Focus report Copenhagen - Colliers Denmark 2024

OFFICE - COLLIERS FOCUS REPORT COPENHAGEN 2024

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cities, while the expansion of the metro network has made public transport in Copenhagen more flexible. This is seen as a particular advantage for the Copenhagen user market. Copenhagen suburbs and neighbouring municipalities greatly benefit from access to the S-train stations. In 2023, the areas around Copenhagen have not only seen an increase in take-up levels but reletting periods here have also become shorter compared to Copenhagen proper. The upcoming Greater Copenhagen Light Rail, scheduled for commissioning in 2025, is expected to have a further positive effect on office properties located close to the railway line. Low vacancy and more selective tenants Relative to comparable metropolises in Europe, office rents in Copenhagen are significantly lower, although it should be noted that the way the lettable area is calcu lated may differ from country to country. The lower office rent levels in Copenhagen tie in with the fact that the city has historically had key development areas available, including Nordhavn (the north harbour) and the Carlsberg City District. These areas have undergone – and are still undergoing – a major transformation, as well as Postbyen, which is still under development. However, supply dynamics are changing, and the pipeline of devel opment opportunities is gradually drying up in central

locations. This is expected to lead to sustained rent increases in the most attractive locations in both the short and long term. Overall, vacancy rates in and around Copenhagen have been downtrending in the aftermath of the COVID-19 pandemic and are now at a historically low level. The vacancies that still exist, however, mainly include outdated properties that do not meet the require ments of more selective tenants. This is due to mounting demand for contemporary and more flexible office space or space in very central and attractive locations. We are also seeing a trend of more companies investing in improving their sustainability profile, partly to contribute to climate goals, but also to strengthen their position in relation to competitors and employees. This has fuelled the demand for leases with sustainability certificates, and some tenants are seen to actively discard leases that are not certified. This can increase the difference in market rent for certified and non-certified leases. Scepticism among international investors Broadly speaking, the Copenhagen investment market for office property differs from the rest of the country, as the market here is driven by domestic pension funds and international investors, who have long had a strong appetite for Copenhagen.

Narrower spread between prime and secondary office yields

7%

6%

5%

4%

3%

2%

1%

0%

19

20

21

22

23

24

CBD, secondary

CBD, prime

Non-CBD, prime

Non-CBD, secondary

Note: Net initial yields, office, Copenhagen. Level in 2024 indicates Colliers’ estimation at year-start. Source: Colliers