The appeal of modern facilities lies behind take-up gains
The Copenhagen office market is structurally changing as modern facilities and flexible jobs are tenants’ main concern. Infrastructure is also important as tenants are looking for properties close to transport facilities and surrounded by an attractive and well-established environment. These requirements are being met by landlords through renovated offices and by new built office properties. Demand is strong enough to see vacancy in Copenhagen drop to about 5.7%, in line with the decline in unemployment. Demand is being focused by small and medium sized businesses on flexible office facilities where they can expand quickly. Large corporations are building big headquarters to accommodate staff. The combination of the two ensured that rents increased last year to DKK 2,100/m²/year (€280/m²/year). Rental growth may slow though if current development projects are added to. Copenhagen offers several new large urban development areas, many of them near the city centre, where industrial areas are being transformed into residential and modern offices.
2017 is one the strongest years ever for the investment market
The transaction volume broke records in 2017 with an estimated €12bn in total up from €9bn in 2016. Office investment volume was approximately €2bn for Denmark with Copenhagen accounting for €1.3bn. The high level of demand for property acquisition resulted in a downward pressure on yields. The prime office yield in Copenhagen lost 25 bps over the year to reach 4.00% at the end of 2017.