The Danish Property Federation Market Statistics Vacancy, July Other commercial has an economic vacancy of 7.7 percent

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1 The Danish Property Federation Market Statistics Vacancy, The Danish Property Federation Market Statistics WEB REPORT VACANCY Results Lowest economic vacancy in seven years decrease in vacancy of 1 percentage point Other commercial has an economic vacancy of 7.7 percent 3.6 percent in economic vacancy for residential The investment property market confirms economic growth Following a six months positive development, the Danish economy is still looking reasonable. As in theh past years, Danish economy continuous forward in a steady pace. The international economy also shows progress. The International Monetary Fund (IMF) expect the global growth to be 3.5 percent in 2017 and 3.6 percent in This is positive for the Danish companies and especially the investment property market where the demand for rentals is increasing. Hence the economic vacancy in decreases to 8.3 percent in total, while the spatial vacancy decreases to 9.1 percent. This is the lowest level for economic vacancy since 2010 and approx. 1 percentage point lower than July Significant improvement in economic vacancy Based on the positive international state of the market and increasing international demand, the Danish Economic Councils expect that employment will increase by in Furthermore, The Councils expect an increase in real wages and together with a historic savings surplus this gives way for an optimistic view on future private consumption and investments. The rest of 2017 and the coming years can provide stable economic growth based on domestic demand as well as export. The Economic Councils expect the average annual growth in Denmark to be 2.1 percent until Since April 2017, the economic vacancy has decreased by 0.5 percentage points implying quarterly decreases since April We see the latest quarterly decrease within all sectors of commercial properties. Office has the highest vacancy among the commercial sectors, but decreases in July with 0.6 percentage points to 11.2 percent following a steady period from January to April Retail also has a decrease of 0.6 percentage point since April The decrease in vacancy is the result of the following three circumstances: Firstly, the relation between new hired rentals and new Table 1. Vacancy rates in Vacancy Vacancy Office Retail Industry Residential Other commercial Total Rem.: The Vacancy rates for all sectors also include actual annual rent and space for other commercial and secondary spaces. 1

2 The Danish Property Federation Market Statistics Vacancy, vacant rentals means a decrease in economic vacancy. This was not the case from January to April this year. Secondly, the vacancy rent for existing retail rentals has depreciated with almost 5 percent. Thirdly, an increasing share of vacant rentals typically in shopping centres have been converted and rented out in new optimized retail units based on the given demand. With regards to industry, experiencing a quarterly decrease of 1.5 percentage points, some of the decrease can be explained by conversions either from other sectors to industry or conversions from industry to other sectors such as office and other commercial. Other commercial has economic vacancy below the national average In, for the first time, we present figures for other commercial in table 1 at page 1. Other commercial has always been included in the total. Other commercial has a vacancy level below the national average. In July, the vacancy was 7.7 percent, lower than both office and industry. We also see a decrease in the other commercial rentals of 0.6 percentage point the latest quarter. Other commercial Other commercial consists of commercial rentals which cannot be categories as office, retail, or industry such as educational institutions, hotels, child care institutions, rentals for leisure and culture, parking, advertising signs, antenna space, and other commercial within e.g. farming and forestry. The sector stands for between five and ten percent of the total annual rent in the Market Statistics. Figure 1. Development in economic vacancy Percent 25,00 20,00 15,00 10,00 5,00 0, Office Retail Industry Residential Total Source: The Danish Property Federation and own calculations based on data from IPD Danish Property Index and Oline-ED statistics. 2

3 The Danish Property Federation Market Statistics Vacancy, Office following stagnation decrease in vacancy The economic vacancy for office decreases to 11.2 percent after having been 11.8 in both January and April Since April, the vacancy has decreased by 0.6 percentage point and compared to a year ago by 1.2 percentage point. The spatial vacancy is decreased by 0.3 percentage point to 13.0 percent. Over the last year, the spatial vacancy has decreased by 1.1 percentage point. The decrease in vacancy covers regional differencies. In the Capital Region, the Zealand Region, and the Southern Denmark Region there is a decrease, while vacancy increases in the Mid- and Northern Jutland Region. In the Capital Region vacancy decreases with 0.7 percentage point which is the largest quarterly decrease since 2014, and in Northern Zealand vacancy decreases from 22.2 percent to 16.7 percent.in the Zealand Region vacancy decreases by 1.1 percentage point to 7.6 percent. In the Southern Denmark Region you find the largest regional decrease of 1.2 percentage point, while the Mid Jutland Region is increased by 0.6 percentage point to 9.5 percent. In Aarhus vacancy increases from 9.6 percent to 10.2 percent, although it is 5.0 percentage point lower than the same quarter last year. In the Northern Jutland Region we see an increase in vacancy of 1.0 percentage point to 12.4 percent. Retail lowest vacancy since 2009 Within retail there is decrease in economic vacancy. In the economic vacancy has decreased by 0.6 percentage point in three months to 7.0 percent. This is 1.4 percentage point lower than July last year. Measured in vacant space, the vacancy has decreased four quarters in a row with an average of 0.3 percentage point each quarter. Overall there has been no s in the Capital Region compared to April. This is a result from the increase in retail vacancy in Northern Zealand and other Copenhagen & Area of 0.9 and 0.4 percentage point respectively is equalized by a decrease of 0.9 percentage point in Copenhagen CBD. In all other regions the vacancy has decreased. Highest decrease in the Mid Jutland Region, where the economic vacancy decreases by 3.0 percentage point. This means that the Mid Jutland Region is now one of the five regions with the lowest economic vacancy. Especially in Other Mid Jutland with a decrease of 5.3 percentage point. Measured in vacant space the decrease corresponds to 7.7 percentage point. Looking back a year ago, Region Zealand has had the best development compared to July last year. Here, the economic vacancy has decreased by 4.6 percentage point. Vacancy is highest in the Northern Jutland Region and among the largest cities Aalborg shows the highest quarterly increase especially measured in vacant space. 3

4 The Danish Property Federation Market Statistics Vacancy, INTERAKTIV WEBRAPPORT TOMGANG Industry positive signals The economic vacancy decreases by 1.5 percentage point from 12.1 percent in April to 10.6 percent in July. Since July 2016 there has been a decrease of 1.7 percentage point. The spatial vacancy decreases by 0.7 percentage point to 10.6 percent. The annual in spatial vacancy is almost the same as economic vacancy at -1.8 percentage point. In the Capital Region the economic vacancy decreases by 1.2 percentage point mainly from Other Copenhagen while increasing in Copenhagen CBD. In the Zealand Region we see the highest decrease of 4.1 percentage point to 12.1 percent. The region still has a relatively high economic vacancy. The only region where the economic vacancy increases is the Mid Jutland Region where the increase is from 4.6 percent to 5.1 percent. In Aarhus there is a small increase of 0.2 percentage point to 4.3 percent. The Mid Jutland Region still has a relatively low vacancy rate. In the Southern Denmark Region the economic vacancy decreases from 13.1 percent to 10.6 percent. Residential economic vacancy at 2014 level Although this is the fifth quarter in a row with minor increases in the economic vacancy for residential, the economic vacancy is still significantly lower that the vacancy for commercial rentals. The economic vacancy for residential is now at 3.6 percent, which is at the same level as in The economic vacancy for residential peaked in 2009 at around seven percent. As opposed to commercial properties, the construction of residentials is progressing which could be a reason why the economic vacancy is showing a slight increase. As seen in figure 1, it has been normal in the period between that the economic vacancy for residential was below the economic vacancy for commercial rentals. Only in 2008 and 2009, the economic vacancy for residentials has been higher or at the level of the economic vacancy for commercial rentals. In the Zealand Region the economic vacancy decreases with 0.2 percentage point compared to last quarter and 1.3 percentage point compared to last year, while the economic vacancy increases in the other four regions. In the Northern Jutland Region the economic vacancy increases by 0.7 percentage point compared to last quarter and 2.8 percentage point compared to last year. In Other Northern Jutland the economic vacancy is now at 8.3 percent which is on the level of the beginning of It is the third quarter where the vacancy increases in Other Northern Jutland. 4

5 The Danish Property Federation Market Statistics Vacancy, Geographical overview Copenhagen CBD Lynettehavnen Margretheholm Kongebrovej Christiansborg Christianshavn Tivoli Northern Jutland Region Aalborg Mid Jutland Region Aarhus Northern Seeland Capital Region Triangle area Southern Denmark Region Odense Seeland Region Western and Southern Seeland Other Copenhagen & area Copenhagen CBD Eastern Seeland Anm.: Copenhagen CBD covers the zipcodes: 900, , og CBD stands for Central Business District. 5

6 The Danish Property Federation Market Statistics Vacancy, Table 2. Office Capital Region Copenhagen CBD Other Copenhagen and area Northern Zealand Zealand Region Eastern Zealand Western and Southern Zealand Southern Denmark Region Odense Triangle Area Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg Total Table 3. Retail Capital Region Copenhagen CBD Other Copenhagen and area Northern Zealand Zealand Region Eastern Zealand Western and Southern Zealand Southern Denmark Region Triangle Area Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg Total

7 The Danish Property Federation Market Statistics Vacancy, Table 4. Industry Capital Region Copenhagen CBD Other Copenhagen and area Northern Zealand Zealand Region Southern Denmark Region Mid Jutland Region Aarhus Total Table 5. Residential Capital Region Copenhagen CBD Other Copenhagen and area Northern Zealand Zealand Region Eastern Zealand Western and Southern Zealand Southern Denmark Region Odense Triangle Area Other Southern Jutland Mid Jutland Region Aarhus Other Mid Jutland Northern Jutland Region Aalborg Other Northern Jutland Total

8 The Danish Property Federation Market Statistics Vacancy, About the Market Statistics The portfolios have approx rentals corresponding to an annual lease value of DKK 18.1 bn and 15.0 m m2. In order to compare, the statistical base in July 2016 had an annual lease value of DKK 16.7 bn and 14.2 m m properties are included in the market statistics. This report is based on data from 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 per 30 June 2017 and is called. is from (closed per 30 June 2017) compared to April 2017 (closed per 31 March 2016). is from (closed per 30 June 2017) compared to July 2016 (closed per 30 June 2016). 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 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, Cromewell Property, CS Pensionsfond, CW Obel Ejendomme, DADES, Danica, Dansk Sygeplejeråd, Danske Bank, DATEA, DEAS, DEAS Invest 1, DIP, DNP Ejendomme, DSB Ejendomme, 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, KIRKBI, KLP Ejendomme, Kramers Legat, 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, ProDomus, Realdania, Sampension, SEB, SPG Omsorg DK1, Steen & Strøm, Taurus Ejendomsadministration, TDC Pensionskasse, Topdanmark, Tryg and Aage Larsens Boligudlejning. Further information For further information regarding this web report please contact Chief Economist in the Danish Property Federation Morten Marott Larsen mml@ejendomsforeningen.dk Phone