Sustainability is playing an role for several property actors

Sustainability has become a permanent part of the property industry for both investors and companies, and it will play an even more significant role in the future. This is illustrated in EDC Poul Erik Bech’s Expectation Survey 2023, conducted for the eighth year in a row. This year, more than 1,700 decision-makers have responded with their expectations for the commercial property market in 2023.

EDC Poul Erik Bech conducted an expectation survey for 2023 which, with responses from over 1,700 decision-makers, is the largest market survey on commercial real estate in Denmark. The participants represent all types and sizes of investors and companies. Responses from all parts of the country reflect EDC Poul Erik Bech’s position as a nationwide brokerage company with 19 business centers.

In recent years, the expectation survey has included more questions about sustainability, which has become part of the daily life of several investors and companies. With the increased focus on sustainability, green investments, and even national strategies for sustainable construction, it looks like a category that property actors should deal with both now and in the future. Frank Jensen, Director and Partner, EDC Poul Erik Bech Aalborg, says:

“Sustainability is essential for pension funds, and for them, it is a prerequisite that a new property is certified as sustainable. It is also becoming more essential for other larger investors but not so much for smaller investors. But it will. It spreads like ripples in water; for example, new EU rules signify that financial companies must account for their loans based on sustainability and carbon footprint criteria.”

Green progress

The Expectation Survey shows that there is a green transition to be found among investors and companies. Joseph Alberti, Head of Research, EDC Poul Erik Bech, says:

“More than half of the respondents have answered that sustainability plays a role in their current investment strategy. 28% answered that sustainability plays a role for both economic and ideological reasons, which was 21% the year before. 31% answered that sustainability plays a role either because it makes economic sense or for ideological reasons.”

He continues: “The trend is towards a greener mindset among investors and companies. 34% of the respondents have already optimized the energy of one or more of their properties, which is an increase of 6 percentage points compared to the previous year.”

Despite some uncertainty in the market, there is still a willingness to pay more for a property if it is sustainable. Joseph Alberti says: “Almost 6 out of 10 are willing to pay more for a sustainable property if the location, condition, and cash flow are the same. This is an increase of 12 percentage points from last year’s survey, where 46% were willing to pay more. However, almost one out of four individuals indicate they are still unwilling to pay more for sustainable property, as they do not believe sustainability should impact the price. This could indicate that more people think sustainability is a prerequisite and not something you should pay extra for.”

“There is also an expectation that tenants are willing to pay more for sustainable leases in the future. At least half of those surveyed believe that tenants are willing to pay more for sustainable leases in the future. In particular, it is expected that new leases will be more sustainable, and existing leases will become more sustainable over time.”

Are you considering selling your commercial property?

As a property owner, you may have considered whether the time is right to sell. If you are thinking of selling, but are worried about the more uncertain market? We have the solution!

Now you can freely follow the interest in your property. Without sale, contract, and obligations.

With “Send-min-køber”, you will be notified every time we have potential buyers in our directory that match your property. You are, of course, anonymous to a potential buyer and choose for yourself whether you want to make contact. Quite simple.

You can also register at www.sendminkøber.com

It has become increasingly difficult to rent out large office buildings to just one company. With many small and medium-sized businesses in Denmark, the trend is that more and more large office spaces are converted into multi-user office buildings with shared facilities. They are easier to rent out. A 6,000 sqm office building in Roskilde, owned by the pension company PenSam, has been energy-renovated and designed ideally as a multi-user office building with up to 12 leases. EDC Poul Erik Bech is responsible for the rentals.

A multi-user office building at Ringstedvej 16-28 in Roskilde has been energy-renovated into a healthy office building with a better energy class, and soon also the sustainability designation ‘DGNB BIU-Gold’. The property contains up to 12 modern leases for rent on three floors. Jacob Østergaard Skyum, Senior Asset Manager at PenSam, says:

“It has previously been a headquarter property, but when the latest headquarter tenant, Orbicon, vacated, we explored different possibilities for sales, conversion to residential, or conversion to a multi-user office building. Ultimately, we chose to convert it into a multi-user office building because renting out smaller units than all 6,000 sqm to one company is easier. It is often obvious, but it was obvious here because it was a plug & play solution, due to the property’s three separate entrances. This implies that companies feel that their customers and partners visit their company exclusively, and the rentals have also been shown to have gone really well.”

“We have energy-renovated the property with new cooling/ventilation, energy controlling measures and removed a large part of the existing interior. When a new tenant arrives, we will closely discuss interior design wishes. This means that we have attracted many strong tenants, with several of them on 10-year lease agreements, and for us, it is important to have good, long-term collaborative relationships. We have invested significant resources in the roperty, but it has gone relatively quickly, so we have rented out almost everything in less than a year. This is satisfying, and even though it is a big investment, the property will give us a good return.”

The seven new tenants are: Kronjylland Savings Bank, plastic surgeons Horn & Gramkow, Children’s House Zealand, office hotel Væxthuset, a specialist dentist, an oral surgeon, and the consultancy firm QV Compliance. There are three remaining leases of 410, 621 and 621 sqm.

Strong sustainability profile

PenSam has a sustainability strategy involving the certification of a large part of their properties and with a declared goal that by the end of 2025, they should have reduced their total CO2 emissions by 50%. Jacob Østergaard Skyum from PenSam says:

“We certify all of our new builds for sustainability, but one thing is new buildings, and another is the existing building stock. A newly built property is built to contemporary and energy-efficient standards. Therefore, there are fewer improvement opportunities to work with, even though the building will have to stand for many years before the overall

CO2 account is settled due to the embedded CO2 from the construction. On the other hand, there are many opportunities to create positive development on existing buildings, and if we are to reverse the trend and reduce the CO2 footprint truly, we must act. We have gone from energy class C to energy class B on the property, and we hope to reach energy class A with further initiatives.”

“We have a strong sustainability profile in PenSam. When we renovate our buildings, we must at least improve the energy class by one. The initiatives on the property have substantially reduced annual CO2 emissions of almost 7 tons here in Roskilde. We have optimized cooling/ventilation, which provides a healthy building with a good indoor climate and introduced energy management measures that reduce consumption. We have also implemented several measures so that the building can achieve the sustainability certification ‘DGNB BIU-Gold,’ which is the certification for existing buildings. We will also soon have charging stations for electric cars in our parking lot. We have gradually put all these things in place, and in fact, we have not even had time to promote the building’s sustainability before the leases were almost filled.”

Multi-user buildings are popular

John Borrisholt, Regional Director of Zealand and partner at EDC Poul Erik Bech Roskilde, has facilitated several of the leases and says: “In addition to energy optimization and sustainability, PenSam’s multi-user office is a good example of a trend we see throughout Denmark. It is more difficult to lease large office spaces to just one company, so we often advice clients to divide the property into several units, as it is easier to attract several small and medium-sized companies that can share office facilities.”

Alexander Wenzel, commercial advisor at EDC Poul Erik Bech Roskilde, adds: “The property is also a good example of the healthy rental market in Roskilde. In general, there is demand for both larger and smaller leases, and the vacancy rate is not very high for office spaces. Out of the total 6,000 sqm, there is now only about 1,600 sqm left, where we are in dialogue with several interested parties.”

Regarding EDC Poul Erik Bech’s role, Jacob Østergaard Skyum, PenSam, says: “When we first decided on a multi-user building, we went all in on strategy and marketing, and it has worked impeccably. There has been an excellent dialogue with John and Alexander from EDC, where we, together with DEAS and our construction consultant, have held briefings every 14 days to give status updates. As an experienced man like John, we naturally expect him to deliver and help find tenants. Still, I would also like to highlight Alexander, who has been proactive, shown great engagement and initiative, and found several tenants, so it has been an outstanding job. I would definitely describe the case as a success story.”

More information