Aarhus__Locations_Online_MR19

Location descriptions Aarhus

Published by Colliers International. Reproduction or citation only with acknowledgement of source.

This is an online addition to The Copenhagen Market Report 2019, based on market data that we believe are reliable. Please note that the rental prices quoted may reflect data incon- sistencies compared to the respective pre-merger (July 2018) databases of Colliers International and/or Sadolin & Albæk. Whilst every effort has been made to ensure that the infor- mation provided in the report is both accurate and complete, Colliers accepts no liability for factual errors.

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Location descriptions | Aarhus – Market Report 2019

In brief Aarhus property market

Introduction Next to Copenhagen, Aarhus is the largest city in Denmark. It enjoys a central location between the urban centres of Jutland, with only about one hour’s drive to Aalborg in the north, Herning in the west and the Triangle Region in the south. Today, the City of Aarhus totals over 345,000 inhabitants and is located at the heart of the Central Denmark Region (Region Midtjylland) with more than 1.3 million inhabitants. This region is considered the catchment area of Aarhus. Today, Denmark is witnessing a general migration trend away from more peripheral locations, spurring population growth in the cities. This is particularly true of Aarhus, reflected in very strong population forecasts for the years ahead. By 2045, Statistics Denmark anticipates over 60,000 new inhabitants, equivalent to a population growth rate of approximately 18%. As this population boost is expected to spur demand for space, the City of Aarhus is actively pursuing development plans for new residential and office construction. In general, the office sector, including the liberal professions and the service industry, is expected to account for the majority of new jobs in future. The aim is to place these new developments within the city boundaries by converting former industrial sites into up-to- date mixed-use residential and commercial districts

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Office

Aarhus has the following four main office locations:

Aahus C/central Aarhus Aarhus C, central Aarhus continues to be the main prime office location, and office prem- ises in this area command somewhat higher rents. The area typically attracts the liberal professions, financial companies and knowledge-intensive professions that value prox- imity to the city centre and want a prominent and visible location in the cityscape. Office premises in this part of the city are typically not up-to-date or space-efficient. However, new office construction is taking place in the area between the central station and the harbour: At Frederiks Plads, a new NCC Company House is let to Horten, SAS Institute and Alektum. In addition, Danske Bank is building a new large-scale office at Sydhavnen, scheduled for completion in 2019. Aarhus N/Skejby Skejby and the surrounding area in Aarhus North, is a highly successful new office area that enables both graduates and students to be recruited due to the city-centre location and the location a short distance from the motorway and light rail stations. However, the area is characterised by heavy traffic during peak hours, which has meant that some tenants are looking to relocate further north. By opting for premises north of Skejby, tenants will typically also achieve a lower rent level than in Skejby. Vestas is one of the primary firms in the area, occupying over 50,000 sqm in the area. Other large office users in the area include ATEA, IBM, Sweco, Willis, G4S, NRGi, Mercuri Urval and Rambøll. Apart from offices, the area also houses the 25,000 sqm north campus of VIA University College and the university hospital, Aarhus Universitetshospital, which, due to being appointed a superhospital, is undergoing a comprehensive expansion and is expected to be fully operational in 2020. Aarhus V Offices in the urban areas Åbyhøj, Brabrand and Aarhus V, which can be categorised as Aarhus West, are typically concentrated around the Ring Road and along the approach roads. There is generally a greater difference in quality than in Aarhus C and Aarhus N, which is reflected in relatively large differences in rent levels. A popular office district has evolved along Viborgvej, attracting several large busi- nesses and new office developments. Tenants in the area include Tryg, Siemens and KPMG. In Aarhus V, the City of Aarhus has taken the first steps in the transformation of the Gellerup neighbourhood, where they will construct a new office building of approx. 20,000 sqm with room for approximately 1,000 employees. It is expected that other new office buildings will be constructed in Gellerup, which may become a new prime office area in Aarhus in the long term.

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Location descriptions | Aarhus – Market Report 2019

OFFICE

Change

Market Expectations

Typical rent levels

2016 1,300

2017 1,350

2018 1,400

2019 1,400 1,050 1,250

2018-19 2019

0%

Prime

Aarhus C

775

800

900

17%

Secondary

1,100

1,150

1,200

4% 0% 0% 7% 0% 0%

Aarhus N

800

800

800

800

1,050

1,100

1,100

1,100

Aarhus V

650 950 600

700

750

800

1,000

1,000

1,000

Aarhus S

700

700

700

Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International

Aarhus S The office market in Aarhus South, which includes the urban areas Viby J, Tranbjerg and Højbjerg, is generally characterised by being estab- lished earlier than other areas, which is reflected in the age and quality of the buildings. Therefore, this area typically attracts companies that have a relatively strong focus on cost in their rental search. The prime office space in this area is often located with a facade facing either the ring road or the access roads.

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Residential development areas The significant population growth has naturally increased demand for housing in Aarhus. Based on the current per capita residential area usage in Aarhus of 45.7 sqm, the popula- tion growth since 2010 corresponds to an additional housing demand of some 1,787,000 sqm. Looking at the predicted population growth, another 2.8 million sqm will be needed by 2045 to house the around 61,300 expected additional residents. On the supply side, the construction of residential properties in Aarhus is gaining momentum in response to the surge in demand. Following record high construction activity in 2017, an estimated 287,000 residential sqm was completed in 2018. The added supply has served to somewhat restore the supply and demand balance in the residential market. However, the current pipeline of another 200,000 sqm under construction could possibly put downward pressure on rents in secondary residential locations in the years ahead. Aarhus Ø Located in the previous industrial harbour, Aarhus Ø is expected to have 12,000 resi- dents and 10,000 workplaces when fully developed. The area has a number of prom- inent residential buildings, including stage one and two of Lighthouse, The Iceberg, Havneholmen and Havnehusene. Located with a waterfront location, residential rents and prices in Aarhus Ø are above average. However, in order to secure varied urban develop- ment, the City of Aarhus has specified that a quarter of the residential construction must consist of rent-regulated social housing. Aarhus has the following four primary residential development areas:

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Location descriptions | Aarhus – Market Report 2019

Lisbjerg Located approximately six kilometres north of Aarhus and connected with light-rail, Lisbjerg is the largest urban development area in Aarhus. The area is expected to have 25,000 inhabitants when fully developed in approximately fifty years. The first 200 units around the old village have already been constructed, and there are plans for much more than just housing: In order to ensure sustainable development, a town centre with shops, cafés and restaurants is planned. Brokvarteret Brokvarteret stretches all the way from Godsbanen to Trianglen and further out along Søren Frichs Vej. In total, approximately 2,800 residential units are envisaged when the area is fully developed. A. Enggaard and PKA are expected to start construction of 700 residential units in 2019. The units will be a mix of rental and owner-occupier flats, as well as social and student housing, contributing to the diversity of the neighbourhood. Risskov Brynet In the old industrial area, Risskov Brynet is developing into a new sustainable city district with approximately 1,800 residential units, including approximately 650 student apartments.

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Retail In all parts of Denmark, retail markets are under pressure due to the increasing amount of online sales. This has led to a dichotomy in the market, where location has become paramount to retailers. The continued strong footfall in prime locations may serve to keep business afloat, whereas prospects are less bright in secondary locations. Consumer trends have shifted away from goods towards experiences. As a result, retail vacancy rates have inched upwards in recent quarters, and may continue to climb, resulting in downward pressure on rental levels, particularly for secondary locations. Prime locations in the high-street area, centered around Søndergade and including the streets of Ryesgade, Skt. Clemens Stræde and Immervad are thriving. Prime rents remain stable, today standing at DKK 7,000 per sqm p.a., excluding taxes and operating costs. Likewise, the central square of Store Torv remains a popular high-street location. Existing retailers include Bang & Olufsen, COS, G-Star Raw, Designers Remix, Peak Performance as well as Tiger of Sweden. Generally speaking, the streets running off the main high streets have seen a weaker trend, with Guldsmedegade in the so-called Latin Quarter of Aarhus as somewhat an exception, attracting relatively strong occupational demand. Dating back to the 15th century, the Latin Quarter of Aarhus features many well-preserved original buildings and structures, today serving as a unique setting for shoppers and visitors alike.

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Location descriptions | Aarhus – Market Report 2019

Situated in the very city centre in connection with the main station, the shopping centre of Bruun’s Galleri has managed to retain fairly strong retail sales. According to an ICP (Institut for Center-Planlægning) survey of Danish shopping centres, Bruun’s Galleri had a turnover of approximately DKK 1.2bn, placing it just outside of the top-ten shopping centres in terms of turnover in 2017. Thanks to its location, many visitors to Aarhus are automatically directed through the shopping centre. In terms of footfall, Bruun’s Galleri therefore ranks number one in Denmark. Shopping centres outside central Aarhus include Storcenter Nord to the north and CityVest to the west. Both are well-functioning shopping centres that cater to the needs and requirements of the population in the immediate catchment area. The clusters of big box outlets, located around Tilst and Skejby, are less susceptible to changes in market conditions thanks to their ability to achieve synergies in a wider catch- ment area and their ability to offer a greater variety of goods. Their strategic location combined with the predominance of large, well-capitalised chains have cushioned them from large-scale vacancies. Major customer magnets in Skejby include IKEA, ILVA, Silvan, STARK and Elgiganten. In Tilst, the most popular big box stores include Bilka, Elgiganten, BAUHAUS, Babysam, Power and Harald Nyborg.

RETAIL

Change

Market Expectations

Typical rent levels

2016 6,500 3,000 2,800 1,800 3,000 1,600

2017 6,750 3,200 2,900 2,000 3,150

2018 7,000 3,400 3,000 2,300 3,350 1,800

2019 2018-19 2019

7,000 3,600 3,200 2,500 3,500 2,000

0% 6% 7% 9% 4% 11%

Prime

Aarhus high street (upper end)

Secondary

Aarhus high street (lower end)

Aarhus Latin Quarter

1,700

Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International

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Industrial & logistics Thanks to its motorway proximity, Logistikparken Aarhus west of Aarhus has developed into a prime industrial/logistics location. Danske Fragtmænd was the first company to relocate here, and several large companies have followed suit, including Brixius Trading and Søstrene Grene, the latter completing a logistics facility of 31,200 sqm in 2018. When fully developed, Logistikparken will extend to 177,000 sqm commercial space on 44 hectares in total. Also in the Logistikparken area, at Årslev, Salling Group has built a large-scale distribu- tion centre. In this location lies the 23,000 sqm fresh produce terminal of Netto, serving all Netto supermarket stores west of the Great Belt. In addition, there is a 53,000 sqm non-food terminal that serves all Føtex and Bilka stores in Denmark. Other prime locations include Hørning, where Frode Laursen, Antalis and Hørkram are located, and Hasselager, where COOP has its fresh produce terminal for all of western Denmark. Older industrial clusters are found at Lystrup, Brabrand, Viby J and Risskov. Commercial areas along the E45 motorway, defined as Skanderborg/Stilling south-west of the city and Hinnerup/Søften to the north-west, are also popular with logistics and wholesale businesses due to their proximity to the Aarhus, ensuring easy access to a strong recruitment base. Important companies located in this motorway corridor include DHL, Freja Transport & Logistik, Bridgestone and GLS.

INDUSTRIAL/LOGISTICS 1

Change

Market Expectations

Typical rent levels

2016

2017

2018

2019

2018-19

2019

400 250 450 250

400 250 450 275

400 250 475 275

400 275 475 300

0%

Prime

Central Aarhus and inner ring roads

10%

Secondary

0% 9%

Aarhus: Approach/outer ring roads 2

1 Industrial includes production, storage and logistics facilities. 2 The prime rents quoted apply also to locations with E45 proximity, i.e. Hinnerup/Søften and Skanderborg/Stilling. Note: Rent levels quoted in DKK per sqm p.a. exclusive of operating costs and taxes. Market expectations indicate trend forecast for the next 12 months. Source: Colliers International