Occupier Services Denmark

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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

3

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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FACEBOOK

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