Colliers Copenhagen Property Market Report 2019

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Copenhagen Property Market Report 2019

LOCATIONS INDUSTRIAL & LOGISTICS Read more

A thriving market segment

Decreasing number of industrial workers in Denmark

In Denmark, the industrial and logistics market has traditionally been strongly correlated with general economic trends. Compared to other types of investment property, favour- able and adverse economic trends alike register more quickly in the market for storage and logistics property. At the moment, the market benefits from the prevailing upturn in Danish economy. Record-low vacancy rates Irrespective of spare capacity, the overall vacancy rate for Greater Copenhagen industrial and logistics property dropped from 3.1% in early 2018 to 2.7% at end-2018, continuing previous years’ downtrend. The same trend applies to industrial vacancy rates in the rest of Denmark, although it is important to bear in mind that there may be great variations as the industrial building stock is highly inhomogeneous in terms of building design and quality, location, etc. In our opinion, the current vacancy rate covers the stock of old and obsolete industrial and logistics facilities that fail to meet today’s user demands in terms of location, ceiling height, turning space, load-bearing capacity and ramps. Industrial activity is picking up The decline in vacancy rates reflects stronger activity in this segment, supported by the industrial production index, which in 2018 showed increased output levels, contin- uing the favourable developments of 2017. The increase in the production index is attrib- utable mainly to higher efficiency standards and automation, with robotics, etc., taking over processes formerly done manually. It is worth mentioning that the increase takes place against the backdrop of a moderate GDP growth forecast of 1.0% by Danske Bank. In addition, the 2019 outlook for the production index is bright, too, given a GDP growth forecast of 2.0% for 2019. Return to insourcing production In recent years, we have seen Danish businesses insource production previously outsourced to facilities abroad, as businesses increasingly decide to retain and enhance high-tech production in Denmark. As the general existing building stock is fairly outdated and unable to meet the demands associated with such high-tech production, we foresee some new construction activity in this segment. In late 2018, pharmaceutical company Leo Pharma supported this notion when announcing its plans to develop a new facility in Ballerup in a DKK 1.5bn investment. The facility is scheduled for completion in 2022.

280 300 320 340 360 380 400

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Denmark

Abroad

Note: Number of employees in the industrial sector in Denmark and in Danish companies abroad, (‘000). Source: Statistics Denmark

Uptrend in Danish exports and imports

25 30 35 40 45 50 55 60 65

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Imports

Exports

Note: Imports and exports, seasonally adjusted foreign trade, DKK billion. Source: Statistics Denmark