Annual Report 2008 - Skanska

property investors. Land value also increases as permitting
risks diminish. A major step in value enhancement
occurs when a parcel of undeveloped land is transformed
into a building right. The process leading up to an
approved commercial development plan may take several
years. Skanska plays a proactive role, working closely
with local government bodies in planning processes for
land use, zoning and commercial development.
Large-scale leasing sharply increases the value of the
project. Leasing activity begins at an early stage. In many
cases, long-term leases are signed with major tenants as
early as the planning stage, or within a short time after
construction work begins. By the completion date, the
goal is to have leased most premises.
Value increases further when the building right is turned
into a completed project that generates rental income.
In some cases, projects that have been fully leased are
divested even before completion.
Close collaboration
To ensure that the development process results in appropriate
Värdeskapande and efficient i Kommersiell commercial utveckling space, Skanska collaborates
Värde closely in its design and planning work with tenants
and potential buyers. Carrying out commercial 6. Försäljning development
successfully on a long-term 5. basis Förvaltning is also facilitated
4. Byggande
by a limited portfolio of completed projects. Managing
these properties provides daily contact with the leasing
3. Uthyrning
market. This, in turn, offers insights about changes in
customer preferences and also generates new projects.
2. Design och projektering
Owning a portfolio of completed properties also lends
flexibility 1. Planläggning to the divestment och bygglovprocess, because it enables
Skanska to time the divestment of these properties based
Tid
on market conditions.
18–36 månader
Kapitalexponering
i pågående projekt
Mkr
3 000
2 500
2 000
1 500
1 000
500
0
1998 2000 2002 2004 2006 2008
Capital at risk in
ongoing projects
SEK M
3,000
2,500
2,000
1,500
1,000
500
0
1998 2000 2002 2004 2006 2008
Energy-efficient solutions
Buildings are estimated to account for more than 30 percent
of carbon dioxide emissions in the EU. Skanska’s sustainability
efforts are positive for our climate and lead to
added value for both users and investors. For some years,
Skanska has worked to develop energy-efficient solutions.
By using such techniques as improved insulation and heat
recycling, Skanska can thus lower energy consumption by
20–30 percent in renovation projects and at least 30 percent
in new construction, compared to Nordic standards.
Through its green initiative, the Group is beginning
efforts to make its products even more competitive from
an environmental standpoint (see page 13).
Risk management
There are risks in all stages of operations. Such external
factors as interest rates, customers’ commercial space
needs and the willingness of investors to buy commercial
properties are of crucial importance to all decisions in the
process. By means of frequent customer contacts, Skanska
tracks the space requirements of customers continuously.
The occupancy level in completed projects and the preleasing
level in ongoing projects are carefully monitored.
Capital at risk
Risks are limited because the business stream has an
established ceiling on capital exposure in projects that
have not been pre-leased. Capital at risk is measured as
the sum of carrying amount in completed projects and
estimated completion cost for ongoing projects, multiplied
by the economic vacancy rate for each respective
project. Capital at risk is limited to a maximum amount
approved by the Board of Directors.
Value creation in Commercial Development
Value
3. Leasing
2.Design and pre-construction
1. Planning and permitting
5. Property management
4. Construction
18–36 months
6. Divestment
The development of commercial projects is a continuous
process with several clearly defined phases – planning and
permitting, design and pre-construction engineering, leasing,
construction, property management and divestment.
The average development cycle is 18–36 months.
Generating value, step by step
1. Macroeconomic and market analyses precede a land
purchase, which is the foundation of the value-generating
process. A major step in value enhancement occurs when
undeveloped land is transformed into a building right.
2. Suitable premises are designed, in close collaboration
with tenants and prospective buyers.
3. Successful leasing work is a precondition for breaking
ground. Larger tenants are contracted at an early stage.
4. The project developer orders construction services, as a
rule from Skanska’s own construction units.
5. Active management and customer relations can add
further value to the property.
6. New projects are developed with an eye to future
divestment. Sometimes a project can be sold while still
in the construction phase.
Time
Ongoing projects – unsold
Type of
project
City
Leasable
area
000 sq.m
Completion
year
Economic
occupancy
rate, %
Nordic
Norra Bantorget Office Stockholm 15 2009 72
Sturegatan 1 Office Sundbyberg 15 2009 95
Gångaren 11 Office Stockholm 32 2009 93
Gångaren 16, hus 17 Office Stockholm 18 2009 75
Bylingen Office Stockholm 16 2009 97
Backa 23:9 Logistic Gothenburg 2 2009 100
Backa 30:3 Logistic Gothenburg 20 2009 100
Gårda Office Gothenburg 16 2010 0
Ljungby Berghem Retail Ljungby 10 2009 82
Lintolahti Office Helsinki 12 2009 84
Scylla 3:1 Office Malmö 11 2009 92
Scylla 3:2 Office Malmö 6 2009 88
Forskaren E 1 Office Lund 11 2009 100
Vevaxeln Office Malmö 16 2010 100
Tobaksvej Office Copenhagen 4 2010 100
Europe
Grunwaldzki Ctr, phase 1 Office Wrocław, Poland 16 2009 90
Grunwaldzki Ctr, phase 2 Office Wrocław, Poland 21 2009 48
Nordic Center Office Ostrava, Czech Rp. 15 2009 0
Total 256 78
In 2008 Skanska started 9 commercial projects, all of them in the Nordic countries, and signed new leases for 195,000 sq. m (2.1 million sq. ft.).
Skanska Annual Report 2008 Commercial Development 37