Market Report 2022

Colliers Market Report 2022

95

Hotel Industri & logistik Detail Bolig Kontor I ial/logistics R Residential Of f ice

Light production/workshops leaving major cities Brownfield development is profitable mainly along major arte rial and ring roads around major Danish towns and cities. Here, the supply of both prime and secondary industrial and logistics facilities has been greatly reduced in recent years. The same applies to potential development sites, which may be described as virtually non-existent, especially around Copenhagen and Aarhus. The reason is that several municipalities continue to convert old industrial areas into office areas or residential neighbourhoods. The trend started years ago when the market for industrial and logistics facilities was altogether different. Back then, the num ber of vacancies was high, and in response, many municipalities initiated new local planning for dated commercial areas with the aim of increasing the supply of residential and office space to accommodate mounting demand in these segments. Although the demand for industrial and logistics facilities is at an all-time high, the conversion trend shows no sign of abating, quite the contrary. Residential districts often mean increased activity and more taxpayers, perceived as an attractive oppor tunity for several municipalities given the current demographic trends, with mainly Copenhagen suburbs experiencing a net inflow of inhabitants. In these locations, the effect is amplified also by the coming Greater Copenhagen Light Rail, better cater ing to the increased transport requirements of new office and residential areas.

This way of prioritising has consequences: Former commercial tenants of old-stock storage facilities, with demands that dif fer from those of major logistics firms, are potentially left with no premises to operate from. Many of these tenants are an integral part of the business communities in major Danish cit ies, rendering services to the local area, e.g., mechanics, skilled craftsmen, and small-sized manufacturers. The development has boosted tenant demand for units for workshops and light production in the 200-1,000 sq m range in proximity of the largest cities. In this respect, brownfield development could also be a relevant option for properties and areas that cannot be repurposed. Property owners in the areas in question are therefore advised to seriously consider this opportunity these years. Massive foreign investor demand The massive demand for industrial and logistics facilities is not confined to the rental market: Over the past five years, the investment market for industrial and logistics facilities is the Danish segment to have seen the by far largest relative growth in the ranks of active investors as well as the highest price hikes. Mainly foreign investors have zoomed in on Denmark in recent years where they predominate in the market for prime located logistics facilities let to a single or few tenants on long lease agreements. Foreign investors have been active in the tradi tional areas in the Triangle Region and around Copenhagen. For

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