small and medi

21

Copenhagen Local market report to Colliers Market Report 2023

Hellerup and Tuborg Nord Hellerup and Tuborg Nord on the waterfront are among the most attractive office areas north of the Copenhagen CBD, featuring a modern office building stock with street level or underground parking facilities. Access by car is fair- ly good, but the district lacks top-tier public transport as the main train station is not ideally situated vis-à-vis the of fice clusters of the district. There are no plans to link the district to the Copenhagen Metro. Tuborg Nord has traditionally been preferred by law firms, professional consultancies and financial institutions, but the location is increasingly competing with other office loca- tions such as Nordhavn that offer more competitive rent levels and lower property taxes. In addition, demand has somewhat shifted towards smaller offices in the older build ing stock in other areas of Hellerup. Lyngby/Gladsaxe Supported by excellent motorway access, the Lyngby and Gladsaxe office locations have seen mounting demand in recent years. Located near the affluent residential districts of northern Zealand and a short distance from Copenhagen,

the district offers lease opportunities for domestic and inter national companies in search for large-scale office premises.

Furthermore, knowledge-intensive businesses prefer the lo- cation as DTU provides a large pool of highly skilled labour. As a result, businesses in the fields of IT, insurance and bio- tech, etc. have settled in the vicinity. Current large-scale office users include Microsoft, Maersk Drilling, Jyske Real- kredit, Danica Pension and COWI. The north corridor Covering large areas along the motorway to Elsinore (Hel- singør), the north corridor stretches across office parks in Vedbæk, Hørsholm, Nivå and Kokkedal, dating mainly from the 1980s. Located close to the motorway, the district bene fits from good access by car, whereas access by public trans port is limited due to the area not being connected to the S-train grid. Linking Elsinore in the north and Copenhagen in the south, the routing and stops of the coastal railway (Kystbanen) are not ideally located vis-à-vis the office areas in the north corridor, which are therefore hampered by relatively poor public transport options.

Ørestad

Carlsberg City District

Teglholm, Sydhavn

23

Innovative measures are called for to re-brand and revitalise the district. So far, the science and technology park of Scion DTU in Hørsholm has been a successful initiative. With sup ply ranging from single offices to large-scale office premises, the business park has become Denmark’s foremost deep tech communities with more than 290 high-tech R&D busi nesses. In recent years, DTU Science Park has seen virtually constant activity, today housing businesses like DHI, ALK, FMC and Floodframe. Birkerød/Allerød Located some 25 kilometres northwest of Copenhagen, the district of Birkerød/Allerød has several large-scale office areas of diverse quality, ranging from the obsolete to the more up-to-date. Some of the older office buildings used to serve as ancillary office units in connection with indus trial facilities. This property type has seen a decrease in de mand over the past years as businesses have zoomed in on space-efficient and flexible premises. Notwithstanding S-train stations in Allerød and Birkerød, the office areas of the district have less than ideal access to public transport. Previously preferred by the IT sector, the district is there fore typically discarded because of its lack of high-quality, space-efficient office premises close to public transport. The district is facing increased competition from alternative locations closer to Copenhagen with superior accessibility. This has slowed letting activity despite the availability of relatively up-to-date premises. Herlev/Ballerup The Herlev/Ballerup district has long been a preferred loca- tion for large-scale companies operating in the high-tech or financial services industries, with the Lautrupvang area at tracting a great number of businesses. Tenants in the area include GN Store Nord, Nets, IBM Danmark and KMD. Furthermore, the district houses the successful World Trade Center (WTC) Ballerup, which is a 17,000 sq m modern busi ness centre offering serviced offices. Thanks to the synergies of the location, including easy ac cess to customers, skilled labour and varying degrees of knowledge sharing, Lautrupvang has attracted also interna tional newcomers operating in the high-tech industries.The less established office locations in the district have a rela tively old building stock, constructed mainly in 1970–1990, and like in other suburban office locations, offices are com

monly laid out as ancillary offices with adjoining industrial facilities. Due to the inflexible layout of most premises as well as limited remodelling options, these locations suffer from weakening demand, and rent levels are among the lowest in the Copenhagen area in general. Even with the future light-rail link in place, it is difficult to envision a full scale reactivation of the more secondary locations. The west corridor Stretching primarily across the towns of Glostrup, Brønd- by, Albertslund and Høje-Taastrup, the west corridor has a relatively outdated office stock with many properties pre- dating the 1990s. Ancillary office units in connection with in dustrial facilities dominate the district, and due to their age, the buildings often have a highly inflexible layout. In addi tion, the district has a fairly large number of secondary of fice premises that attract little interest as they fail to meet today’s tenant requirements. As a result, vacancy rates are soaring in the district, especially in secondary locations. Infrastructure upgrade initiatives or investments in the existing building stock are not expected to significantly improve the situation. However, prime locations in the west corridor offer good accessibility and low rent levels, making the district a sought-after back-office location. Valby The district of Valby is currently undergoing massive trans formation, with former disused industrial facilities giving way to new attractive mixed-use commercial and residen- tial areas that are expected to appeal to many tenants in the years ahead. The bright outlook is driven mainly by the area’s affordable rent levels, excellent accessibility as well as development opportunities. For instance, the area around Gammel Køge Landevej is currently being lifted, with former industrial facilities being converted into attractive office premises while preserving their industrial exterior. With København Syd (Copenhagen South, formerly known as Ny Ellebjerg station) as a future hub linking also to the Copenhagen Metro (as from 2023), the area around Carl Jacobsens Vej has started to attract newcomers, including the Danish Building & Property Agency (Bygningsstyrelsen) as well as acclaimed architecture firm Bjarke Ingels Group (BIG). In addition, Genmab’s new head office is under con struction in Valby, scheduled for completion in 2023.

Copenhagen Local market report to Colliers Market Report 2023

Carlsberg City District Bordering on Valby, Vesterbro and Frederiksberg, on the site formerly used by the Carlsberg breweries, the Carlsberg City District is one of the most exciting urban development zones in Copenhagen. Relatively recent newcomers include Visma, taking an office lease of 20,000 sq m, and Roche, relocating to the Carlsberg City District in summer 2022. The area benefits from easy access to public transport at Carlsberg station and the new metro station at Enghave Plads. In summer 2023, Boston Consulting Group is expected to relocate from Kalvebod Brygge on the Copenhagen water front to 10,000 sq m new office premises in a former indu- strial property, which CapMan acquired back in 2019 and which is now transforming into a state-of-the-art office building. Sydhavn Having evolved as one of the most prominent Copenhagen office locations in the early to mid-2000s, Sydhavn (the south harbour) suffered a severe blow during the financial crisis. In the golden 2000s, telecommunications companies flocked to new single-tenant properties on the waterfront at Sluseholmen and Frederikskaj. Both addresses enjoy easy access to the Copenhagen road grid, the motorway grid and Copenhagen Airport, making them ideal locations consid ering the land prices at the time. However, the financial cri sis caused the resident telecommunications companies to downsize or relocate. In recent years, conditions have improved, with educational institutions such as Aalborg University absorbing a substan tial share of vacant office space. Connecting Sydhavn with the remaining parts of Copenhagen, a bridge now spans the fairway of Teglværksløbet, and the Copenhagen Metro will expand to the district in 2024. One metro station is expected to open at Sluseholmen, which will serve to reposition the district as an attractive office location. Amager/Ørestad Located south of the Copenhagen CBD, the island of Amager benefits from proximity to the Copenhagen city centre and excellent infrastructure, with easy access to the motorway Coupled with an increasing emphasis on public transport access, vacancy rates began to surge in the district.

grid, railway links, two metro lines and Copenhagen Airport. Furthermore, the fixed links to Sweden and Avedøre Holme provide access to the rest of Scandinavia and large indus trial areas, respectively. Ørestad is dominated by up-to-date, space-efficient prop erties, whereas other parts of Amager contain a large share of older office and production facilities. Locations such as Islands Brygge and Prags Boulevard have seen a dramatic transformation, with industrial properties converted into up-to-date office premises but retaining many of their ori- ginal features. Ørestad has positioned itself as a key non-CBD office loca tion and transport hub, still providing plenty of development opportunities. The location caters to the requirements of a wide range of tenants in terms of space-efficiency, flexibility and accessibility. Furthermore, the profile of the location is more low-key compared to some CBD areas, including Nordhavn, while still offering up-to-date office space at moderate rent lev els. These factors have been crucial in establishing the area. Major office users in Ørestad include Nordea, Rambøll, and a large number of international companies such as Nestlé, Q8 and 3M, taking advantage of the district’s perfect infra structure, with metro, train, direct motorway access, and its proximity to Copenhagen Airport. A new development area near Copenhagen Airport, Scan port, is currently emerging. Hoping to leverage the proxim ity to Copenhagen Airport, the fixed link to Sweden and the metro line, Scanport plans to offer close to 100,000 sq m of commercial space on completion with a sizeable portion labelled for office use. After years of preparation, Ferring Pharmaceuticals has re- located from Ørestad to a new head-office building, Sound- port, in Scanport. Incidentally, the area is known for Den Blå Planet (the blue planet), the biggest aquarium in northern Europe.

Ørestad

25

Copenhagen Local market report to Colliers Market Report 2023

RESIDENTIAL

Market for rental housing remains red-hot

4,608 residential units

However, recent years’ brisk newbuilding has gradually served to restore the balance, reducing the total accumula- ted housing shortage. As from 2022 onwards, some 12,000 units in multi-storey buildings have been completed, corre sponding to approximately 1.1 million sq m space in multi- storey buildings in Copenhagen and environs. However, the construction sector faced headwinds in 2022, when construc tion costs as well as financing costs moved higher. Mainly the non-profit housing sector and small market players proved susceptible to the change in market conditions, resulting in several bankruptcies and a suspension of development pro jects. Nevertheless, the pipeline of new Copenhagen resi- dential development schemes remains strong, albeit con struction activity is expected to slow in 2023. Residential newbuilding has involved mainly large resi- dential units due to the former municipal plan requirement aimed at promoting family housing, with 75% of units in res idential newbuilds required to have a minimum size of 95 sq m. However, the rule was eased in 2020, and today only 50% of units in residential newbuilds must comply with the min imum size requirement. Because of the amendment, recent years’ newbuilding has catered more to the needs of stu dents and single households, who generally demand smaller residential units. Copenhagen continues to grow – and developers and inves tors still have a stomach for new construction, although exer cising more prudence. Copenhagen continues to offer land for residential newbuilding. A great many plots are located in out-of-town locations, but some are also found in more cen tral districts only 3-5 kilometres from Rådhuspladsen The Copenhagen residential market has long witnessed massive demand for ownership and rental housing alike, but also a supply/demand imbalance, with demand greatly outstripping supply.

completed in 2022 (Q1-Q3)

379,270 sq m residential completions in 2022 (Q1-Q3)

.

79 sq m Average residential unit size

84.20% Tenant share

4.78% Average residential vacancy rate

Note : The three bottom figures denote average data on multistorey apartment blocks in the City of Copenhagen.

Source : Colliers, Statistics Denmark.

27

Residential transaction activity slowed in 2022 – investors in stand-by position

ing of large residential units has attracted demand from many young families that often lack the financial means to enter the ownership housing market due to current pricing and financing requirements. The residential market segment has for some time now been property investors’ top pick. However, the rise in in- terest rates in 2022 has dampened demand, because finan- cing terms and achievable LTVs have greatly deteriorated. This has been particularly evident in Copenhagen, as resi- dential property here trades at the lowest yields, which means that this kind of property bears the brunt when interest rates move higher as the cashflows from property operations is required to cover costs associated with stand ard financing. By the same token, an increasingly uncertain market outlook and a shift in sellside/buyside power bal ance in favour of the buyside dramatically changed the residential investment market in 2022. In 2022, the Copenhagen residential transaction volume fell dramatically below the 2021-level, which to some extent was anticipated as 2021 witnessed a record-high total trans action volume. Mainly residential properties in top locations have suffered a blow, commanding the lowest yields, and with the movement in interest rates severely impacting achievable LTVs for this segment. In addition, the currently higher interest rate payments impair investors’ overall in vestment assumptions and business case. Similarly, the change in market conditions have made investors some

For years, Copenhagen rent levels have been uptrending. This was also the case in 2022. In particular the higher rent adjustment rates due to high inflation have contributed to a rent uplift. This applies mainly to areas characterised by scarce supply and strong demand. However, rent levels have in many locations reached a level where many tenants are neither willing nor able to pay the rent. As far as this group of tenants is concerned, suburban rent levels may well be more alluring. Still, rents have increased across the board, also in Copenhagen suburbs, involving both prime and secondary properties. Although already high in central Copenhagen, rent levels are expected to see a sustained in crease in 2023, with urban sprawl and new central residen tial schemes playing an important part. When the city grows, prime locations typically become more popular as they are considered unique. However, as supply has a natural limit in such locations, and with rent adjustments being higher here (and tenants ready to pay them), rent levels are ex pected to increase in prime locations. New micro living projects, e.g. Kaktus Towers at Dybbølsbro in central Copenhagen, have highlighted how differentiated residential schemes are attracting exceptional tenant inter est. In addition, these projects have shown that the propen sity to pay is intact provided the residential units meet ten ant requirements. Such projects are therefore fully let, even if at excessive rent levels. Similarly, the large-scale newbuild

Copenhagen Local market report to Colliers Market Report 2023

Typical rent levels

Residential

Change

2020 2,200 1,650 1,800 1,450 2,000 1,550 1,850 1,450

2021 2,300 1,650 1,850 1,450 2,100 1,550 1,850 1,450

2022 2,350 1,700 1,850 1,450 2,200 1,600 1,900 1,500

2023 2022-2023

Copenhagen K

Prime

2,400 1,800 1,950 1,500 2,250 1,700 1,950 1,550

2.13% 5.88% 5.41% 3.45% 2.27% 6.25% 2.63% 3.33%

Secondary

Copenhagen NV

Prime

Secondary

Frederiksberg

Prime

Secondary

Valby

Prime

Secondary

Note : Rent levels quoted in DKK per sq m p.a. for new residential units of 75-80 sq m, ground-floor and penthouse units excepted, Copenhagen. Level in 2023 indicates Colliers' estimation at year-start . Source : Colliers.