Development in office properties

Development in office properties

Demand for flexible and modern conditions

The demand for attractive office properties remains strong, while secondary office properties are experiencing lower demand. In 2024, we have seen several major transactions, particularly among institutional investors. Despite this, transaction volume has still dropped by around 25%. In contrast to many other European countries, this is relatively positive, as activity has declined more sharply in other markets with significant increases in yield requirements, even for the most attractive properties.

In Denmark, demand is supported by a continuously growing labour market with record-high employment, as well as more limited work-from-home practices compared to larger European metropolises.

Many companies continue to seek flexible office solutions due to increased focus on remote work, better space utilization, and scaling opportunities. This is especially the case in Copenhagen, where the supply of flexible office concepts is large, while in cities such as Aarhus, demand for such spaces is high, but supply is limited-particularly in the city center, where demand for office space is greatest. However, there are also trends in the opposite direction, with some companies establishing policies around the number of remote workdays to limit work-from-home possibilities.

The national office vacancy rate was 5.7% in Q3 2024, up 0.7 percentage points from the same quarter the previous year. Yield requirements are generally expected to remain stable over the coming year, as is the market rent. However, the future course of interest rates will be a major factor, as a continued high rate environment could lead to further increases in return requirements-particularly for prime office properties.