Odense__Locations_Online_MR19

Location descriptions Odense

Published by Colliers International. Reproduction or citation only with acknowledgement of source.

This is an online addition to The Copenhagen Market Report 2019, based on market data that we believe are reliable. Please note that the rental prices quoted may reflect data incon- sistencies compared to the respective pre-merger (July 2018) databases of Colliers International and/or Sadolin & Albæk. Whilst every effort has been made to ensure that the infor- mation provided in the report is both accurate and complete, Colliers accepts no liability for factual errors.

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Location descriptions | Odense – Market Report 2019

In brief Odense property market Introduction Odense has experienced sustained population growth for more than a decade. Since 2010, the population has increased from around 189,000 to some 202,500, corre- sponding to a population growth of 7.2%, exceeding the national growth rate by 2.7 percentage points. According to Statistics Denmark, the population growth is expected to continue, albeit at a slower pace. By 2040, Odense is predicted to house some 19,000 additional residents, corresponding to a population growth of 9.2%, with a rising share of young families and elderly people. This prediction underlines two general demographic trends: An increasing number of young families are opting to stay in the city instead of moving to the suburbs as was previously the norm. Similarly, but at the other end of the age spectrum, an increasing number of elderly people have a strong preference for central living with easy access to public transportation. Typically selling their single-family houses or villas in the suburbs to move to rental accommodation in the central city districts, today’s elderly mostly enjoy good health and have a strong appetite for the city’s cultural offerings.

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Office

Prime office premises in Odense are concentrated around the harbour area and the city centre, where a number of offices are found. The city centre offers only a modest number of large prime office properties and few major office workplaces. At the harbour, the primary office employers include Deloitte, Alectia, EY, Codan, Willis Towers Watson, Rambøll and Nørgård Mikkelsen. Offering office premises that meet today’s tenant requirements, this location still harbours development potential, and we expect to see further office newbuilding. However, developers have been cautious when it comes to new office starts in Odense. This does not apply to residential construc- tion, with several development schemes in the pipeline for the Odense harbour area. Altogether, they will help to make the area a vibrant and attractive location. Another district which is currently undergoing development into a future high-quality office location is Cortex Park. A superhospital is scheduled to open in 2022, and the area is located right next to the University of Southern Denmark. As such, it is expected to attract knowledge-intensive businesses in the technology, research and innovation cluster that will find it easy to recruit from the resident pool of university students. Fully devel- oped, the 200,000 sqm area is will be transformed into a dynamic new neighbourhood with a total of 60,000 students, academics, residents and employees. Prime office space in the harbour areas are currently believed to command rents of some DKK 1,200 per sqm p.a., excluding taxes and operating costs. Central Odense office rents have been stable around DKK 600 - 800 per sqm p.a., excluding taxes and operating costs. Due to the current large oversupply of secondary office space, concessions are generally made for new leases.

OFFICE

Change

Market Expectations

Typical rent levels

2016 1,050

2017 1,100

2018 1,100

2019 1,200

2018-19 2019

9% 0%

Prime

Odense

700

750

750

750

Secondary

Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International

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Location descriptions | Odense – Market Report 2019

Residential

In Odense, the residential building stock is characterised by a diversified mix of detached houses, multi-family properties and terraced houses, accounting for some 45%, 32% and 21%, respectively, of the total building stock. Further, approximately 58% of the residen- tial units are rented, primarily driven by the multi-family properties and terraced houses where the ownership ratio is just 8% and 36%, respectively. For the detached houses, which are generally located outside of the city centre, the ownership ratio is 92%. The significant population growth has naturally increased demand for housing in Odense. Based on the current per capita residential area usage in Odense of 48.6 sqm, the popu- lation growth since 2010 corresponds to an additional housing demand of some 726,000 sqm. Looking at the predicted population growth, another million sqm will be needed by 2045 to house the around 20,550 expected additional residents. On the supply side, the construction of residential properties in Odense is gaining momentum in response to the surge in demand. Following years of relatively low construction activity, an estimated 108,000 residential sqm was completed in 2018. With an estimated 80,000 sqm under construction in 2018, residential construction activity is expected to remain high in the coming years, albeit at a lower level as the volume of initi- ated projects seems to have tapered off slightly. Comparing supply and demand, residential construction activity since 2010 has not been sufficient to meet the additional housing demand, resulting in an estimated pent-up demand in 2019 of some 95,000 sqm. However, with the completion of new residen- tial properties in 2016, 2017 and 2018 surpassing the marginal housing demand, recent years’ accumulated housing shortage seems to be coming to an end. Odense Harbour A masterplan earmarks Odense Harbour as a high priority development area in Odense, allowing for the construction of some 2,500 new residential units over the next 10-20 years, which will benefit from an attractive waterfront location and proximity to recrea- tional areas such as Åløkke Forest. Vollsmose Vollsmose is a neighbourhood north east of Odense, approximately 3 kilometres from the city centre. The neighbourhood has approximately ten thousand residents, with a large number of households with children. The building stock is currently characterised by Odense has the following five main residential development areas:

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consisting almost exclusively of social housing. The planned transformation of Vollsmose will split the area into smaller neighbourhoods and reduce the proportion of social housing from the current 98% to a maximum of 40%. Additionally, public infrastructure with the light rail system will improve access to the rest of the city. Gartnerbyen Gartnerbyen is located approximately one kilometer west of the city centre on the grounds of the previous GASA fruit, flower and vegetable market. The development plans are based on the past function, featuring and incorporating green roads, parks and living areas. When fully developed, the neighbourhood will form an attractive and dynamic mixed-use area with approximately 140,000 sqm new development. In addition to rental and owner-occupied housing, the area will include a hotel, health clinic and supermarkets and other commercial buildings. Østerlunden at Østerbro Østerlunden is centrally located one kilometre east of the city centre by Østerbro and Lollandsgade. Letting of stage one with 240 flats will commence in spring 2019, and the area is expected to be fully developed by 2020 with approximately 400 units and 1,000 residents. In addition to flats and terraced houses, the area will have common recrea- tional areas. The area used to be home to a COOP warehouse and is being developed by Topdanmark Ejendomme. Dalum Papirfabrik Dalum Papirfabrik (Dalum Paper Mill) is located approximately five kilometres south of the city centre and approximately three kilometres west of the future superhospital. As the name suggests, the area used to house a large paper mill, which closed at the end of 2012. MT Højgaard plans to build a new neighbourhood consisting of two-storey terraced houses and four-storey flats. In total, approximately 450 units are expected, in addition to a supermarket and a culture centre. A recreational area by the Odense river will provide access to nature.

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Location descriptions | Odense – Market Report 2019

Retail

The Odense retail property market is divided into two sub-markets: the pedestrian shop- ping street area in the city centre and the south-east shopping area surrounding the Rosengårdcentret shopping centre. The latter is highly successful and sees increasing footfall, but the city centre remains challenged by increased online shopping. Top high- street locations are thriving and attracting strong occupational demand. However, the most highly coveted stretch of the high street seems to be shrinking, and today most activity centres on Vestergade and the southern end of Kongensgade. The best retail premises command rents of DKK 5,500 per sqm p.a., excluding taxes and operating costs. Although this top rent has remained constant in recent years, it now applies to a smaller number of shops than before. Secondary rents have increased to around DKK 1,700 per sqm p.a., excluding taxes and operating costs. However, at Kongensgade it is possible to find shops to let at rents as low as DKK 1,200 per sqm p.a. Like other major Danish cities, Odense has seen significant growth in the F&B (food and beverage) segment. New cafés, take-away food and restaurants have been able to absorb a substantial amount of vacant retail space, as consumer trends shift from consumption of goods towards consumption of experiences. Despite this, the retail segment is chal- lenged by increased online shopping. The northern end of Kongensgade was expected to be revitalised in conjunction with the scheduled completion of the shopping centre VIVA by Steen & Strøm in 2015. However, the construction has been delayed, and it is uncertain when construction will start, and what it will entail. Originally, the centre was expected to comprise 42,000 sqm, distrib- uted on more than 100 units. If built, it can be expected that VIVA will put additional pres- sure on the shops in the city centre, despite increasing total footfall in the area.

RETAIL

Change

Market Expectations

Typical rent levels

2016 5,500 2,500

2017 5,400 2,500

2018 5,300 2,500

2019 5,300 2,400

2018-19 2019

0%

Prime

Odense

-4%

Secondary

Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International

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Industrial & logistics In Odense, prime industrial locations are concentrated around the district of Tietgenbyen south-east of the city. This district was developed in 1999 by the City of Odense in response to the then mounting demand for industrial and logistics sites. Given its direct access to the E20, the area is ideally located and has attracted several major companies, including Davidsen Tømmerhandel, Kjær & Sommerfeldt and Danske Fragtmænd. Last but not least, the area will also be home to the 55,000 sqm Facebook data centre, which is expected to be completed in 2020. Moving further west along the E20 to Hjallese and Hestehaven, the former location of Roulunds Fabrikker, there is an industrial and logistics cluster where the COOP non-food distribution centre is the largest facility. Finally, there is an industrial cluster south-west of Odense by Højme, home to several warehouse facil- ities, including GASA, DLF and Micro Matic. Against the backdrop of consumer trends changing towards online shopping, prolonged economic growth and declining overall vacancy rates in the industrial/logistics segment, the segment is flourishing. Despite this, we do not expect an increase in the prime industrial rent, which is estimated to remain stable at a level of DKK 375 per sqm p.a., excluding taxes and operating costs. By comparison, the rent level in secondary proper- ties has increased, now estimated at DKK 250 per sqm p.a. According to ICP, Rosengårdcentret posted a turnover of approximately DKK 2.2 bn in 2017, making it the fourth-largest shopping centre in Denmark in terms of sales. Together with a number of other shops at this location, including home furnishings store IKEA and a Bilka hypermarket, this very successful shopping centre is drawing substantial customer flow to the area from Funen and parts of southern Jutland, an extensive catch- ment area.

INDUSTRIAL/LOGISTICS*

Change

Market Expectations

Typical rent levels

2016

2017

2018

2019

2018-19 2019

325 225

350 225

375 250

375 250

0% 0%

Prime

Odense

Secondary

1 Industrial includes production, storage and logistics facilities. Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International