THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK
January 2016
WEB REPORT
Investment properties increase economic growth in Denmark In 2016, the Danish Economic Councils expect an economic growth of 1.1 percent. The relatively low growth rate is still a positive indicator of a Danish economy going moderately forward, which imply a further demand for vacant capacity within retail, office and industry. The unemployment rate continues at a low level as the gross unemployment rate was 4,5 percent in November 2015 and the Danish Economic Councils expect employment to increase with 26.000 persons in 2015.
quarter and are included in the statistic. At the same time, the statistical material has been expanded due to more participants which can influence the total result. The new office rentals contribute to an increasing economic vacancy rate for office rentals of 0.6 percentage points compared to October 2015. Another explanation to the increase in the economic vacancy rate is the vacancy increase for existing office rentals in the statistics by 0.3 percentage points. The most important reason is however, that more leases are vacant compared to the amount of new rentals in January. Each of the effects contributes with 1.8 percentage points increasing the vacancy rate, respectively – 1.3 percentage points decreasing the vacancy rate. Finally, there are some minor effects that in total with the above means that the economic vacancy for office increases with 1,0 percentage points to a total of 13.0 percent.
The availability of commercial rentals is an essential factor for economic growth as production and commerce need properties and squaremetres. At the same time there are approximately 100.000 employed within commercial properties in Denmark. A little more than 50 percent are employed within construction, development and improvements while almost 45 percent are employed within property management, rentals and maintenance. A smaller part of the employed work with portfolio management and transactions. In total, the share of employees within commercial properties is higher than the group of employees within the banking sector in Denmark. This also implies, that when the Danish economy is doing well, more activity will lead to higher employment within commercial properties and further economic growth.
Spatial vacancy is higher than economic vacancy rate While the average economic vacancy rate is 9.8 percent in January 2016, spatial vacancy rate is 11.1 percent. Spatial and economic vacancy rates for residential leases of 2.9 and 3.1 percent are considered low. For commercial leases the spatial vacancy rate is higher than economic vacancy rate, which means that is it typically the cheap space that is hard to rent. Spatial vacancy for industrial rentals show positive development as the rate decrease by 0.1 percentage points compared to last quarter and a yearly decrease of 4.2 percentage points. The spatial vacancy rate for retail is slightly increasing with 0.2 percentage points compared to last quarter and 0.6 percentage points compared to last year. Spatial vacancy rate for office is 14.8 percent which is higher than for both residential, retail, and industrial rentals. As the economic growth increases, there will be vacant office space available. In other words according to vacancy rates it pays to construct residential properties compared to office properties.
Slight increase in economic vacancy rate Unfortunately, the economic growth has not meant a lower economic vacancy in Denmark during the latest quarter. Compared to last quarter the economic vacancy rate has decreased by 0.2 percentage points for industrial and 0.4 percentage points for residential rentals. The economic vacancy rate is unchanged for retail while there is a disappointing increase of 1.0 percentage points for office rentals. There are several reasons for the economic vacancy rate increase for office rentals. A significant reason is that office rentals under development or under construction have been finished since last
Table 1. Vacancy rates January 2016
Economic vacancy rate Vacancy (percent)
Quarterly change (percentage points)
Office
13.0
Retail
8.0
Industry
Space vacancy rate
Annual change (percentage points)
Vacancy (percent)
Quarterly change (percentage points)
Annual change (percentage points)
1.0
0.6
14.8
0.5
0.5
0.0
-0.1
8.4
0.2
0.6
13.2
-0.2
-2.5
14.2
-0.1
-4.2
Residential
3.1
-0.4
0.5
2.9
-0.2
0.0
Total
9.8
0.1
0.2
11.1
-0.1
-0.2
Source: The Danish Property Federation. Rem.: The vacancy rate covering all sectors also include rent and space for other commercial sectors and secondary premises.
Published by the Danish Property Federation