Review of 2010 â USD version - Skanska
Review of 2010 â USD version - Skanska
Review of 2010 â USD version - Skanska
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Business streams<br />
estimated completion cost for ongoing projects, multiplied<br />
by the economic vacancy rate for each respective<br />
project. Capital at risk is limited to a maximum amount<br />
approved by the Board <strong>of</strong> Directors.<br />
A leader in Green Premises<br />
Interest in green and energy-efficient commercial premises<br />
is continuously increasing. <strong>Skanska</strong> is a leader in<br />
developing energy-efficient, environmentally certified<br />
properties. Energy-efficient solutions add value for both<br />
investors and users.<br />
<strong>Skanska</strong> is the first construction and development<br />
company to require LEED certification <strong>of</strong> all new commercial<br />
properties developed for its own account in the<br />
Nordic countries, Central Europe and the U.S. In recent<br />
years, a number <strong>of</strong> projects have also received EU Green-<br />
Building certification, which requires a building to show<br />
25 percent lower energy use and climate impact than the<br />
national construction norm for new properties.<br />
When completed, the Gårda <strong>of</strong>fice building project<br />
will be the first in Gothenburg to achieve the highest<br />
level, LEED Platinum. The aim <strong>of</strong> <strong>Skanska</strong>’s new projects<br />
in Warsaw, Wrocław, Prague and Budapest is to achieve<br />
LEED Platinum certification.<br />
By means <strong>of</strong> new, improved technical solutions,<br />
consumption <strong>of</strong> both energy and water is substantially<br />
reduced in both renovated and newly constructed<br />
projects, compared to standard projects.<br />
Markets<br />
<strong>Skanska</strong> carries out commercial property development,<br />
mainly <strong>of</strong> <strong>of</strong>fice buildings, in selected major Nordic,<br />
Central European and U.S. growth centers.<br />
It also develops logistics and high-volume retail<br />
properties at strategic locations in Sweden, Denmark<br />
and Finland.<br />
Increasing investment appetite<br />
The capital market is increasingly interested in commercial<br />
property investments. Return requirements<br />
are falling. Transaction market volume rose in <strong>2010</strong>.<br />
<strong>Skanska</strong> sold <strong>USD</strong> 0.5 billion worth <strong>of</strong> properties during<br />
the year, <strong>of</strong> which <strong>USD</strong> 416 M in the Nordic countries. Its<br />
gain on these divestments totaled <strong>USD</strong> 110 M.<br />
<strong>Skanska</strong>’s financial strength enables it to start new<br />
property projects early in the business cycle. During <strong>2010</strong><br />
it invested a total <strong>of</strong> <strong>USD</strong> 430 M in 14 new <strong>of</strong>fice building<br />
projects and in land for future projects in the U.S., Central<br />
Europe and the Nordic countries.<br />
Commercial Property Development – Projects in <strong>2010</strong><br />
Commercial<br />
Development<br />
Nordic<br />
Commercial<br />
Development<br />
Europe<br />
Commercial<br />
Development<br />
USA<br />
No. <strong>of</strong> projects started, <strong>2010</strong> 8 4 2 14<br />
Total investment commitments, <strong>USD</strong> M 372 166 154 692<br />
Number <strong>of</strong> ongoing projects 12 4 2 18<br />
Leasable space, 000 sq.m 154 84 36 274<br />
Economic occupancy rate, % 51 3 15 32<br />
Ongoing projects sold 3 0 0 3<br />
Leasable space, 000 sq.m 30 0 0 30<br />
Commercial Property Development – Ongoing projects<br />
Type <strong>of</strong><br />
project<br />
City<br />
Leasable<br />
area<br />
000 sq.m<br />
Completion<br />
year<br />
Total<br />
Economic<br />
occupancy<br />
rate, %<br />
Nordics<br />
Gångaren 15 Office Stockholm, Sweden 14 2011 99<br />
Lustgården 14, phase 1 Office Stockholm, Sweden 51 2013 0<br />
Uppsala Entré Office Uppsala, Sweden 12 2012 86<br />
Gårda, phase 1 Office Gothenburg, Sweden 15 2011 76<br />
Gårda, phase 2 Office Gothenburg, Sweden 6 2011 76<br />
Svågetorp Retail Malmö, Sweden 5 2011 100<br />
Bassängkajen, Universitetsholmen,<br />
phase 1 Office Malmö, Sweden 10 2011 88<br />
Bassängkajen, Universitetsholmen,<br />
phase 2 Office Malmö, Sweden 9 2011 0<br />
Polisen 1, Rosengård Office Malmö, Sweden 3 2012 100<br />
Ruskeasou, phase 1 Office Helsinki, Finland 13 2012 100<br />
Ruskeasou, phase 2 Office Helsinki, Finland 10 2012 0<br />
Scanport, Nordhuset Office Copenhagen, Denmark 5 2011 50<br />
Europe<br />
Green Tower Office Wrocław, Poland 17 2012 14<br />
Green Corner Office Warsaw, Poland 23 2012 0<br />
City Green Court Office Prague, Czech Republic 19 2012 0<br />
Green House Office Budapest, Hungary 26 2012 0<br />
U.S.<br />
733 10th Street Office Washington, D.C. 18 2011 25<br />
1776 Wilson Boulevard,<br />
Arlington Office Washington, D.C. 18 2011 0<br />
Total 274 32<br />
Recovery in the leasing market<br />
The recovery after the global financial crisis began, but<br />
demand for commercial premises remained relatively<br />
weak. Office vacancy rates are stable in Central Europe<br />
and the Nordic countries. In the US there is good potential,<br />
since many market players lack financial resources.<br />
<strong>Skanska</strong> signed new leases for 116,000 sq. m (1.25 million<br />
sq. ft.) <strong>of</strong> space.<br />
Cautious optimism about 2011<br />
The outlook for 2011 is cautiously optimistic, with stable<br />
or rising rents. The vacancy rate has stabilized and is<br />
low in <strong>Skanska</strong>’s property portfolio. Transaction volume<br />
and interest on the part <strong>of</strong> investors are expected to<br />
remain at good levels.<br />
In <strong>Skanska</strong>’s markets, very few projects have been<br />
started on speculation by other developers. This is<br />
expected to strengthen the competitiveness <strong>of</strong> <strong>Skanska</strong>’s<br />
ongoing projects, especially since <strong>Skanska</strong>’s projects<br />
have a strong and clear environmental pr<strong>of</strong>ile.<br />
Nordic countries<br />
<strong>Skanska</strong> Commercial Development Nordic initiates and<br />
develops real estate projects, mainly <strong>of</strong>fice, logistics and<br />
retail buildings. Its <strong>of</strong>fice building development operations<br />
focus on the Stockholm, Gothenburg and Malmö<br />
regions <strong>of</strong> Sweden; the Copenhagen region <strong>of</strong> Denmark;<br />
and Helsinki, Finland. In Oslo, Norway, the business<br />
unit carried out its first land purchase for development<br />
and groundbreaking during the next few years.<br />
The business unit pursues the development <strong>of</strong> logistics<br />
and high-volume retail properties at strategic locations<br />
in Sweden, Denmark and Finland.<br />
A number <strong>of</strong> ongoing or fully developed <strong>of</strong>fice<br />
properties were sold during the year. They included the<br />
Flat Iron Building and Kvarteret Bylingen in Stockholm,<br />
as well as Hjälmarekajen in Malmö and Lintulahti,<br />
<strong>Skanska</strong>’s first project for its own account in Helsinki.<br />
46 Commercial Property Development <strong>Skanska</strong> <strong>Review</strong> <strong>of</strong> <strong>2010</strong> – <strong>USD</strong> <strong>version</strong>