Colliers Market Report Denmark 2023

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Industrial & logistics - Colliers Market Report 2023

Supply chain disruption Supply chain disruption is a relatively new phenomenon adding to occupational demand. After years with globali sation and outsourcing to China and other low-cost coun tries being buzzwords, several businesses are now shift ing their focus to supply chain risk. During the pandemic, businesses across multiple indus tries learnt that fully or partly closed plants in the Far East meant that the delivery of goods and components was heavily delayed or altogether failed. Freight rates rose, with inter-continental transport posing a bottleneck. Uncertainty with respect to deliveries grew even stronger with the war in Ukraine due to the sanctions aimed at Russia and other factors. Delivery security and insourcing have come to the fore, pushing up already record-high industrial output levels even further and in the process accelerating the demand for both production and storage facilities. Mainly high tech production is being insourced or pulled back to Denmark. By the same token, previous outsourcing plans are being put on hold or altogether shelved.

An example to illustrate extensive domestic investments in production: In 2021 and again in May 2022, Novo Nordisk announced plans to expand its Kalundborg facility at a total cost of DKK 18 billion. Insourcing typically involves end-users developing and investing in built-to-suit build ings for own use. From an investor perspective, it is useful to know that some production companies may be think ing about entering into sale-leaseback agreements, often involving triple-net leases with the tenant paying all oper ating costs save property management. In June 2022, Designa Kitchen Group A/S sold two of their production facilities in Kjellerup at Silkeborg to Vika Project Finance, entering into a 15-year leaseback agree ment. In December 2022, Velux followed suit, with the portfolio sale topping the year’s list of high-volume trans actions in the industrial/logistics segment. Similarly, businesses increasingly prioritise having buffer storage facilities. The previously widely accepted just-in time principle, reducing the amount of capital tied up in stocks, etc., has given way to the quest for reducing sup ply line risks to a minimum.

Suez Canal

Industrial output levels continue to soar

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Note: Seasonally adjusted production index, Danish industry, index 100 = 2015. Source: Statistics Denmark, Colliers