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The Danish Property Federation Market Statistics – vacancy

April 2018

• Economic vacancy has seen the largest annual decline since April 2006 of 1.1 percentage points • Decline in vacancy entails DKK 2 bil. increase in returns since 2015 • 12 percent increase in office employment since 2009 improves vacancy • In April 2018, retail has the highest quarterly decrease in vacancy

WEB REPORT VACANCY

Lower vacancy due to better conditions The decrease in vacancy continues the positive development in April 2018. On a national level the vacancy is 7.7 percent which approaches the average of seven percent since 2000. Compared to April 2017, the vacancy level is 1.1 percentage points lower today being the largest annual vacancy decrease since April 2006. The Danish Property Federation estimate that vacant rental properties cost approx. eight billion DKK a year. Although we still see considerably lost rental incomes associated with the present vacancy level, the annual lost income for owners of investment properties has decreased by two billion DKK since July 2015.

Vacancy of 7.7 percent costs 8 billion DKK every year.

Increased office employment improves vacancy The results are consistent with the favorable conditions that still characterize the market.

Figure 1. Vacancy rates in April 2018 10.6

10.2

8.3

7.7

6.1 4.1

Office

Retail

Industry

Residential

Other commercial

Total

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Quart.

An.

Quart.

An.

Quart.

An.

Quart.

An.

Quart.

Quart.

An.

-0.3

-1.6

-0.4

-1.6

0.3

-1.5

0.0

0.8

0.8

-0.2

-1.1

An.

Source: The Danish Property Federation Market Statistics. Note: 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, April 2018

This applies to the development in office employment which has increased by 2.1 percent over the last year. Along with the expectation of a continued increase in employment, the demand for office rentals is strengthened which implies that the office vacancy soon could reach the long-term level of approx. eight percent.

Lower office vacancy continues in April.

Increased consumption reduces retail vacancy The vacancy decrease for retail continues in April and follows the tendency for the latest three years. This is a result of a vacancy decrease all over the country except for Copenhagen CBD where the vacancy has been slightly increasing over the last three quarters. According to Statistics Denmark the retail turnover continues to increase and in March 2018 the increase was 1.2 percent compared to the same time last year. The positive trend in consumer confidence also means that retail can experience an additional demand for retail space. The last three months’ decrease in total vacancy of 0.2 percentage points is a result of the positive development within office and retail where there has been a decrease of respectively 0.3 and 0.4 percentage points within the last quarter. Also, minor increases in vacancy within residential since July 2016 has been replaced by unchanged vacancy in this quarter. This means that residential vacancy maintains a relatively low vacancy level of 4.1 percent.

Retail vacancy continues to decrease.

Combining this with a total return of 7.2 percent in 2017 and expectations of a reasonable return in the years to come it generally looks positive for the investment property market. Industry vacancy has increased by 0.3 percentage points since January 2018. However, the vacancy level of 10.6 percent means an annual decrease of 1.5 percentage points for indus­ try at national level.

Figure 2. 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. Okt. Jan. Apr.

0,00 2000

2001

2002

2003

2004

2005

Office

2006

2007

Retail

2008

2009

Industry

2010

2011

Residential

2012

2013

2014

2015

2016

2017

2018

Total

Source: The Danish Property Federation and own calculations based on data from IPD Danish Property Index and Oline-ED statistics. Note: Data from January and onwards is from The Danish Property Federation. From 2001 to 2013 is data from IPD Danish Property index based on difference in level in 2014. In year 2000, office data from The Danish Property Federation incorporated. Calculations method differs, hence there is data breaches between October 2013 and January 2014. From January 2014 the publication is divided quarterly, while it is yearly before 2014. Therefore, from 2014 there is a bigger data base. 2


The Danish Property Federation Market Statistics – vacancy, April 2018

Office – The vacancy decreases again The economic vacancy decreases with respectively 0.3 and 1.6 percentage points compared to last quarter and last year, while the spatial vacancy increases with 0.2 percentage points compared to last quarter and decreases with 0.7 percentage points compared to last year. Decrease of 2.4 percentage point Following the peak in economic vacancy in January 2016, the economic vacancy has decreased from 12.6 to 10.2 percent. The decrease within spatial vacancy is larger as it has decreased by 3.0 percentage points since the peak of spatial vacancy in 2016. The spatial vacancy is still higher than the economic vacancy meaning that it is often the relatively cheap office space that is empty. Increased demand for office premises There are more office employees which means an increasing demand for office space. Office employment has increased by 2.1 percent compared to last year. The office employment has increased by 12 percent since it reached bottom in 2009 after the financial crisis Overall it is expected that the employment continues to increase in Denmark. In 2018 it is expected that the total employment grows with approx. 40.000. Decrease in the Southern Denmark Region In the Southern Denmark Region there is an economic vacancy of 10.9 percent which is slightly above the national average. However, the Southern Denmark Region is moving in the right direction as the economic vacancy has decreased 2.9 percentage points since last quarter and 3.8 percentage points compared to last year. Within the Southern Denmark Region there is a relatively high level of free capacity in Odense, however, the vacancy has decreased here as well.

Since 2010 the vacancy level has not been below ten percent.

In February there were 1.211.400 employed in the office sector.

The economic vacancy in the Southern Denmark Region peaked in April 2017 at 15.7 percent.

Economic vacancy rate April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

10,4

-0,1

-1,6

6,9

1,1

0,6

Other Copenhagen and area

10,9

-0,1

-2,0

Northern Zealand

19,9

-4,8

-2,2

11,8

0,0

4,8

15,5

-1,3

Western and Southern Zealand

9,2

0,7

3,6

Southern Denmark Region

Table 1. Office Capital Region Copenhagen, CBD

Zealand Region Eastern Zealand

10,9

-2,9

-3,8

Odense

17,0

-1,5

-0,9

Triangle Area

11,1

-4,8

Mid Jutland Region

6,2

-1,7

-2,8

Aarhus

6,4

-2,3

-3,2

Other Mid Jutland

5,6

0,0

-0,9

11,9

0,4

-1,1

12,0

0,0

-1,5

10,2

-0,3

-1,6

Northern Jutland Region Aalborg Total

Source: The Danish Property Federation Market Statistics.

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The Danish Property Federation Market Statistics – vacancy, April 2018

Retail – The vacancy rate continues to decrease Retail vacancy maintains the last three years’ trend and still decreases in April 2018 at national level. Retail is the sector which has the largest quarterly decrease of 6.1 percent and the lowest vacancy level compared to the other sectors. The latest three months, the economic vacancy for retail has decreased by 0.4 percentage points and compared to April last year, the vacancy is now 1.6 percentage points lower.

Increased consumption still nourish the demand for retail premises.

Decrease in four out of five regions.

This is due to the general positive development seen in the retail sector since the beginning of 2013. A survey about the consumer confidence indicates that consumers are still positive about the Danish economy which can result in further demand for retail premises. Largest decrease in the Northern Jutland Region Vacancy decrease is seen in four of Denmark’s regions. In the Northern Jutland Region, the change of -0.8 percentage points means that the region has a level of 2.3 percent. As such, the Northern Jutland Region still has the lowest vacancy level among the regions. Also, the spatial vacancy of 3.3 percent is quite below the national average and has a decrease of 1.5 percentage points in the last quarter. In the Capital Region, the retail vacancy has decreased as well. The change of -0.6 percentage points is the largest since April 2017, and with an economic vacancy of 6.2, the region has a vacancy level close to the national average.

Highest decrease in the Capital Region since April 2017.

Vacancy in Copenhagen CBD is 5.2 percent In the Capital Region the decrease has been driven by the development outside central Copenhagen, where Other Copenhagen and Area has a decrease of 1.1 percentage points, and the Northern Zealand Region has a decrease of 2.2 percentage points. In Copenhagen CBD, the retail vacancy has increased the last quarter with 1.0 percentage points. This is the third quarter in a row that the vacancy increases in Copenhagen CBD.

Economic vacancy rate

Table 2. Retail Capital Region

April 2018 (percent)

Quarterly change (percentage points)

6.2

-0.6

-0.5

Copenhagen, CBD

5.2

1.0

1.3

Other Copenhagen and area

6.8

-1.1

-0.7

Northern Zealand

6.1

-2.2

-3.3

8.2

-0.5

-2.2

Eastern Zealand

7.5

-0.6

-1.8

Western and Southern Zealand

9.8

-0.4

-3.0

5.8

0.5

-2.0

5.5

0.5

-2.6

5.7

-0.2

-2.2

Aarhus

4.3

-0.4

-0.4

Other Mid Jutland

8.3

0.0

-5.4

2.3

-0.8

-9.0

2.6

-0.7

6.1

-0.4

Zealand Region

Southern Denmark Region Triangle Area Mid Jutland Region

Northern Jutland Region Aalborg Total

Source: The Danish Property Federation Market Statistics.

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Annual change (percentage points)

-1.6


The Danish Property Federation Market Statistics – vacancy, April 2018

Industry – Small increase in vacancy In April 2018 there was a small quarterly increase in the economic vacancy of 0.3 percentage points. Thus, industry is the only sector where the economic vacancy has increased. The spatial vacancy for industry has increased by 1.0 percentage points compared to last quarter. However, it has decreased with 0.6 percentage points compared to April 2017. Magical limit of ten percent To find a level for economic vacancy below ten percent for industry one needs go back to 2008. As such, April 2018 was neither the quarter were the level came below ten percent in economic vacancy. Therefore, we will have to wait patiently to see an economic vacancy level consisting of one figure. The economic vacancy for industry peaked in January 2015 with 15.8 percent and since last year the economic vacancy has decreased by 1.5 percentage point. The overall decrease is probably related to the increase of 2.8 percent in the industry production in Denmark in 2017. Decrease in the Southern Denmark Region Compared to last quarter the economic vacancy has increased in the Capital Region, the Zealand Region, and the Mid Jutland Region. On the other hand, the economic vacancy decreased in the Southern Denmark Region. Common for these regions are the decrease in economic vacancy compared to same period last year. The largest decrease of 4.9 percent is found in the Zealand Region, although this is where one finds the highest regional economic vacancy.

Quarterly increase but annual decrease of 1.5 percentage point.

Large decrease in the Zealand Region.

Economic vacancy rate

Table 3. Industry Capital Region

April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

11.4

0.9

-1.2

Copenhagen, CBD

17.0

-1.3

5.1

Other Copenhagen and area

10.5

1.1

-1.7

Northern Zealand

11.7

-0.8

-6.5

Zealand Region

19.2

0.1

-4.9

Southern Denmark Region

11.9

-6.0

-1.2

4.3

0.8

-0.3

5.2

2.0

1.2

10.6

0.3

-1.5

Mid Jutland Region Aarhus Total

Source: The Danish Property Federation Market Statistics.

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The Danish Property Federation Market Statistics – vacancy, April 2018

Residential – Stable vacancy level Compared to the other sectors, the vacancy of residential is still low at 4.1 percent in April 2018. Despite this, there is an annual increase compared to same month last year of 0.8 percentage points. Residential vacancy is still above the long-term level.

The Capital Region is now below national average.

The vacancy level lies above the long-term average since 2000 of 3.3 percent. With a continuous healthy Danish economy and expectations of maintaining this in the time to come, there is still reason to expect that the demand of residential, especially in the larger cities, will make the vacancy reach the long-term level. Decrease in the Capital Region – increases in other regions In April 2018 there are signs in the Capital Region that indicate that the last six quarters’ minor increases since October 2016 will end. As opposed to the other regions, the residential vacancy has decreased by 0.3 percentage points to a level of 3.7 percent and below the national average in April. In the Zealand Region and the Southern Denmark Region, the vacancy is quite below the average with an economic vacancy of 2.7 and 2.1 percent, even though it increases in the last quarter of respectively 0.4 and 0.1 percentage points. In the Northern Jutland Region and the Mid Jutland Region, the residential vacancy is 6.8 and 6.3 percent and furthermore we experience minor increases in April of 0.8 and 0.5 percentage points. Compared to the same period last year, the vacancy percentage has increased by 2.6 and 1.5 percentage points in the two regions.

Odense has the lowest vacancy of the four largest cities.

Increases in Aalborg and Aarhus This is mainly due to increases in Aalborg and Aarhus that have experienced increases of 2.6 and 2.0 percentage points during the last year ending with a vacancy level of 6.7 and 7.2 percent. The relatively high levels in residential vacancy in the larger cities, with a high demand, can be a result of larger investments and renovations. Leading to a shorter period of empty leases, while renovations are done. The residential vacancy in Odense are lower than the national average with an economic vacancy of 1.7 percent.

Economic vacancy rate

Table 4. Residential Capital Region

Quarterly change (percentage points)

Annual change (percentage points)

3.7

-0.3

0.4

Copenhagen, CBD

5.3

-0.1

0.5

Other Copenhagen and area

3.8

-0.3

0.5

Northern Zealand

2.1

-0.4

-0.1

2.7

0.4

0.4

Eastern Zealand

1.1

0.0

-0.4

Western and Southern Zealand

3.2

0.5

0.7

2.1

0.1

0.5

Odense

1.7

0.0

0.2

Triangle Area

3.5

0.7

1.1

Other Southern Jutland

2.0

0.0

0.6

6.3

0.5

1.5

Aarhus

7.2

0.7

2.0

Other Mid Jutland

3.0

-0.5

-0.6

6.8

0.8

2.6

Aalborg

6.7

0.8

2.6

Other Northern Jutland

8.3

2.0

1.8

4.1

0.0

0.8

Zealand Region

Southern Denmark Region

Mid Jutland Region

Northern Jutland Region

Total 6

April 2018 (percent)

Source: The Danish Property Federation Market Statistics.


The Danish Property Federation Market Statistics – vacancy, April 2018

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 Market Statistics. Note: 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, April 2018

About the Market Statistics

This report is based on data from

This web report is published 6 July 2018. Next scheduled publication is primo August 2018.

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, CS Pensionsfond, CW Obel Ejendomme, DADES, Danica, Dansk Sygeplejeråd, Danske Bank, DATEA, DEAS, DEAS Invest 1, DIP, DNP Ejendomme, DSB Ejendomme, Ejendomsforeningen Danmark, 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, Karberghus, KIRKBI, KLP Ejendomme, Kramers Legat, Laros, 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, Probus, ProDomus, Realdania, Sampension, SEB, SPG Omsorg DK1, Steen & Strøm, Taurus Ejendomsadministration, TDC Pensionskasse, Topdanmark, Tryg, Valad, Wagner Ejendomme og Aage Larsens Boligudlejning.

The portfolios have approximately 83.900 rentals corresponding to an annual lease value of DKK 19,0 billion and 15,3 million square meters. In comparison the statistical base in April 2017 had an annual lease value of DKK 18,0 billion and 15,9 million square meters. 5.500 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 31 March 2018 and is called April 2018. Quarterly change is from April 2018 (closed 31 March 2018) compared to January 2018 (closed 31 December 2017). Annual change is from April 2018 (closed 31 March 2018) compared to April 2017 (closed 31 March 2017). 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

* The number of properties include properties and parent properties. A property can include one or more buildings and one or more residentials or office units. A parent property includes a property, in which there is apartments, which are registered as independent properties. For these units it is the parent properties that are counted and not each apartment.

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Further information If you wish to know more about this publication please contact Chief Economist in the Danish Property Federation

Morten Marott Larsen mml@ejendomsforeningen.dk Phone +45 28 45 56 51


The Danish Property Federation Market Statistics – vacancy, April 2018

Appendix Figure 3. Spatial vacancy rate, April 2018 11.3

10.7 8.3

8.5

6.6

3.9

Office

Retail

Industry

Residential

Other commercial

Total

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Change in percentage points

Quart.

An.

Quart.

An.

Quart.

An.

Quart.

An.

Quart.

Quart.

An.

-0.4

-1.8

0.2

-0.7

1.0

-0.6

0.0

0.8

1.6

0.0

-0.8

An.

Source: The Danish Property Federation Market Statistics. Note: The Vacancy rates for all sectors also include actual annual rent and space for other commercial and secondary spaces.

Spatial vacancy rate

Table 5. Office Capital Region

April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

11.3

-0.2

-1.8

6.8

0.7

0.8

Other Copenhagen and area

12.0

-0.1

-2.1

Northern Zealand

17.7

-4.5

-3.4

14.6

0.6

5.3

Eastern Zealand

16.3

0.3

Western and Southern Zealand

13.7

0.7

4.6

Southern Denmark Region

Copenhagen, CBD

Zealand Region

13.0

-4.0

-7.1

Odense

18.6

-1.3

-5.4

Triangle Area

13.7

-7.5

7.4

-2.2

-2.8

6.6

-2.9

-3.5

Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg Total

9.2

-0.5

-0.9

13.1

0.7

-1.2

13.7

0.2

-1.5

11.2

-0.6

-2.0

Source: The Danish Property Federation Market Statistics.

9


The Danish Property Federation Market Statistics – vacancy, April 2018

Spatial vacancy rate

Table 6. Retail Capital Region

April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

6.9

0.8

1.1

Copenhagen, CBD

5.8

1.2

3.6

Other Copenhagen and area

7.3

1.0

0.8

Northern Zealand

7.0

-1.1

-2.1

Zealand Region

7.5

0.0

-3.1

Eastern Zealand

6.2

0.2

-2.1

Western and Southern Zealand

9.5

-0.4

-4.5

5.5

-0.2

-1.7

5.1

-0.6

-3.5

7.1

-0.5

-3.2

Aarhus

5.4

-0.2

1.2

Other Mid Jutland

9.0

-1.0

-9.3

3.3

-1.5

-5.1

4.1

-1.3

6.6

0.3

Southern Denmark Region Triangle Area Mid Jutland Region

Northern Jutland Region Aalborg Total

-0.7

Source: The Danish Property Federation Market Statistics.

Spatial vacancy rate

Table 7. Industry Capital Region

April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

11.9

2.1

0.2

Copenhagen, CBD

19.7

0.7

-1.5

Other Copenhagen and area

10.8

2.3

0.1

Northern Zealand

18.7

0.1

3.2

Zealand Region

15.0

0.2

-2.4

Southern Denmark Region

13.0

-5.2

-3.1

4.2

-0.1

-1.7

4.2

0.0

-0.6

10.6

1.0

-0.7

Mid Jutland Region Aarhus Total

Source: The Danish Property Federation Market Statistics.

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The Danish Property Federation Market Statistics – vacancy, April 2018

Spatial vacancy rate

Tabel 8. Residential Capital Region

April 2018 (percent)

Quarterly change (percentage points)

Annual change (percentage points)

3.4

-0.2

0.5

Copenhagen, CBD

4.2

-0.1

0.3

Other Copenhagen and area

3.5

-0.2

0.6

Northern Zealand

2.1

-0.4

-0.1

Zealand Region

3.4

0.3

0.3

Eastern Zealand

1.3

0.0

-0.4

Western and Southern Zealand

4.0

0.5

0.5

2.2

0.1

0.6

Odense

1.8

-0.1

0.4

Triangle Area

3.4

0.5

1.2

Other Southern Jutland

1.9

0.0

0.5

Southern Denmark Region

Mid Jutland Region

5.6

0.2

1.4

Aarhus

6.7

0.4

2.4

Other Mid Jutland

2.7

-0.2

-0.9

Northern Jutland Region

6.9

0.9

2.3

Aalborg

6.7

0.8

2.3

Other Northern Jutland

9.6

2.1

1.8

3.9

0.0

0.9

Total

Source: The Danish Property Federation Market Statistics.

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The Danish Property Federation´s market statistics – vacancy (April 2018)  

Economic vacancy has seen the largest annual decline since April 2006 of 1.1 percentage points Decline in vacancy entails DKK 2 bil. increas...

The Danish Property Federation´s market statistics – vacancy (April 2018)  

Economic vacancy has seen the largest annual decline since April 2006 of 1.1 percentage points Decline in vacancy entails DKK 2 bil. increas...

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