Occupier Services
C APABILITY STATEMENT
AN INTRODUCTION TO CUSHMAN & WAKEFIELD GLOBALLY
DENMARK
OCCUPIER SERVICES
Cushman & Wakefield offers advice and creative real estate solutions to investors, landlords, property developers and tenants worldwide.
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 dedicated Occupier Services Team at Cushman & Wakefield | RED in Denmark brings ‘best in class’ specialised occupier expertise to international corporates.
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.
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.
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.
The business in Denmark provide the following service lines: • Occupier Services • Capital Markets • Valuation & Advisory • Research • Office Agency
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Y(OUR) TEAM 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.
Allan Ulrich Bjørnsholm Senior Adviser
Marie Helms Associate Partner
Mobile: +45 29 72 72 84 aub@cw-red.dk
Mobile: +45 25 78 28 31 mhe@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.
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.
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COPENHAGEN OFFICE MARKET OVERVIEW Increasing spread between the yield on office properties in Copenhagen and in the surrounding municipalities 90% of the capital is chasing 10% of properties In 2020 investors showed a strong appetite for office properties and therefore we again experienced record-low yield levels. The downside is that 90% of the capital is chasing the same properties in Copenhagen and to some extent in the two or three next-largest cities, while interest in office properties outside the biggest cities is limited. Consequently, we experienced a historically wide gap between prices for offices in central Copenhagen and those
with a less prime location in 2020. While office properties in central Copenhagen were traded at prices in excess of DKK 50,000 per m², an office property located just 15 km from central Copenhagen was more difficult to sell and was offered at DKK 5-10,000 per m². Thus, the price level in central Copenhagen was 5-10 times as high.
Copenhagen now are acquired at lower initial yields than residential properties. However, the rationale behind this development can be questioned as the costs of vacancy, re-letting and conversion to new tenants in offices are significantly higher than for residential properties.
Historically low yields Followed by an increasing interest from foreign investors, we have experienced a significant decrease in the yield levels for prime office properties in Copenhagen from approx. 4.50% in 2015 to 3.5% in 2020. In the same period the yield on prime residential properties has also decreased, although to a lesser degree, why prime office properties in
Office Vacancy rates
Source: C&W | RED
Vacancy rate Copenhagen City
Vacancy rate Copenhagen Area
Vacancy rate Region Hovedstaden
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COPENHAGEN OFFICE MARKET OVERVIEW Expectation of increasing rent levels
Limited speculative construction
The low initial yields on office properties in Copenhagen CBD and the wide gap between selling prices in Copenhagen and in surrounding municipalities should be viewed in the context of the trend seen in Copenhagen in recent decades. Copenhagen CBD has gradually become fully developed, and the expansion in the supply of office space is now happening in a 5-6-kilometre radius around central Copenhagen, for example in Ørestad, Nordhavnen, Godsbanearealet, and Sydhavnen. As a consequence it is expected that rent levels in CBD over the next 5-10 years will increase more (in percentage terms) than the offices located in the surrounding municipalities and in those areas where large volumes of new construction can still be added. This means that although investors today are buying prime office properties at low yields, it is anticipated that their investments will generate reasonable total yields over the investment period given the expectation of increasing rent levels in CBD.
Despite a year dominated by covid-19, the office market has been particularly resilient, with a limited increase in the vacancy rates. The end of an economic upturn, where vacancy rates are low and rent levels are high, has often led to much speculative construction, which consequently has a negative impact on the market. In Copenhagen, nine wholly or partially speculative construction projects have so far been launched with combined floor space of 260,000 m² of which approx. 56% has been pre-let. The office market will thus not be flooded with office properties in 2021, and we anticipate that office leases in Copenhagen will do well in 2021 despite an expectation of rising vacancy rates.
Subarea
Base rent (DKK)*
CBD – City center & Christianshavn
1,950
Kalvebod Brygge
1,700
North Harbour & Amerika Plads
1,950
Frederiksberg
1,450
Copenhagen E
1,500
Copenhagen W & Carlsberg Byen
1,600
Copenhagen N
1,300
Copenhagen NW
1,200
Islands Brygge
1,450
Ørestad
1,500
South Harbour
1,300
Valby
1,350
Amager East & Copenhagen Airport
1,425
Tuborg Harbour
1,700
Kongens Lyngby
1,450
Ring 3
1,100
* Excl. service charges
Source: C&W | RED
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OVERSKRIFT MED HIGHLIGHTED ORD Copenhagen City
Copenhagen Area
Region Hovedstaden
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CASE STUDIES
Huawei
Oracle
Embassy of Sweden
Lease acquisition of 1.300 sq m office in Copenhagen
Lease acquisition, 1.800 sq m office in Hellerup
Lease acquisition of 700 sq m office in central Copenhagen
Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. Huawei’s sublease expired, and Huawei needed to find a new office in Copenhagen. The project timeline was very tight, and Huawei asked RED to lead the process of finding a new office and negotiate a new lease contract. In addition RED provided extensive data for Huawei’s internal approvals as well as coordinated all the project stakeholders, internal and external.
Oracle is one of world’s leading tech companies.
RED managed to secure Huawei their favorite lease, optimized the lease terms and executed the project within the challenging timeframe.
The rent for Oracle’s current lease was significantly above the market rent and the building had challenges with the indoor climate which had a negative effect on the employees’ wellbeing. The landlord did not want to discuss the rent or remedy the problems with the indoor climate. Oracle asked RED to assist with the search for a new lease. RED searched the market and negotiated lease terms that supported the future business strategy. The solution in a modern and flexible multi-user property was ideal for Oracle’s focus on recruitment and employee well-being.
The embassy of Sweden was residing in an office domicile property which was becoming too large for their purpose. The embassy wished to stay in the same area, but after having been actively searching the market for more than a year the Swedish embassy asked Cushman & Wakefield I RED for assistance. Through our extensive network RED found a perfect off market lease very close to the embassy’s current location. RED coordinated all the advisers and stakeholders and undertook the negotiation of the contract, successfully securing the embassy new premises which matched all their needs and wishes for a future office.
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CASE STUDIES
AGA
G4S
Lease acquisition and negotiation of 1.700 sq m office and warehouse Ballerup
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.
Facebook needed warehouse capacity to facilitate a newly established data center in Odense.
G4S has for many years occupied an older domicile property, which 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 regulations passed the market rent and is too high. G4S asked RED to renegotiate the contract terms despite another 3 years left of the non-termination / non-renegotiation period.
AGA is part of Linde AG, market leader in the production of industrial gasses. The urban development and AGA’s strategy of no longer owning properties led to a need to sell AGA’s property on Vermlandsgade on Amager. AGA approached RED with a request for assistance with an overall optimization of the real estate strategy. In a process under considerable time pressure, RED helped with both the sale of the property on Vermlandsgade, the search for the alternative lease market and the negotiation of new lease on flexible terms within AGA’s deadline.
RED searched the market for options. For logistical reasons Facebook’s favorite option was a property of the highest quality on the same road as the data center. However, the property did not have the required vacant space. RED negotiated, under considerable time pressure, that the landlord moved his own business from the property to free up the required space. Facebook could thus take over the ideal lease on a date that was crucial to the business strategy.
RED conducted a thorough analysis of the local market and renegotiated the lease contract, achieving massive savings for G4S over the coming lease period.
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CASE STUDIES
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 basic 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 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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DANISH LEASEHOLD MARKET PRACTICE Landlord and tenant responsibilities Structural repairs
Landlord
Internal repairs
Tenant
Landlord insures and recovers cost from tenant
Yes
Occupier transaction costs Transfer tax
None
Legal fees
By agreement
Ongoing taxation liabilities of tenant related to occupancy Local tax (% of annual rent)
Property tax (varies between locations)
VAT/GST (% of annual rent)
25%
Purchaser transaction 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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Amaliegade 3, 5th floor, 1256 København K T: +45 33 13 13 99