Demand from midsized companies is driving flexible space take-up
Historically high demand, low vacancy rates and innovative solutions defined the Copenhagen office market in 2018. The decline in unemployment in the strong Danish economy has driven vacancy rates down, which currently stands at 5.9% for Copenhagen’s office market. Development continues to go forward in renovated offices and new buildings but in Denmark, the trend for coworking space started to accelerate over 2018. It is in that segment that Copenhagen is seeing new developments going forward as international investors and developers started building coworking spaces and office hotels. Concept developers look primarily at the best locations in Copenhagen, which is crucial for coworking spaces. It is essential that the property is located close to great infrastructure, public transport, as well as near other highgrowth companies. Demand continues to be generated by small and medium sized businesses who are increasingly choosing flexible office facilities where they can expand quickly. Large corporations are either actively building their own headquarters to accommodate staff or preletting space. Diminished supply plus ongoing space requirements resulted in pressure being maintained on rents that stood at DKK 2,200/sq m/year (€295/sq m/year) in the most central districts of Copenhagen.
Investment in logistics property almost doubled in 2018
Office investment volume was approximately €2bn for Denmark and what was particularly striking about 2018 is that investment in industrial and logistics properties almost doubled from 4.5% to 8%. There are positive prospects for the investment market in 2019, as buyers still wish to acquire core prime properties even with a shortage of product. This dynamic is expected to keep prime office yields low over 2019.