Market Report 2022

Colliers Market Report 2022

35

Hotel Industrial/logistics Retail Residential Of f ice

Vandtårnsvej 83, Søborg

Teglholm Allé 13-15, Copenhagen S

that to some extent already exist but will be the most predomi nant among office tenants in the years ahead. The same mind set has fostered NREP’s Woods concept. Here, the emphasis is not only on how the tenants use the office but also on how to adjust the property to meet the demands that staggered hours schemes entail. As a result, Woods Augusthus, the first building developed to these project specifications, contains a hotel, a restaurant and a supermarket in addition to offices. In the investment market too, the demand for office properties is at an all-time high these years. A combination of grave uncer tainty due to the coronavirus pandemic, low bond yields and substantial placement requirements have made many inves tors zoom in on low-risk properties offering stable cash flows. Although predominantly a driver of the surging demand for residential property, this trend is prevalent in the office market too. Since 2018, net initial yield requirements on properties in Massive investor competition in Copenhagen – location as vital as tenancy situation

Copenhagen CBD and non-CBD locations alike have been drop ping at a rapid pace, with most types of property seeing yields drop by as much as 1 ppt in the period. In Copenhagen, not only properties let on long lease agree ments are today considered secure core or core+ properties. Because of a buoyant letting market and continued limited sup ply, even properties with a relatively high share of vacancies are evaluated based on yield requirements that are approaching those applied to fully let properties, always provided, of course, that the location of the properties is right. Deductions for refur bishment and re-letting are still items that enter into the price valuation, but several investors have lowered their claims for a premium to compensate for the risk associated with successful business plan implementation and lease-up. In January 2021, the central Copenhagen office complex known as “The Square” at Rådhuspladsen 4, etc., sold to AM alpha. More than 70% of the property stood to be vacated later that year, yet the prop erty attracted substantial demand from both domestic and for

Continued downtrend in office net initial yields in Copenhagen

8%

7%

6%

5%

4%

3%

2%

0% 1%

13

14

15

16

17

18

19

20

21

22

Copenhagen CBD, prime

Copenhagen CBD, secondary

Copenhagen non-CBD, prime

Copenhagen non-CBD, secondary

Note: Developments in net initial yields, office, Copenhagen, 2013-2022. Source: Colliers