EjendomDanmark marked statistics - Vacancy (Oktober 2015)

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK

October 2015

WEB REPORT

Decrease in Economic Vacancy The economic vacancy for investment property in Denmark is 9.7 percent in October 2015. This is a decrease of 0.2 percentage points compared to the figures published in July, (table 1). The slight decrease can be explained by demand for retail rentals. This has been applicable for the Capital Region, where economic vacancy for retail has decreased to the low level of 1.4 percent for Copenhagen CBD. The same tendency can be seen in most other regions and follows the general relative postive economic development seen in the Danish economy. The latest reports from the Danish Economic Councils, predict a fall in unemployment and a larger economic activity. This means an even stronger rental market in the future

quarters with very low economic vacancy on residential, the economic vacancy is now on par with January 2014.

The economic vacancy for residential peaked in 2009 with approx. 7 percent, which is seen in figure 1.

Fewer Vacant Squaremetres for Industrial In total a slight decrease has been seen in space vacancy.

In October 2015 space vacancy was 11.2 percent which is 0.1 percentage points lower than in July and 0.1 percentage points higher compared to last year. Between the sectors, space vacancy is lower for residential and retail leases while it is higher for office and industrial leases. The recent report shows a space vacancy for industrial of 14.3 percent, which is a decrease of 1.4 percentage points over the latest 3 months and 3.3 percentage points compared to the same period last year.

Retail and Industrial are moving in the right direction There is a decrease in economic vacancy for both retail and industrial. The economic vacancy for retail is 7.9 percent, which is a decrease of 0.5 percentage points compared to last quarter and 0.8 compared to last year. Industrial still has the highest economic vacancy of 13.4 percent, but we see a decrease of 0.6 percentage points compared to last quarter and 1.4 percentage points compared to last year.

Both retail and industrial have had decreasing economic vacancy since the level peaked in the beginning of 2014, but there is still some way to go to reach their long-term economic vacancy levels. Office experienced a very weak increase of 0.1 percentage points compared to last quarter.

This is a decrease of 0.6 percentage points compared to a year ago. Residential has the lowest economic vacancy of 3.4 percent but it is an increase of 0.9 percentage points compared to last quarter and last year. After a number of

As economic vacancy matters most to the owners and the economy in Denmark, space vacancy also gives an understanding of the link between economy and space. If space vacancy is higher than economic vacancy, it is a result of the vacant space being cheap. Thus the increase of 0.5 percentage points in space vacancy within office compared to an increase of 0.1 percentage points in economic vacancy means that there has been relatively more vacant cheap office space. The opposite applies for residential leases.

Table 1. Vacancy Rates October 2015 Economic Vacancy Rate

Office Retail Industry

Space Vacancy Rate

Vacancy (percent)

Quarterly change (percentage points)

Annual change (percentage points)

Vacancy (percent)

Quarterly change (percentage points)

Annual change (percentage points)

12.0

0.1

-0.6

14.4

0.5

-0.2

7.9

-0.5

-0.8

8.2

0.2

-0.2

13.4

-0.6

-1.4

14.3

-1.4

-3.3

Residential

3.4

0.9

0.9

3.1

0.6

0.8

Total

9.7

-0.2

-0.1

11.2

-0.1

0.1

Source: The Danish Property Federation.

Note: The vacancy rate covering all sectors also include rent and space for other commercial sectors and secondary premises.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015

Office

WEB REPORT

Decreasing Econmic Vacancy in the Capital Area The economic vacancy for office in the Capital Region is 12.1 percent in October 2015 which corresponds to the national average and vacancy is still decreasing in the region. This is due to a decrease in Copenhagen CBD from 9.9 to 8.9 since July 2015. Compared to the same time last year, the decrease in Copenhagen CDB is 4.1 percentage points. The Northern Seeland Region had the largest quarterly decrease among the reported areas from 19.2 last quarter to 17.5 percent in October. The quarterly decrease in economic vacancy for office in the Capital Region is 0.2 percentage points due to the increase of the space vacancy within Other Copenhagen & Area. It is because there are relatively many office rentals in this area. From April to July 2015 we see a quarterly increase of 1.3 percentage points in the economic vacancy in Other Copenhagen & Area.

In the other regions there have been an increase in the economic vacancy for offices in the last quarter. This means that the economic vacancy in the Southern Denmark Region and the Mid Jutland Region lies above average. In Odense, the economic vacancy is 14.2 percent, while it is 13.7 percent in Aarhus.

In common for all office rentals in all reported areas is that the economic vacancy is lower than the space vacancy. This means that the relatively expensive squaremetres are rented more than the cheap ones. This implies that newer and well-placed offices are rented more than older and secondary placed offices.

Retail

Decreasing Economic Vacancy almost Everywhere in the Country The national average for the economic vacancy for retail is 7.9 percent in October 2015. This corresponds to a decrease of 0.5 percentage points since last quarter and a decrease of 0.8 percentage points since last year. In Copenhagen CBD the retail vacancy decrease by 0.3 percentage points compared to last quarter to af level of 1.4 percent, which is considerably below the average for the Capital Region of 7.7 percent. In Aarhus, the economic vacancy is 4.3 percent and below the national average of 7.9 percent, and the quarterly decrease is 1.6 percentage points.

The largest area for retail, Other Copenhagen & area, also had a decrease in the economic vacancy to 9.3 percent in October. This corresponds to a decrease of 2.6 percentage points compared to October 2014 and a decrease of 0.3 percentage points compared to July 2015. The Northern Seeland Region is the only region, who has experienced an increase in economic vacancy with an increase of 8.3 percent in July to 10.4 percent in October. Here, we also see an increase in the space vacancy from 8 percent to 11.5 percent. The largest decrease in economic vacancy is found in the Northern Jutland Region, where the economic vacancy has decreased by 4.2 percentage points. The decrease comes from the relatively high level of 13.1 in July to 8.8 percent in October.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015

WEB REPORT

Industrial A Decrease of 1.4 Percentage Points in Economic Vacancy The economic vacancy for industrial decreased in October both quarterly and annually. Despite the fact that the economic vacancy for industrial is relatively high, we see positive tendencies in October 2015. The last three months, the economic vacancy decreased by 0.6 percentage points and over the last year with 1.4 percentage points. The economic vacancy of 13.4 percent in October is now below the average for the last eight quarters of 13.8 percent. Looking at the regions, the economic vacancy for industrial is highest in the Seeland Region and the Capital Regional of 15.6 percent and 14.9 percent respectively. In Northern Seeland there was a decrease in the economic vacancy of 2.0 percentage points, while the annual decrease was 8.1 percentage points. In Aarhus we see a decrease in vacancy both quarterly and annually. Compared to July, the economic vacancy has decreased by 5.3 percentage points to 8.0 percent.

Residential Low Economic Vacancy Compared to commercial properties the vacancy for residential is low at 3.4 percent as seen in table 5. But compared to last quarter and last year there is a minor increase in residential vacancy in the Capital Region and the Seeland Region while the vacancy is decreasing in the Southern Denmark Region, the Mid Jutland Region, and the Northern Jutland Region.

Copenhagen CBD lies above national average with an economic vacancy of 5.1 percent, which is a decrease of 0.6 percentage points compared to last quarter. We would not have expected Copenhagen CBD to have higher economic vacancy as it is more in demand than other comparable regions. By taking a random sample of Copenhagen CBD properties we could explain this abnormality in that a major part of the rentals were vacant in connection with larger redevelopments and renovations. A minor part of the vacant leases were either for sale as condominiums or were not rented. If you look at the average time of vacancy in Copenhagen CBD, it is 2.5 quarters which is below the national average of 2.8 quarters. So, even if there is redevelopment and renovation in Copenhagen CBD, it does not mean that the rentals are vacant for a longer period than the rest of the country. Aarhus with an economic vacancy of 5.4 percent, also has a longer average time of the vacant rental. In Aarhus a residential lease is vacant approx. 3.8 quarters.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015 N

Ø

V

S

WEB REPORT

Geographical Overview 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.

Copenhagen CBD

Christiansborg

Copenhagen CBD covers the zip codes: 900, 1000-1559,

Tivoli

1562-1609, 1611-1614.

Source: The Danish Property Federation.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015

WEB REPORT

Table 2. Office Economic Vacancy Rate October 2015 (percent) Capital Region total Copenhagen, CBD

Quarterly change (percentage points)

Space Vacancy Rate

Annual change (percentage points)

October 2015 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

12.1

-0.2

-0,8

14.3

0.1

-0.5

8.9

-1.0

-4,1

9.6

-0.9

-3.8

Other Copenhagen & area

12.8

0.2

0,4

15.1

0.5

0.2

Northern Seeland

17.5

-1.7

-0,9

18.7

-1.5

0.7

8.3

0.2

-2,6

10.9

0.7

-4.0

13.2

0.5

2,0

17.8

1.2

3.3

Seeland Region Southern Denmark Region Odense

14.2

Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Total

*

18.8

12.7

2.4

*

1,4

14.9

2.7

*

1.3

*

13.7

2.7

1,4

15.4

2.3

1.2

8.5

0.9

1,0

13.0

3.3

2.1

9.2

2.2

0,4

11.4

1.6

-0.6

12.0

0.1

-0,6

14.4

0.5

-0.2

Source: The Danish Property Federation.

Table 3. Retail Economic Vacancy Rate

Space Vacancy Rate

October 2015 (percent)

Quarterly change (percentage points)

Capital Region total

7.7

-0.2

-2.0

Copenhagen, CBD

1.4

-0.3

-0.9

Other Copenhagen & area

9.3

-0.3

10.4 12.4 10.6 5.4

Northern Seeland Seeland Region Eastern Seeland Southern Denmark Region Triangle Area Mid Jutland Region Aarhus Other Mid Jutland

Quarterly change (percentage points)

Annual change (percentage points)

7.7

0.4

-1.5

1.5

-0.3

-0.8

-2.6

8.9

0.1

-2.1

2.1

0.3

11.5

3.5

1.0

0.6

1.6

10.7

1.3

-0.3

-0.3

0.8

8.7

-0.1

0.7

-0.6

-1.7

5.8

-0.4

-2.5

6.6

-0.5

-1.5

7.4

-1.2

-2.1

6.7

-1.0

3.0

8.9

-0.8

5.4

4.3

-1.6

-0.1

5.0

-1.0

1.1

11.6

*

Annual change (percentage points)

*

October 2015 (percent)

13.9

*

*

Northern Jutland Region

8.8

-4.2

0.5

9.8

-1.8

2.1

Total

7.9

-0.5

-0.8

8.2

0.2

-0.2

Source: The Danish Property Federation.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015

WEB REPORT

Table 4. Industrial Economic Vacancy Rate October 2015 (percent)

Space Vacancy Rate

Quarterly change (percentage points)

Annual change (percentage points)

October 2015 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

Capital Region total

14.9

0.1

-0.8

15.4

-0.9

-2.2

Copenhagen, CBD

11.9

0.4

-7.8

24.0

0.1

-1.7

Other Copenhagen & area

15.6

0.2

0.5

14.9

-1.0

-1.6

Northern Seeland

10.2

-2.0

-8.1

13.2

0.1

-8.2

Seeland Region

15.6

Southern Denmark Region

11.1

-0.1

-5.3

17.0

-0.2

6.4

-0.8

-0.8

8.4

-0.8

-0.7

8.0

-5.3

-7.2

9.2

-9.1

-10.8

13.4

-0.6

-1.4

14.3

-1.4

-3.3

Mid Jutland Region Aarhus Total

*

*

14.5

*

* -5.8

Source: The Danish Property Federation.

Tabel 5. Residential Economic Vacancy Rate

Space Vacancy Rate

October 2015 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

October 2015 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

Capital Region total

3.5

1.4

1.3

3.1

0.9

1.0

Copenhagen, CBD

5.1

-0.6

0.6

4.5

-0.7

0.8

Other Copenhagen & area

3.7

1.9

1.5

3.2

1.2

1.2

Northern Seeland

1.5

0.6

0.3

1.5

0.5

0.2

Seeland Region

5.0

3.4

3.9

6.2

3.9

4.5

Eastern Seeland

3.6

2.8

2.9

3.4

2.4

2.5

Western and Southern Seeland

5.7

3.5

4.3

7.2

4.2

5.1

1.5

-0.7

-0.6

1.5

-0.7

-0.6

Southern Denmark Region Odense

1.3

0.2

1.2

1.4

0.2

1.3

Triangle area

2.1

-0.2

-0.1

1.7

-0.3

-0.4

Other southern Denmark

1.3

-1.5

-2.1

1.5

-1.6

-1.9

5.2

-1.3

-0.5

4.3

-1.1

-0.4

Aarhus

5.4

-0.7

0.2

4.4

-0.3

0.5

Other Mid Jutland

4.4

-3.5

-3.4

4.3

-3.5

-3.2

Mid Jutland Region

Northern Jutland Region

1.1

-0.6

-0.7

1.5

-0.4

-0.5

Aalborg

0.8

-0.3

-0.7

0.8

-0.1

-0.4

Other Northern Jutland

4.5

-2.7

-0.6

6.7

-2.1

-0.8

3.4

0.9

0.9

3.1

0.6

0.8

Total Source: The Danish Property Federation.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015

WEB REPORT

Figure 1. Economic Vacancy Rate 2000-2015 Percent 25,0

20,0

15,0

10,0

Apr. Jul. Oct.

0,0

Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. tOct. Oct. Jan. Apr. Jan. Jul. Apr. Oct. Jul. Jan. Oct. Apr. Jan. Jul. Apr. Oct. Jul. Jan. Oct. Apr. Jan. Jul. Apr. Oct. Jan. Jul. Apr. Oct. Jul. Jan.

5,0

2000

2001

2002

2003 Office

2004

2005 Retail

2006

2007

2008 Industrial

2009

2010 Residential

2011

2012

2013

2014

2015

Total

Source: The Danish Property Federation and own calculations based on data from IPD Danish Property Index and Oline-ED statistikken.

Note: Data from January 2014 and forward is from the Danish Property Federation. From 2001 to 2013, data from IPD Danish Property Index has been processed based on differences in level in 2014. In year 2000, office data from Oline-ED Statistics has been included.

Methods are not identical, which is why there is a gap between October 2013 and January 2014. From January 2014 data is quarterly, and before this data is annual. From 2014 there is a larger base of data.

About the Market Statistics

This web report is published on 19 November 2015. Next planned publishing is mid February 2016.

The report has been based on data from: Aage Larsens Boligudlejning, Aberdeen Asset Management, Alm. Brand, AP Pension, ATP, Bevica Fonden, Carlsbergfondet, CS Pensionsfond, CW Obel Ejendomme, DADES, Danica, Danske Bank, DATEA, DEAS, DIP, DNB, Fast Ejendom Danmark, FrederiksbergFonden, Færchfonden, Grosserer Schiellerup og Hustrus Fonde, Gudbjørg og Ejnar Honorés Fond, Højgaard Ejendomme, Jeudan, Jorcks Ejendomme, JØP, LB Forsikring, Lærernes Pension, Majbritt Birch Ejendomsadministration, Niam, Nordea Ejendomme, North Property Asset Management, NREP, PBU, PenSam, PensionDanmark, Pensionskassen for Farmakonomer, PFA, PKA, Sampension, SEB, SPG Omsorg DK1, Steen & Strøm, Taurus Ejendomsadministration, Topdanmark, Unipension and Valad.

The portfolios have approx. 58.000 rentals corresponding to an annual lease value of DKK 15.4 bn and 13.3 m sq. m. In order to compare, the statistical base in October 2014 had an annual lease value of DKK 11.7 bn and 9.6 m sq. m.

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 September 2015 and and is called October 2015. Quarterly change is from October 2015 (closed per 30 September 2015) compared to July 2015 (closed per 30 June 2015). Annual change is from October 2015 (closed per 30 September 2015) compared to October 2014 (closed per 30 September 2014).

We have chosen not to publish data, where the data is not sufficient to give valid and representative results or combinations if only one or very few portfolios are represented.

For further information regarding this web report, please contact Chief Economist Morten Marott Larsen, mml@ejendomsforeningen.dk, phone +45 28 45 56 51.

Published by the Danish Property Federation