Colliers Market Report Denmark 2023

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Industrial & logistics - Colliers Market Report 2023

Hotel I ndustrial & logistics Retail Residential Office

Slowdown in newbuilding The historically low vacancy rates largely tie in with the fact that the supply of industrial/logistics facilities has been stunted by the shortage of commercial land, mainly inGreater Copenhagen and Aarhus. In Copenhagen environs, numer ous long-standing business districts have long been under pressure, particularly as areas with station proximity are increasingly being designated and converted for residential use. The trend has accelerated with the Greater Copenhagen Light Rail drawing nearer, now scheduled for commissioning in two years’ time, and because the residential market was red-hot all through 2021 and the first part of 2022. In traditional business-intensive municipalities like Brøndby, Gladsaxe, Glostrup, Herlev, Ishøj and Vallensbæk, all situ ated west of Copenhagen, as well as in Tårnby (Amager), districts that have for decades been designated for indus try and other commercial uses are shrinking. Furthermore, rising construction costs have made newbuilding a much costlier affair since mid-2021, with both users and devel opers suspending or altogether shelving new construction plans. In 2022, the rise in interest rates served to exacer bate the situation. In the past, the market value of a standing asset in a well-established district exceeded the cost of newbuild ing, making it particularly profitable for investors to break ground. However, this is no longer necessarily the case because of higher yield requirements on properties and higher construction costs. Overall, mainly supply is found to be lagging whereas occu pational demand remains strong. All other things being equal, this will drive up rent levels in existing lease prem ises. In addition, users and investors are to some extent forced out of Greater Copenhagen and Aarhus to districts offering development sites with motorway proximity, e.g. the E45 and E20. Alternative locations should therefore be given careful consideration, with future new attractive locations possibly emerging as a result, driven also by the future Fehmarn Belt link. Scheduled for commissioning in 2029, the Fehmarn Belt link could potentially reshape the Danish goods distribution landscape. At the same time, the Fehmarn tunnel, in interaction with the fixed link across the Sound, could make Denmark the gateway to the entire Nordic market. Both factors may increase demand for Lolland-Falster, Næstved and other parts of southern Zealand as attractive logistics or storage locations.

Persian Gulf