The Danish Property Federation Market Statistics – Vacancy, July 2017
The Danish Property Federation Market Statistics
July 2017
WEB REPORT VACANCY
Results • Lowest economic vacancy in seven years • Annual decrease in vacancy of 1 percentage point • Other commercial has an economic vacancy of 7.7 percent • 3.6 percent in economic vacancy for residential The investment property market confirms economic growth
This is positive for the Danish companies and especially the investment property market where the demand for rentals is increasing. Hence the economic vacancy in July 2017 decreases to 8.3 percent in total, while the spatial vacancy decreases to 9.1 percent. This is the lowest level for economic vacancy since 2010 and approx. 1 percentage point lower than July 2016.
Following a six months positive development, the Danish economy is still looking reasonable. As in theh past years, Danish economy continuous forward in a steady pace. The international economy also shows progress. The International Monetary Fund (IMF) expect the global growth to be 3.5 percent in 2017 and 3.6 percent in 2018.
Significant improvement in economic vacancy
Based on the positive international state of the market and increasing international demand, the Danish Economic Councils expect that employment will increase by 30.000 in 2017. Furthermore, The Councils expect an increase in real wages and together with a historic savings surplus this gives way for an optimistic view on future private consumption and investments. The rest of 2017 and the coming years can provide stable economic growth based on domestic demand as well as export. The Economic Councils expect the average annual growth in Denmark to be 2.1 percent until 2025.
Since April 2017, the economic vacancy has decreased by 0.5 percentage points implying quarterly decreases since April 2016. We see the latest quarterly decrease within all sectors of commercial properties. Office has the highest vacancy among the commercial sectors, but decreases in July with 0.6 percentage points to 11.2 percent following a steady period from January to April 2017. Retail also has a decrease of 0.6 percentage point since April 2016. The decrease in vacancy is the result of the following three circumstances: Firstly, the relation between new hired rentals and new
Table 1. Vacancy rates in July 2017 Economic vacancy rate Vacancy (percent) Office Retail Industry
11.2
Quarterly change (percentage points) -0.6
Spatial vacancy rate
Annual change (percentage points) -1.2
Vacancy (percent)
Quarterly change (percentage points)
13.0
-0.3
Annual change (percentage points) -1.1
7.0
-0.6
-1.4
6.7
-0.6
-1.3
10.6
-1.5
-1.7
10.6
-0.7
-1.8
0.9
3.2
0.1
0.6
8.0
1.6
9.1
-0.2
Residential
3.6
0.3
Other commercial
7.7
-0.6
Total
8.3
-0.5
-0.9
-0.9
Source: The Danish Property Federation. Rem.: The Vacancy rates for all sectors also include actual annual rent and space for other commercial and secondary spaces. Published by
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Other commercial has economic vacancy below the national average
vacant rentals means a decrease in economic vacancy. This was not the case from January to April this year. Secondly, the vacancy rent for existing retail rentals has depreciated with almost 5 percent. Thirdly, an increasing share of vacant rentals – typically in shopping centres – have been converted and rented out in new optimized retail units based on the given demand.
In July 2017, for the first time, we present figures for other commercial in table 1 at page 1. Other commercial has always been included in the total. Other commercial has a vacancy level below the national average. In July, the vacancy was 7.7 percent, lower than both office and industry. We also see a decrease in the other commercial rentals of 0.6 percentage point the latest quarter.
With regards to industry, experiencing a quarterly decrease of 1.5 percentage points, some of the decrease can be explained by conversions either from other sectors to industry or conversions from industry to other sectors such as office and other commercial.
Other commercial Other commercial consists of commercial rentals which cannot be categories as office, retail, or industry – such as educational institutions, hotels, child care institutions, rentals for leisure and culture, parking, advertising signs, antenna space, and other commercial within e.g. farming and forestry. The sector stands for between five and ten percent of the total annual rent in the Market Statistics.
Figure 1. Development in economic vacancy Percent 25,00
20,00
15,00
10,00
5,00
Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul. Okt. Jan. Apr. Jul.
0,00
2000
2001
2002
2003
2004
2005
Office
2006
2007
Retail
2008
2009
Industry
2010
2011
Residential
2012
2013
2014
2015
2016
2017
Total
Source: The Danish Property Federation and own calculations based on data from IPD Danish Property Index and Oline-ED statistics.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Office – following stagnation – decrease in vacancy The economic vacancy for office decreases to 11.2 percent after having been 11.8 in both January and April 2017. Since April, the vacancy has decreased by 0.6 percentage point and compared to a year ago by 1.2 percentage point. The spatial vacancy is decreased by 0.3 percentage point to 13.0 percent. Over the last year, the spatial vacancy has decreased by 1.1 percentage point. The decrease in vacancy covers regional differencies. In the Capital Region, the Zealand Region, and the Southern Denmark Region there is a decrease, while vacancy increases in the Mid- and Northern Jutland Region. In the Capital Region vacancy decreases with 0.7 percentage point which is the largest quarterly decrease since 2014, and in Northern Zealand vacancy decreases from 22.2 percent to 16.7 percent.In the Zealand Region vacancy decreases by 1.1 percentage point to 7.6 percent. In the Southern Denmark Region you find the largest regional decrease of 1.2 percentage point, while the Mid Jutland Region is increased by 0.6 percentage point to 9.5 percent. In Aarhus vacancy increases from 9.6 percent to 10.2 percent, although it is 5.0 percentage point lower than the same quarter last year. In the Northern Jutland Region we see an increase in vacancy of 1.0 percentage point to 12.4 percent.
Retail – lowest vacancy since 2009 Within retail there is decrease in economic vacancy. In July 2017 the economic vacancy has decreased by 0.6 percentage point in three months to 7.0 percent. This is 1.4 percentage point lower than July last year. Measured in vacant space, the vacancy has decreased four quarters in a row with an average of 0.3 percentage point each quarter. Overall there has been no changes in the Capital Region compared to April. This is a result from the increase in retail vacancy in Northern Zealand and other Copenhagen & Area of 0.9 and 0.4 percentage point respectively is equalized by a decrease of 0.9 percentage point in Copenhagen CBD. In all other regions the vacancy has decreased. Highest decrease in the Mid Jutland Region, where the economic vacancy decreases by 3.0 percentage point. This means that the Mid Jutland Region is now one of the five regions with the lowest economic vacancy. Especially in Other Mid Jutland with a decrease of 5.3 percentage point. Measured in vacant space the decrease corresponds to 7.7 percentage point. Looking back a year ago, Region Zealand has had the best development compared to July last year. Here, the economic vacancy has decreased by 4.6 percentage point. Vacancy is highest in the Northern Jutland Region and among the largest cities Aalborg shows the highest quarterly increase – especially measured in vacant space.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Industry – positive signals The economic vacancy decreases by 1.5 percentage point from 12.1 percent in April to 10.6 percent in July. Since July 2016 there has been a decrease of 1.7 percentage point. The spatial vacancy decreases by 0.7 percentage point to 10.6 percent. The annual change in spatial vacancy is almost the same as economic vacancy at -1.8 percentage point. In the Capital Region the economic vacancy decreases by 1.2 percentage point mainly from Other Copenhagen while increasing in Copenhagen CBD. In the Zealand Region we see the highest decrease of 4.1 percentage point to 12.1 percent. The region still has a relatively high economic vacancy. The only region where the economic vacancy increases is the Mid Jutland Region where the increase is from 4.6 percent to 5.1 percent. In Aarhus there is a small increase of 0.2 percentage point to 4.3 percent. The Mid Jutland Region still has a relatively low vacancy rate. In the Southern Denmark Region the economic vacancy decreases from 13.1 percent to 10.6 percent.
Residential – economic vacancy at 2014 level Although this is the fifth quarter in a row with minor increases in the economic vacancy for residential, the economic vacancy is still significantly lower that the vacancy for commercial rentals. The economic vacancy for residential is now at 3.6 percent, which is at the same level as in 2014. The economic vacancy for residential peaked in 2009 at around seven percent. As opposed to commercial properties, the construction of residentials is progressing which could be a reason why the economic vacancy is showing a slight increase. As seen in figure 1, it has been normal in the period between 2000-2017 that the economic vacancy for residential was below the economic vacancy for commercial rentals. Only in 2008 and 2009, the economic vacancy for residentials has been higher or at the level of the economic vacancy for commercial rentals. In the Zealand Region the economic vacancy decreases with 0.2 percentage point compared to last quarter and 1.3 percentage point compared to last year, while the economic vacancy increases in the other four regions. In the Northern Jutland Region the economic vacancy increases by 0.7 percentage point compared to last quarter and 2.8 percentage point compared to last year. In Other Northern Jutland the economic vacancy is now at 8.3 percent which is on the level of the beginning of 2014. It is the third quarter where the vacancy increases in Other Northern Jutland.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Geographical overview Copenhagen CBD
Lynettehavnen
Margretheholm
Kongebrovej
Christiansborg Christianshavn
Tivoli
Northern Jutland Region
Aalborg
Mid Jutland Region
Aarhus Northern Seeland Capital Region
Other Copenhagen & area
Triangle area Seeland Region
Southern Denmark Region
Odense
Western and Southern Seeland
Copenhagen CBD Eastern Seeland
Source: The Danish Property Federation. Anm.: Copenhagen CBD covers the zipcodes: 900, 1000-1559, 1562-1609 og 1611-1614. CBD stands for Central Business District.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Table 2. Office Economic vacancy rate
Spatial vacancy rate
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
11.4
-0.7
-1.2
13.0
-0.3
-1.1
Capital Region Copenhagen CBD
5.6
-0.3
-0.8
5.8
0.2
-0.9
Other Copenhagen and area
13.1
-0.5
-0.7
14.8
0.0
-0.5
Northern Zealand
16.7
-5.5
-5.8
15.1
-5.2
-7.5
7.6
-1.1
-1.2
10.4
-0.9
-0.8
Eastern Zealand
5.5
-3.3
-2.2
6.1
-3.4
-1.5
Western and Southern Zealand
9.3
0.8
-0.3
13.4
0.9
-0.4
Zealand Region
Southern Denmark Region
12.5
-1.2
1.8
16.8
-1.9
2.9
Odense
13.8
-1.2
0.2
16.6
-3.0
-1.6
Triangle Area
14.9 9.5
0.6
-4.3
10.6
0.6
-5.2
10.2
0.6
-5.0
10.2
0.0
-6.9
7.2
0.7
-0.4
12.5
2.6
1.2
12.4
1.0
0.9
14.2
1.4
0.6
12.4
0.8
0.8
14.5
1.3
1.0
11.2
-0.6
-1.2
13.0
-0.3
-1.1
Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg
Total
22.1
Source: The Danish Property Federation.
Table 3. Retail Economic vacancy rate
Spatial vacancy rate
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
6.6
0.0
-0.6
5.8
0.0
-0.7
Copenhagen CBD
3.2
-0.9
1.9
2.8
0.3
1.4
Other Copenhagen and area
7.8
0.4
-0.9
6.2
-0.2
-1.3
Capital Region
Northern Zealand Zealand Region Eastern Zealand Western and Southern Zealand Southern Denmark Region Triangle Area Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg
Total
11.0
0.9
0.4
10.2
0.3
0.6
10.2
-0.3
-4.6
9.2
-1.4
-3.7
9.1
-0.2
-4.8
6.8
-1.5
-4.4
12.7
-0.2
-3.9
12.8
-1.2
-2.6
6.0
-1.8
-2.5
6.2
-1.1
-2.3
6.0
-2.0
-2.4
6.7
-1.8
-2.0
5.3
-3.0
-2.2
6.6
-3.8
-2.6
3.4
-1.2
-1.3
3.7
-0.5
-0.5
7.9
-5.3
-5.8
9.7
-7.7
-6.7
11.2
-0.1
-2.0
11.0
2.6
1.5
12.8
0.5
7.0
-0.6
-1.4
13.5
4.0
6.7
-0.6
-1.3
Source: The Danish Property Federation.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
Table 4. Industry Economic vacancy rate
Capital Region
Spatial vacancy rate
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
11.5
-1.2
-2.1
11.1
-0.9
-2.4
Copenhagen CBD
14.3
2.0
1.7
19.1
-2.5
-4.4
Other Copenhagen and area
11.0
-1.5
-2.8
10.3
-0.6
-2.3
Northern Zealand
15.5
-0.8
2.8
14.1
-1.1
0.7
Zealand Region
12.1
-4.1
-2.6
9.0
-3.4
-2.1
Southern Denmark Region
10.6
-2.5
-1.3
21.5
5.5
5.2
5.1
0.5
-0.7
5.8
-0.1
-1.2
4.3
0.2
-3.1
4.0
-0.8
-4.1
10.6
-1.5
-1.7
10.6
-0.7
-1.8
Mid Jutland Region Aarhus Total Source: The Danish Property Federation.
Table 5. Residential Economic vacancy rate
Spatial vacancy rate
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
July 2017 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
3.5
0.2
0.7
3.0
0.1
0.5
Copenhagen CBD
5.2
0.4
1.7
4.1
0.2
0.9
Other Copenhagen and area
3.5
0.3
1.0
3.1
0.2
0.7
Northern Zealand
1.7
-0.3
-2.0
1.7
-0.2
-1.7
Capital Region
Zealand Region
2.2
-0.2
-1.3
2.9
-0.2
-1.4
Eastern Zealand
0.8
-0.8
-1.2
0.8
-0.9
-1.3
Western and Southern Zealand
2.7
0.1
-1.2
3.6
0.1
-1.3
Southern Denmark Region
1.7
0.0
0.1
1.7
0.1
0.1
Odense
1.9
0.4
0.8
2.0
0.5
0.8
Triangle Area
2.0
-0.3
0.4
1.8
-0.4
0.5
Other Southern Jutland
1.3
-0.2
-0.8
1.3
-0.1
-0.8
Mid Jutland Region
5.2
0.4
2.0
4.2
0.1
1.4
Aarhus
5.6
0.4
2.6
4.8
0.5
2.5
Other Mid Jutland
3.5
-0.1
-0.4
2.5
-1.2
-1.3
Northern Jutland Region
5.0
0.7
2.8
5.0
0.5
2.5
Aalborg
4.8
0.7
2.9
4.8
0.4
2.8
Other Northern Jutland
8.3
1.9
3.9
10.1
2.3
3.3
3.6
0.3
0.9
3.2
0.1
0.6
Total Source: The Danish Property Federation.
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The Danish Property Federation Market Statistics – Vacancy, July 2017
INTERAKTIV WEBRAPPORT TOMGANG
About the Market Statistics The portfolios have approx. 77.000 rentals corresponding to an annual lease value of DKK 18.1 bn and 15.0 m m2. In order to compare, the statistical base in July 2016 had an annual lease value of DKK 16.7 bn and 14.2 m m2. 4.900 properties are included in the market statistics . The base of the economic vacancy is the actual annual rent. The economic vacancy is defined as: Sum of actual rent in all vacant rentals divided by the sum of actual annual rent in both occupied and vacant rentals. The Market Statistics is based on quarterly processed property data for rentals and vacancies within the period in question. This web report has been closed per 30 June 2017 and is called July 2017. Quarterly change is from July 2017 (closed per 30 June 2017) compared to April 2017 (closed per 31 March 2016). Annual change is from July 2017 (closed per 30 June 2017) compared to July 2016 (closed per 30 June 2016). Published data are updated and valid on the date of publication. As the Market Statistics are updated ongoing, historic data might also be updated. We have chosen not to publish data, where the data is not sufficient to give valid and representative results or in combinations where only one or very few portfolios are represented.
This report is based on data from 2 + 3 Ejendomme, Aberdeen Asset Management, Akelius, Alm. Brand, Andersen Partners Ejendomsadministration, AP Pension, Arkitekternes Pensionskasse, ATP, Bevica Fonden, Blue Vision, Carlsbergfondet, CBRE, CEJ Ejendomsadministration, Coller Capital, Cromewell Property, CS Pensionsfond, CW Obel Ejendomme, DADES, Danica, Dansk Sygeplejeråd, Danske Bank, DATEA, DEAS, DEAS Invest 1, DIP, DNP Ejendomme, DSB Ejendomme, Ejendomsselskaberne Grønløkkevej 10, Fast Ejendom Danmark, Fokus Asset Management, FrederiksbergFonden, Færchfonden, Grosserer Schiellerup og Hustrus Fonde, Gudbjørg og Ejnar Honorés Fond, HD Ejendomme, Højgaard Ejendomme, Industriens Pension, Jammerbugt Kommune, Jeudan, Jorcks Ejendomsselskab, JØP, Kalkværksgrundene, Kalvebod Ejendomme, KIRKBI, KLP Ejendomme, Kramers Legat, LB Forsikring, Lægernes Pensionskasse, Lærernes Pension, MP Pension, Niam, Nordea Ejendomme, Nordea Liv og Pension, North Property Asset Management, Patrizia Denmark, PBU, PenSam, PensionDanmark, Pensionskassen for Farmakonomer, PFA, Pitzner Ejendomme, PKA, ProDomus, Realdania, Sampension, SEB, SPG Omsorg DK1, Steen & Strøm, Taurus Ejendomsadministration, TDC Pensionskasse, Topdanmark, Tryg and Aage Larsens Boligudlejning.
Further information For further information regarding this web report please contact Chief Economist in the Danish Property Federation
Morten Marott Larsen mml@ejendomsforeningen.dk Phone +45 28 45 56 51
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