Focus Report Copenhagen - Colliers Denmark 2025

INDUSTRIAL AND LOGISTICS - COLLIERS FOCUS REPORT COPENHAGEN 2025

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INDUSTRIAL AND LOGISTICS RETAIL RESIDENTIAL OFFICE

Industrial/logistics market remains an attractive invest- ment destination In recent years, international investors have become aware of light industrial and last mile distribution prop erties in Greater Copenhagen – a market previously dominated by owner-occupiers and domestic investors. In 2024, international investors accounted for 65% of the transaction volume in the industrial and logistics market in Copenhagen and Greater Copenhagen. International players such as Mileway, Catena, KKR and Palm Capital were prominent in the transaction market, with their investment profiles being typical of the buyers active in this market, namely sector specialists and primarily value-add investors, but also core+ investors. In the Copenhagen and Greater Copenhagen industrial and logistics markets, international investor demand is driven by prospects of rent increases. At the same time, prices here have been less affected by rising interest rates as the higher net initial yield provides more stable and predictable earnings. This combination of rental growth prospects and potential pricing consensus has made Greater Copenhagen an attractive market for inter national investors. The robust demand for Greater Copenhagen indus trial and logistics properties is expected to continue in 2025, and we still expect price increases in the market to be driven by rent increases rather than lower yields. However, the level of investment activity will largely hinge on the availability of attractive properties and portfolios in the market.

Large share of owner-occupied properties The prospect of a weaker supply of lease premises is further exacerbated by the strong occupational market. Data from Hubexo Denmark shows that almost 84% of the industrial and logistics properties expected to be built in the municipalities around Copenhagen by 2028 are owner-occupied properties, i.e. where the owner also occupies the property. This means that only the remaining 16%, corresponding to approx. 49,000 sq m, is expected to be offered in the market. We therefore expect demand to continue to outstrip supply, which may incentivise some developers to build on speculation, without pre-let agreements in place. The strong occupational market also means a shift in focus in terms of the size of industrial and logistics prop erties. There are only few companies in Denmark that have the size to take on the largest industrial and logistics properties, and users are demanding smaller properties instead. This is also something investors are starting to pay attention to. Although industrial and logistics real estate looks set for a strong 2025, external factors may create challenges. Mainly developments in the US and Germany, Denmark's two largest export markets, will be crucial for the market. In the US, Donald Trump was re-elected president in November 2024. Trump's policies are focused on protecting American industry, which is creating turmoil and uncertainty in the market. The German economy is also under pressure and in Q4 2024 had experienced six quarters of decline. The automotive industry in particular is suffering from rising costs and falling demand, which has led to factory closures and layoffs. However, the recent easing of the German debt brake has allowed the German government to pursue a more expansive fiscal policy, giving hope for renewed growth, also for the benefit of Denmark and Europe. Macroeconomic uncertainty may put a damper on the party