MR 2018

27

Copenhagen Property Market Report 2018

In focus: Serviced offices

In the office market, the stronger tenant focus on flexible lease terms and conditions has fuelled the demand for serviced offices in so-called office hotels. Short minimum contract periods and better up- and downscaling possibilities are among the main factors that attract businesses to office hotels. Similarly, office hotels offer the possibility of reducing workplace area requirements as common facilities such as reception services, conference rooms, staff dining room, etc. are shared with other tenants. Although the rent levels in serviced offices may seem high, in particular small businesses and startups find office hotels appealing because they incur lower overhead costs, all other things being equal. So far, the Copenhagen market for office hotels is relatively small compared to the more mature markets of e.g. London and New York, where office hotels command a market share of 3-5%. However, we have seen an increase both in the number of office hotels and office hotel users in Copenhagen; a trend that we expect to continue, driven by multiple variables. Small businesses are increasingly setting up shop in office hotels as the focus on flexibility and the ease of up- and downscaling premises to suit area requirements and control rental cost are becoming key parameters. The generally low Copenhagen office rent levels relative to those of comparable major cities have so far served to slow the growth in the Copenhagen market for office hotels, as businesses generally have a stronger incentive to limit area requirements when office rents are high. So far, high rents have therefore not been a key driver of the demand for office hotels in Copenhagen. However, if Copenhagen office rents start to climb we would not be surprised to see the office hotel market gain an increasing market share.

Despite strong growth, serviced offices continue to account for a small share of Copenhagen office stock.

1.6%

Serviced offices

Note: Share of serviced offices in terms of total Copenhagen office stock. Based on data compiled in Q2 2017.

Total office stock