THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK
July 2015
WEB REPORT
Economic vacancy rate of almost 10 percent In this first release by the Danish Property Federation’s Market Statistics the economic vacancy rate for investment properties in July 2015 is measured to an average of 9.8 percent for all types of properties. The overall vacancy rates are presented in table 1.
decrease by 1.7 percentage points. Thus, the retail vacancy level is lower than the level of office and industrial rentals. The economic vacancy rate for office rentals is of 11.8 percent, which is an increase of 0.5 percentage points during the last quarter; however, compared to last year, the economic vacancy rate for office rentals has decreased by 1.3 percentage points. The annual change indicates a positive development for economic vacancy rate for office rentals. However historically, an economic vacancy rate of 11.8 percent for this sector is relatively high for Denmark. The average economic vacancy rate level over the past 15 years is around 8 percent.
The level of economic vacancy rate is to be seen in connection with the fact that after the financial crisis economic activity has been lower, which means less demand for premises. Moreover, before the financial crisis decisions for new construction and development were made. The completion at a time of economic decline let to overbuilding, put pressure on rental rates and raised vacancy.
Industrial rentals has an economic vacancy rate of 14.6 percent and thus the highest vacancy within the four sectors. The vacancy rate for industry has increased the last quarter as well as the last year.
When looking at the forecasts for economic growth in the years to come, it is expected that the vacancy rates will decrease. Today, the economic vacancy rate is declining compared to last year when the economic vacancy rate was 0.5 percentage points higher although there has been a small increase in the economic vacancy rate of 0.1 percentage points the latest quarter.
The space vacancy rate is 11.3 percent It is the economic vacancy rate which is of the greatest importance for owners evaluating management performance and the Danish economy as a market key figure. However, the Danish Property Federation’s Market Statistics also measure statistics covering the vacancy rate for space to get a better understanding of the correlation between market value and area. In general, the space vacancy rate is typically higher than the economic vacancy rate.
Low residential economic vacancy rate The economic vacancy rates vary significantly across types of investment properties. The residential economic vacancy rate for of 2.6 percent is relatively low, especially considering a certain natural vacancy due to moving in or out and renovation. Compared to the latest quarter, the economic vacancy rate for residential rentals is unchanged.
The space vacancy rate is 11.3 percent. This is an increase of 0.3 percentage points compared to the last quarter and a decrease of 0.2 percentage points over the last year. The level of space vacancy is a little lower than the economic vacancy rate for residential and retail rentals while the opposite applies to office and industrial rentals.
Compared to residential rentals the economic vacancy rate regarding commercial rentals are relatively higher. The economic vacancy rate is of 8.3 percent implying a small quarterly increase by 0.2 percentage points and a yearly
Table 1. Vacancy rates July 2015 Economic vacancy rate
Office Retail
Space vacancy rate
Vacancy (percent)
Quarterly change (percentage points)
Annual change (percentage points)
Vacancy (percent)
Quarterly change (percentage points)
Annual change (percentage points)
11.8
0.5
-1.3
13.9
0.3
-1.1
8.3
-1.7
0.2
8.0
-0.7
-0.7
14.6
1.0
0.5
15.7
0.9
-2.3
Residential
2.6
0.0
-1.5
2.5
0.0
-1.0
Total
9.8
0.1
-0.5
11.3
0.3
-0.2
Industry
Source: The Danish Property Federation. 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 July 2015 WEB REPORT
Office
Office has lower economic vacancy rates than space vacancy rates The Copenhagen region has an economic vacancy rate for office of 12.2 percent, as seen in figure 2. This is a little more than the national average, which is 11.8 percent. The economic vacancy rate in Copenhagen CBD, however, is low at 9.9 percent and it is moving in the right direction as there is a decrease of 0.6 percentage points compared to last quarter and of 2.9 percentage points compared to last year. Other Copenhagen & area is the area with the most office rentals in the statistic. The economic vacancy rate is 12.5 percent which implies an increase of 1.3 percentage points compared to last quarter, but a decrease by 1.1 percentage points compared to last year. In the Northern Seeland Region, there has been a decrease in the economic vacancy rate compared to last quarter and last year. The economic vacancy rate is 19.0 percent. For Seeland Region, Mid Jutland Region, and Northern Jutland Region the economic vacancy rate is below the national average of 11.8 and the economic vacancy rate has been decreasing compared to the same time last year. In Northern Jutland Region, the economic vacancy rate for office is 7.0 percent and in Seeland Region it is 8.2 percent. In Mid Jutland Region the economic vacancy rate is 10.2 percent. The level is pulled up by Aarhus with an economic vacancy rate of 10.9 percent, which still is lower than the national average. Sourthern Denmark Region is the region with the highest economic vacancy rate of 12.7 percent, although it has a decrease of 0.9 percentage points compared to last quarter. Common to all office rentals in all regions, sub-regions and parts of the country is that the economic vacancy rate is lower than the space vacancy rate. This means that the relatively expensive space is rented more than the cheap ones. This implies that new and well placed premises are more interesting than old and secondary placed office rentals.
Retail Low economic vacancy rates for retail rentals in Copenhagen CBD and Aarhus Retail in Copenhagen CBD has an economic vacancy rate of 1.7 percent, which is somewhat below the national average of 8.3 percent. This is seen in table 3. The economic vacancy rate in Copenhagen CBD has decreased by 1.0 percentage points compared to last quarter and 1.5 percentage points compared to last year. The economic vacancy rate in Aarhus is 5.8 percent, which is also below the national average. The largest sub-region Other Copenhagen & area has an economic vacancy rate of 9.5 percent, which is above the national average, but it is a decrease of 3.4 percentage points compared to last quarter and 0.4 percentage points compared to the same time last year. In Northern Seeland, the economic vacancy rate for retail is 8.3 percent, which is lower than for office in Northern Seeland. In Seeland Region the economic vacancy rate for retail is above the national average with 11.7 percent, but the economic vacancy rate has been decreasing with 3.5 percentage points compared to last quarter and 0.5 percentage points compared to the same time last year.
Published by the Danish Property Federation
THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK July 2015 WEB REPORT
Industrial
Economic vacancy rate of 14.6 for industrial rentals The industrial rentals sector consists of industry- and stock rentals. This sector has the highest economic vacancy rate with 14.6 percent and it has slowly increased since last quarter and compared to last year, as can be seen in table 4. In Southern Denmark Region the economic vacancy rate is 11.5 percent, which is a decrease of 1.0 and 3.7 percentage points compared to last quarter and last year. In Mid Jutland Region the economic vacancy rate is 7.7 percent, but in Aarhus the economic vacancy rate is 14.9 percent. In the Capital Region the economic vacancy rate for industrial rentals is above national average with 15.4 percent and here the economic vacancy rate has a slow increase.
Residential
Lowest regional economic vacancy rate for residential in Seeland Region The economic vacancy rate for residential is generally low, which is seen in table 5. If you only look at economic vacancy rate, residential is a safer investment. Of course there are several conditions to be aware of concerning uncertainty, but it is a good sign for the investors within residential that the national average for residential is down at 2.6 percent. The lowest regional economic vacancy rate is found in Seeland Region with 1.6 percent, closely followed by Northern Jutland Region with 1.7 percent. In the Capital Region the economic vacancy rate is also below national average, but in Copenhagen CBD it is 5.7 percent.
Published by the Danish Property Federation
THE DANISH PROPERTY FEDERATION MARKET STATISTICS – VACANCY COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK July 2015 WEB REPORT N
Ø
V
S
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, 1562-1609, 1611-1614.
Tivoli
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 July 2015 WEB REPORT
Table 2. Office Economic vacancy rate Quarterly change (percentage points)
Annual change (percentage points)
12.2
0.8
-1.6
July 2015 (percent) Capital Region total Copenhagen, CBD
Space vacancy rate Quarterly change (percentage points)
Annual change (percentage points)
14.2
0.6
-1.2
July 2015 (percent)
9.9
-0.6
-2.9
10.5
-0.7
-3.2
Other Copenhagen & area
12.5
1.3
-1.1
14.6
1.0
-0.9
Northern Seeland
19.0
-0.7
-1.0
20.2
-0.1
1.2
Seeland Region
8.2
-1.6
-4.1
10.2
-2.4
-6.5
Southern Denmark Region
12.7
-0.9
1.8
16.7
-1.5
2.6
Mid Jutland Region
10.2
1.3
-0.6
12.2
0.4
-2.0
10.9
1.7
-0.7
13.0
1.3
-2.0
7.6
-0.2
0.3
9.7
-2.4
-1.1
7.0
-2.5
-1.5
9.9
-0.5
-1.5
11.8
0.5
-1.3
13.9
0.3
-1.1
Aarhus Other Mid Jutland Northern Jutland Region Total Source: The Danish Property Federation.
Table 3. Retail Economic vacancy rate
Space vacancy rate
July 2015 (percent)
Quarterly change (percentage points)
Capital Region total
7.8
-2.6
-0.6
Copenhagen, CBD
1.7
-1.0
-1.5
Other Copenhagen & area
9.5
-3.4
Northern Seeland Seeland Region Eastern Seeland
Quarterly change (percentage points)
Annual change (percentage points)
7.3
-1.6
-2.4
1.7
-0.4
-1.3
-0.4
8.8
-2.4
-3.4
Annual change (percentage points)
July 2015 (percent)
8.3
0.1
-1.7
7.9
0.1
-2.3
11.7
-3.5
-0.5
9.4
-2.9
-2.8
10.8
-1.7
-0.1
8.8
-0.7
-0.3
Southern Denmark Region
5.9
-1.4
2.2
6.3
-1.9
1.5
Mid Jutland Region
7.6
3.8
2.5
9.6
6.0
5.1
Aarhus Northern Jutland Region Total
5.8
1.2
-2.0
6.0
1.1
-0.8
13.0
-1.8
5.3
11.6
-0.8
4.7
8.3
-1.7
0.2
8.0
-0.7
-0.7
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 July 2015 WEB REPORT
Table 4. Industrial Economic vacancy rate July 2015 (percent)
Space vacancy rate
Quarterly change (percentage points)
Annual change (percentage points)
July 2015 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
Capital Region total
15.4
0.4
0.4
16.2
0.3
-2.0
Copenhagen, CBD
12.9
0.0
-5.8
23.9
0.0
-1.9
Other Copenhagen & area
15.7
0.5
1.4
15.9
0.5
-1.3
Northern Seeland
13.6
-1.0
-6.0
13.2
-1.8
-8.2
11.5
-1.0
-3.7
17.2
0.9
-5.0
7.7
2.4
1.0
9.2
1.6
-0.3
14.9
4.9
-1.8
18.3
3.7
-3.6
14.6
1.0
0.5
15.7
0.9
-2.3
Southern Denmark Region Mid Jutland Region Aarhus Total Source: The Danish Property Federation.
Tabel 5. Residential Economic vacancy rate July 2015 (percent)
Quarterly change (percentage points)
Space vacancy rate
Annual change (percentage points)
July 2015 (percent)
Quarterly change (percentage points)
Annual change (percentage points)
Capital Region total
2.1
-0.1
-1.8
2.2
-0.1
-1.3
Copenhagen, CBD
5.7
0.4
-1.5
5.1
0.4
-0.2
Other Copenhagen & area
1.8
-0.2
-2.4
1.9
-0.1
-1.8
Northern Seeland
1.0
-0.1
-0.1
1.1
-0.2
-0.1
Seeland Region
1.6
0.7
0.1
2.2
0.7
0.3
Eastern Seeland
0.7
0.5
0.2
1.0
0.7
0.1
Western and Southern Seeland
2.2
0.7
0.1
3.0
0.8
0.4
2.2
0.2
-1.3
2.2
0.2
-0.9
Odense
1.1
0.8
-0.2
1.2
0.7
-0.1
Triangle area
2.3
0.0
-3.3
2.0
0.1
-2.3
Other southern Denmark
2.8
0.1
0.0
3.1
0.0
0.1
6.5
0.3
-1.0
5.5
0.4
-0.6
Southern Denmark Region
Mid Jutland Region Aarhus
6.1
0.4
-0.8
4.7
0.5
-0.5
Other Mid Jutland
7.8
-0.1
-1.9
7.7
0.0
-1.6
Northern Jutland Region
1.7
0.2
-0.4
2.0
0.1
-0.1
Aalborg
1.0
-0.2
-0.6
0.9
-0.3
-0.6
Other Northern Jutland
7.3
3.6
1.1
8.9
3.1
2.4
2.6
0.0
-1.5
2.5
0.0
-1.0
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 July 2015 WEB REPORT
Figure 1. Economic vacancy rate 2000-2015 Percent 25.0
20.0
15.0
10.0
5.0
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. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul.
0.0
2000
2001
2002
2003
2004
Office
2005
2006
Retail
2007
2008
Industrial
2009
2010
2011
Residential
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. Rem.: Data from January 2014 and forward are from the Danish Property Federation. From 2001 to 2013, data from IPD Danish Property Index have been processed based on differences in level in 2014. In year 2000, office data from Oline- ED statistikken have been included. Methods are not identical, which is why der is a gap between October 2013 and January 2014. From January 2014 data are quarterly, before this data are annual. From 2014 there is a larger base of data.
About the Market Statistics This web report is published on September 9, 2015. Next planned publishing is mid November. The report has been based on data from: Aberdeen Asset Management, Alm. Brand, AP Pension, ATP, Bevica Fonden, Carlsbergfondet, CS Pensionsfond, C.W. 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, Niam, Nordea Ejendomme, North Property Asset Management, NREP, PBU, PenSam, Pension Danmark, Pensionskassen for Farmakonomer, PFA, PKA, Sampension, SEB, SPG Omsorg DK1, Steen & Strøm, Topdanmark, Unipension og Valad. The portfolios have approx. 50.000 rentals corresponding to an annual lease value of DKK 14.9 bn and 12.5 m m2. In order to compare, the statistical base in July 2014 had an annual lease value of DKK 11.2 bn and 9.4 m m2. The market statistics is based on quarterly processed property data for rentals and vacancies within the period in question and closed per June 30, 2015. 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