As consumers replace in-store purchases with online purchases, the environment of the retail market is changing. The e-commerce sector in Europe
. Similarly, the
has also grown exponentially in recent years. This shift in the shopping behavior fuels the need for prime industrial and logistic warehousing for e-commerce companies. In 2020, the
reached over 38 billion euros in 2020. Between 2021 and 2025, Denmark’s capital, Copenhagen is forecasted to see the
What drives prices for warehousing?
For occupiers, being as close to the end customer as possible ensures short delivery times and low transport costs. For this reason, location is one of the most important factors when choosing a property and one of the biggest drivers of pricing. Copenhagen city is the most attractive area for industrial and logistic facility space in the country and is the
area with the highest rental cost per square meter. Another factor is the quality of the property: Primary warehouses are usually held to higher standards and are therefore
pricier than secondary warehouses. Furthermore, the shortage of fit for purpose facilities can also drive up rents. In 2020, Copenhagen had the
lowest amount of logistic facility space and although the
vacancy rate was one of the highest in Denmark, at 3.1 percent as of the first quarter of 2021, it revealed that there is robust demand for this type of properties.
How have prime yields for warehousing developed?
Yield is an indicator for the expected return of a property investment and is calculated as the ratio of the rental income and the property value. In 2020, the net prime yields in Denmark
remained unchanged from the previous year at 5.25 percent. This was higher than in Norway, Finland, and Sweden, where yields were below five percent. The same trend could be observed in
Copenhagen. Several factors drive yields - increased demand could raise property values causing lower yields while a fall in demand could create the opposite effect. While high yields suggest high return on investment, competitive markets tend to have lower yields.
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