Colliers Copenhagen Property Market Report 2019

Special Feature: Aarhus – Market Report 2019

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AARHUS C is a prime office location characterised by exceptionally brisk letting activity PRIME RENT: DKK 1,400 per sqm p.a. SECONDARY RENT: DKK 900 per sqm p.a.

to our records, there is in fact a latent demand for an additional 20,000 sqm space. This suggests that the quality of today’s office supply is not aligned with current tenant demands. Main Aarhus office locations Broadly speaking, the Aarhus office market may be divided into four main office districts along with several more peripheral office locations: 1 Aarhus C 2 Aarhus N 3 Aarhus V (including Åbyhøj and Brabrand) 4 Aarhus S (including Viby J, Højbjerg and Tranbjerg) We have analysed the strength profiles of the above-mentioned Aarhus office locations, based on various performance scores. The analysis is based on observations of 100,000+ sqm office space, where we have been involved in our capacity as commercial property advisers. None of the analysed tenancy agreements predate 2016. In addition to geograph- ical area, the analysis is based on predefined business categories, some broader than others, to ensure that the terms and conditions of individual tenancy agreements are not disclosed. Our objective is to highlight disparities between various locations in the hope that the analysis will enhance market transparency for the benefit of both tenants and investors. Aarhus C (Aarhus city centre) stands out as the office location seeing the strongest letting activity, in the analysis accounting for about 36% of leases in terms of floorspace and about 42% of annual rent. In this district, just shy of 90% of office space is let to the professions, trade and technology businesses as well as financial service providers. Generally speaking, unit sizes vary considerably, ranging from 50 sqm to some 6,000 sqm. This is reflected in annual rents per sqm, in the district ranging from DKK 650 to DKK 1,500, excluding operating costs and taxes. The average annual office rent in Aarhus C may be calculated at DKK 1,117 per sqm. Today’s prime rent is estimated at DKK 1,400 and the secondary rent at DKK 900 per sqm. Financial service providers are typically seen to be willing to pay the highest rent per sqm, paying an average rent of DKK 1,193 per sqm p.a., ahead of the liberal professions (law firms, accountants, etc.) with an average rent of DKK 1,152 per sqm. These two business categories typically demand top locations and premises, making the generally higher rent level in these two categories less surprising. In terms of unit sizes, the same two business categories occupy the largest leases on average, that is, 800 sqm (liberal professions) and 675 sqm (financial services). However, the professions are typically willing to commit to longer leases than financial service providers, with an average non-terminability period of 87 months (7.25 years) weighted by sqm as compared with ‘only’ 57 months (4.75 years) on average, representing the shortest non-terminability period among private business leases in the district. 1 Aarhus C – preferred location of the liberal professions and financial institutions