MR 2018

24

Copenhagen Property Market Report 2018

The perfect corporate setting relies on a combination of multiple value drivers.

tenants focused on factors such as price, location and unit size, but today’s tenant requirements are much more varied and diverse.

In order to pinpoint the elements demanded by tenants in their pursuit of new premises, Sadolin & Albæk conducted two major interview-based surveys in 2017 (targeting tenants with 0-49 employees and 50+ employees) 1 . Broadly speaking, we found that the perfect corporate setting relies on a combination of multiple value drivers. The interviewees in fact ranked eight factors on average (out of 24 possible) as “very important” for their choice of lease premises. In this context, it is remarkable to note that indoor climate was claimed to be the most important determinant, but the tenants also gave high scores to flexible lease terms and confidence in the landlord. Flexible office hotels on the rise The stronger demand for flexibility has fed through to the market for office hotels and similar concepts. These office facilities have been widely accepted as a viable alternative to traditional office leases. This is supported by the fact that an increasing number of businesses opt in favour of office hotels. In connection with our interview- based tenant surveys, one in five businesses indicated a “strong” or “fairly strong” interest in relocating to an office hotel. Costs less important in economic upturn However, the cost of the lease premises remains a key determinant, in particular for small businesses. Conversely, major businesses have a greater preference for e.g. sustainability, flexibility in terms of up- or downsizing the lease premises as well as satisfactory shared facilities. As a rule, the need for sustainability and similar parameters is cyclical today: During an economic upturn, the focus tends to be less on overheads, leaving room and leeway for a stronger focus on non-financial values. We expect this to change, with sustainability becoming a constant determinant for the choice of office premises. This ties in with the need to attract and retain highly skilled and well-educated employees, who today increasingly embrace notions of sustainability and social responsibility. Excellent access to public transport, defined as being within close proximity of a metro or S-train station, was rated as another important value driver for both sub-segments. As a result, we expect to see increased segmentation in locations formerly considered equally attractive, as the scheduled opening of new metro stations and lines in the years ahead will define the ability to attract new businesses. For instance, we believe that the new metro station in the Nordhavn district will greatly benefit the immediate neighbourhood, giving it a competitive advantage over e.g. Tuborg Nord. Reduced reletting costs for basic products As today’s office tenants are demanding greater flexibility, adopting an increasingly agile approach to space utilisation and functionality, developers and landlords must rethink their basic products accordingly.

During an economic upturn, the focus tends to be less on overheads, leaving room and leeway for a stronger focus on non-financial values.

1 The surveys are part of a recurring an- nual surveys of the Copenhagen office letting market, targeting a representa- tive selection of office tenants.