The Danish Property Federation Market Statistics – vacancy, January 2017
January 2017
WEB REPORT VACANCY
Results • Vacancy decreases fourth quarter in a row • Vacancy adds up to 8.8 billion DKK • Lowest economic vacancy for office in three years in the Capital Region • Lowest retail vacancy since 2009
Investment properties in the spring
economic vacancy has decreased by 1.8 percentage points corresponding to an extra revenue of 1.8 billion DKK.
The economic vacancy is 8.8 percent, which is a decrease of 0.2 percentage points compared to last quarter and 0.8 percentage points compared to last year. This is a fourth-quarter-in-a-row improvement and the vacancy rate is now at the same level as in the beginning of 2011. The economic vacancy was four percent in 2007. Thus, there is room for further decrease, and this can be expected as the Danish economy is in progress. You can say that it is springtime for investment properties and that even lower vacancy rates can be expected in the time to come.
In January 2017, the economic vacancy for office is 11.9 percent. It is a decrease of 0.3 percentage points compared to last quarter and 0.7 percentage points compared to last year. From 2012 to 2016, the economic vacancy has been stable between 11 and 13 percent. Hopefully, the positive trends in Danish economy can change that and contribute to a future decrease in vacancy below 11 percent as in 2011, cf. figure 1. The decrease in economic vacancy last quarter – as well as the quarter before – is due to increases in actual rent for rentals, a slightly decreasing vacancy rent and because of the conversion of vacant offices. In October and January, vacancy rent was higher for existing rentals than for newly rented offices, which brings up the economic vacancy a little. It does not apply to retail where existing rentals in October and January brings down the economic vacancy. This is caused by rental value from newly rented retail rentals in January are higher than the vacancy rent from the new vacant rentals from January. That is one of the essential reasons to the decrease in economic vacancy
An economic vacancy of 8.8 percent corresponds to 8.8 billion DKK waiting for new tenants having an assumption of a total rental value of 100 billion DKK at the Danish investment property market. There will always be a certain economic vacancy and the lost rental value will never reach 0. However, it is realistic that the total economic vacancy will decrease to four percent over time. This would mean 4.8 billion DKK in extra revenue for owners of investment properties as well as more activity. The last four years, the
Table 1. Vacancy rates in January 2017 Economic vacancy rate Vacancy (percent) Office Retail Industry
Quarterly change (percentage points)
Spatial vacancy rate
Annual change (percentage points)
11.9
-0.3
-0.7
8.0
-0.4
11.7
-0.3
Vacancy (percent)
Quarterly change (percentage points)
Annual change (percentage points)
13.5
-0.3
-0.6
-0.1
7.5
-0.5
-0.9
-1.0
11.4
-0.4
-3.1
Residential
3.2
0.3
0.0
2.9
0.1
0.0
Total
8.8
-0.2
-0.8
9.4
-0.2
-1.3
Source: The Danish Property Federation. The vacancy rate covering all sectors also include rent and space for other commercial sectors and secondary premises.
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