Cushman & Wakefield | RED Occupier Services Denmark
AN INTRODUCTION TO CUSHMAN & WAKEFIELD GLOBALLY
Cushman & Wakefield offers advice and creative real estate solutions to investors, landlords, property developers and tenants worldwide.
Following the recent completion of the merger between DTZ and Cushman & Wakefield, we stand stronger than ever as a global leader in commercial real estate services. With the total number of employees exceeding 51,000 in more than 400 offices across 71 countries, we are one of the world’s largest real estate consulting companies. Our global strength and local expertise enable us to advise on diverse and complex projects across a broad range of real estate services. Our people and culture deliver optimal solutions and outcomes for our clients every day.
DENMARK
Cushman & Wakefield | RED has long been one of the leading firms in real estate advisory in Denmark. Our 35 employees are able to provide national coverage of all key markets.
The Cushman & Wakefield business in Denmark has been established since 2004 and was thereby one of the first international real estate players to enter Denmark. The business in Denmark provide the following service lines:
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Occupier Services Capital Markets Valuation & Advisory Research Office Agency
OCCUPIER SERVICES
The dedicated Occupier Services Team at Cushman & Wakefield | RED in Denmark brings ‘best in class’ specialised occupier expertise to international corporates.
Occupier Services provides strategic advice and operational support to tenants across all occupier related real estate services. We work closely with Cushman & Wakefield Global Occupier Services on numerous accounts and projects, enabling us to add global knowledge and experience to our ‘best in class’ local expertise.
Over-all winner of Euromoney Real Estate Award in 2016, 2017 and 2019. For the third time Cushman & Wakefield | RED has won all four Euromoney Awards - best in:
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Overall Research Property valuation Agency - letting/sales
Y(OUR) TEAM
Marie Helms Associate Partner Mobile: +45 25 78 28 31 mhe@cw-red.dk
Marie is heading the Occupier Services team in Denmark. Marie is a Chartered Estate Agent and Valuer, MRICS, and has been active as an adviser in the commercial real estate sector since 2008. Acting on behalf of both landlords and occupiers has given her an in depth knowledge of the Danish commercial property market. Marie has recently assisted G4S, The Embassy of Sweden, Signify and Huawei.
Allan Ulrich Bjørnsholm Senior Adviser Mobile: +45 29 72 72 84 aub@cw-red.dk
Allan Ulrich Bjørnsholm is a senior project manager in the Occupier Services team. Allan holds a master degree in law has more than 10 years of experience in the real estate sector, many of these as attorney at law. He has expert knowledge into the Danish lease legislation and can advise clients in very complex real estate and lease projects. Allan has recently assisted Oracle, Facebook, AGA and AIG.
Our Occupier Services team is specialized in assisting and advising Danish and international corporate clients with planning and execution of their real estate strategy in order to align it with the core business strategy. They represent clients in relocating, (re-) negotiating, subletting, sale and purchase and legal and/or financial evaluation of current or future leases.
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COPENHAGEN OFFICE MARKET OVERVIEW
Strong demand and increasing requirements for office space. The very positive business cycle development in recent years has lead to an increase in production and employment, which manifests itself in a strong demand for office space. The strong demand is reflected in the vacancy rates, which according to Ejendomstorvet make up 6.6% for Copenhagen and 11.6% for Greater Copenhagen as of October 2019. However, real vacancy rates are estimated to be lower, with a large proportion of the current vacancy areas being old, outdated properties, while newer and modern properties are vacant for significantly shorter periods.
Space and lease term flexibility is in demand Tenants are increasingly aware of the need for flexible solutions in relation to their office space. This is clearly seen in the market where demand for lease size flexibility and short periods of non-termination have lead to increasing demand for scalable leases in multi-tenant properties and co-working solutions.
District, Christianshavn, Nordhavn, Ă˜restad and Tuborg Havn are in demand. As one of the few areas outside Copenhagen, Kgs. Lyngby is also a popular area due to good infrastructural accessibility and supply of modern properties.
Limited supply will lead to rent increases in the short term Increasing demand for centrally located office space, coupled with a limited amount of speculative new construction, has resulted in rising rental levels in both primary and secondary locations. The market rent for prime offices has increased by approx. 10% since end-2015 and now sits at approx. DKK 1,900 per sq m excl. operating costs. For secondary offices, the market rent is in the range of DKK 1,100 - 1,500 per sq m excl. operating costs. P R I M E R E N T D K K /S Q M
Emerging demand for cognitive buildings
SUBAREA
Companies are increasingly demanding buildings with smart solutions. Using BIG data, the cognitive buildings of the future will help companies and their employees with everything from environmental improvements to brewing coffee. Cognitive buildings are still in the development stage and properties such as The Edge in Amsterdam are considered as pioneering projects. Thus, the cognitive building era is still a few years in the future, but there is no doubt that it will come.
The office as employer brand Increasing employment and strong economic growth mean that companies at a strategic level attempt to optimise their ability to attract and retain talented employees through location and quality of the physical environment for the workplace. Primary demand for office space is centred around the CBD and inner Copenhagen, but also areas such as Carlsberg City
2019 Q3
Copenhagen City (CBD)
1,850
Copenhagen E & W
1,500
Frederiksberg
1,450
Harbour areas
1,900
South Harbour
1,300
Ă˜restad
1,500
Copenhagen N & NW
1,300
South & West of Copenhagen
1,000
North of Copenhagen
1,300
*Base rents ex. Service charges Source: Statistics Denmark and C&W | RED
VACANCY RATES AND CONSUMER CONFIDENCE Retail vacancy rates compared to consumer confidence in Copenhagen 12,00% 10,00% 8,00% 6,00% 4,00% 2,00%
Vacancy rate Copenhagen City
Source: Statistics Denmark & Ejendomstorvet.dk
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Vacancy rate Copenhagen Area
Unemployment Copenhagen Area
2019 Q3
2019 Q2
2019 Q1
2018 Q4
2018 Q3
2018 Q2
2018 Q1
2017 Q4
2017 Q3
2017 Q2
2017 Q1
2016 Q4
2016 Q3
2016 Q2
2016 Q1
2015 Q4
2015 Q3
2015 Q2
2015 Q1
2014 Q4
2014 Q3
2014 Q2
2014 Q1
2013 Q4
2013 Q3
2013 Q2
2013 Q1
2012 Q4
2012 Q3
2012 Q2
0,00%
NORTH HARBOR
CPH E
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CPH N
CBD
CPH W
BR YG G
EN
FREDERIKSBERG
AMAGER STRAND
VALBY
SOUTH HARBOR
ØRESTAD
HVIDOVRE
AMAGER
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AIRPORT
1. CENTRAL COPENHAGEN 2. GREATER COPENHAGEN 3. CENTRAL COPENHAGEN SUBAREAS
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INNER CITY
CASE STUDIES
HUAWEI
ORACLE
Lease acquisition of 1.300 sq m office in Copenhagen
Lease acquisition, 1.800 sq m office in Hellerup Oracle is one of world’s leading tech companies.
Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices.
The rent for Oracle’s current lease was significantly above the market rent and the building had challenges with the indoor climate which
Huawei’s sublease expired, and Huawei needed to find a new office in
had a negative effect on the employees’ wellbeing. The landlord did
Copenhagen. The project timeline was very tight, and Huawei asked
not want to discuss the rent or remedy the problems with the indoor
RED to lead the process of finding a new office and negotiate a new
climate.
lease contract. In addition RED provided extensive data for Huawei’s internal approvals as well as coordinated all the project stakeholders,
Oracle asked RED to assist with the search for a new lease. RED
internal and external.
searched the market and negotiated lease terms that supported the future business strategy. The solution in a modern and flexible
RED managed to secure Huawei their favorite lease, optimized
multi-user property was ideal for Oracle’s focus on recruitment and
the lease terms and executed the project within the challenging
employee well-being.
timeframe.
EMBASSY OF SWEDEN
AGA
Lease acquisition of 700 sq m office in central Copenhagen
Lease acquisition and negotiation of 1.700 sq m office and warehouse Ballerup
The embassy of Sweden was residing in an office domicile property
AGA is part of Linde AG, market leader in the production of industrial
which was becoming too large for their purpose. The embassy wished
gasses.
to stay in the same area, but after having been actively searching the market for more than a year the Swedish embassy asked Cushman &
The urban development and AGA’s strategy of no longer owning
Wakefield I RED for assistance.
properties led to a need to sell AGA’s property on Vermlandsgade on Amager. AGA approached RED with a request for assistance with an
Through our extensive network RED found a perfect off market lease
overall optimization of the real estate strategy.
very close to the embassy’s current location. RED coordinated all the advisers and stakeholders and undertook the negotiation of the
In a process under considerable time pressure, RED helped with
contract, successfully securing the embassy new premises which
both the sale of the property on Vermlandsgade, the search for the
matched all their needs and wishes for a future office.
alternative lease market and the negotiation of new lease on flexible terms within AGA’s deadline.
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G4S
Lease acquisition, 4,500 sq m warehouse in Odense
Renegotiation of 8.600 sq m office in Albertslund
Facebook is the world’s largest online social media site.
G4S is a global market leader within the security sector. years
Facebook needed warehouse capacity to facilitate a newly
G4S has for many years occupied an older domicile property, which
established data center in Odense.
some years back was updated to suit G4S’ needs. G4S wish to remain in the building, however the passing rent has now due to annual
RED searched the market for options. For logistical reasons
regulations passed the market rent and is too high. G4S asked RED
Facebook’s favorite option was a property of the highest quality on
to renegotiate the contract terms despite another 3 years left of the
the same road as the data center. However, the property did not have
non-termination / non-renegotiation period.
the required vacant space. RED negotiated, under considerable time pressure, that the landlord moved his own business from the property
RED conducted a thorough analysis of the local market and
to free up the required space. Facebook could thus take over the
renegotiated the lease contract, achieving massive savings for G4S
ideal lease on a date that was crucial to the business strategy.
over the coming lease period.
SELECTION OF CORPORATE CLIENTS
SIGNIFY
Lease acquisition of 1.300 sq m office in Copenhagen Signify is a world leader in connected LED lighting systems, software and services. Following a line of global organizational initiatives Signify decided to move their Copenhagen headquarters to a new and more modern location. Signify asked RED to complete a market search for a new office lease and negotiate a new lease contract, along with leading and coordinating the process and the stakeholders involved. Based on RED’s thorough analysis of the options, Signify was able to choose the best lease. RED ensured a stable process and lease terms which match Signify’s future strategy.
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DANISH LEASEHOLD MARKET PRACTICE
LEASE STRUCTURE THE BASICS
Standard lease document
Partly, app. 80% of leasedoc. is standard
Standard space delivery conditions
Fully fitted
Standard fit-out costs (local currency)
DKK 3,000-6,000 per sq m
Rent guarantee period
6 months
Typical lease length
3-5 years, after that until either party terminates with 6-12 months notice
Statutory right to renew the lease
No, however leases automatically roll on after initial period
INCENTIVES
Other incentives
Stepped rents and enhanced fit-out may be negotiated depending on lease length
RENTS
Rent payable every
Quarter
Basis of measurement
Gross external area
Unit of measurement
DKK per sq m per year
Inclusions
None
Exclusions
Service charge, utilities, parking, taxes
Frequency of rent reviews
Usually every four years unless otherwise agreed
Frequency and basis of indexation of rent
Annual (based on CPI, some leases may be subject to minimum increases)
LEASE DISPOSAL
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Subletting/assignment rights
Subject to landlord’s consent
Reinstatement to original condition on termination
Yes, removal of tenant’s fixtures and fittings is required
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LANDLORD AND T EN A N T R ESP ON SI BI L I T I E S Structural repairs
Landlord
Internal repairs
Tenant
Landlord insures and recovers cost from tenant
Yes
OCCUP IER TRA N SACT I ON COSTS Transfer tax
None
Legal fees
By agreement
ONGOIN G TAXAT I ON L I A BI L I T I ES OF T ENA N T R E LATE D TO O CC U PA N CY Local tax (% of annual rent)
Property tax (varies between locations)
VAT/GST (% of annual rent)
25%
P URCHASER TRA N SACT I ON COSTS RESTRICTION ON OWNERSHIP OF PROPERTY BY FOREIGNERS
Yes, permission from the Danish Ministry of Justice is needed for purchasers outside the EU PURCHASER TRANSACTION COSTS
Transfer tax
DKK 1,400 (registry) + 0.6% of the sale or the public tax valuation (whichever is higher)
VAT/GST
25% (for new buildings)
Legal fees
By agreement
VAT on transaction fees
25%
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Marie Helms Associate Partner Mobile: +45 25 78 28 31 mhe@cw-red.dk
Allan Bjørnsholm Senior Adviser Mobile: +45 29 72 72 84 aub@cw-red.dk
www.cushmanwakefield.com
