2010 Global Market Report - NAI Commercial Real Estate

Copenhagen, DenmarkFinlandContactNAI Denmark+45 70 23 00 26Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)1334.3-2.43%$308.32$55,942.171.68%3.50%Forced sales of properties and asset management havebeen a dominant part of the 2009 market in Copenhagen.The interest rate had fallen steadily during 2009 to thecurrent 1.25% but is expected to increase during 2010. Theunemployment rate has increased to approximately 4% andis expected to increase in 2010. GDP in 2009 is expectedto end negative at -4.1% but turn around to 1.5% in 2010.Office vacancy increased in 2009 to the current level of4.7 % in the CBD. We expect the vacancy rate to increasefurther in 2010. One of the largest new office developmentsis the 25,000 SM SEB Bank property. Jeudan has justacquired office properties totaling approximately €400 million.Prime industrial locations along the highways and attractivefacilities are still hard to find in Copenhagen, which has keptthe rent level stable. We believe that the rent will stay levelin 2010. The vacancy rate rose from 1.9% in the capitalarea to approximately 2.8%.The retail market has been severely affected by the financialcrisis and rent levels have fallen by approximately 20% inthe Copenhagen area. In the primary retail streets, thereis still no real vacancy. The vacancy has primarily hit thesecondary locations. The vacancy rate for the greaterCopenhagen area is 3%, which is expected to increaseslightly in 2010.The demand for properties in general, is still very low due tofinancial uncertainty. Even a very low interest rate has nothelped much. Yields in general have increased. Distressedproperties have, on many occasions, been bought by thebanks that have the largest securities. We are expecting theprices will find a stable level in the beginning of 2010.The investment market is slowly starting to loosen up andduring 2009 there have been a few large transactions. Thepension funds are willing to buy at competitive levels, but thecore properties they are targeting are very scarce.ContactNAI Premises+358 46 712 2197Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)338,424-7.00%$242.33$45,876.383.00%8.74%The Finnish economy seems to have reached the bottombut Finland’s recovery from the recession will take time.Finland became a victim of the global crisis mainly due toits export-driven economy while its domestic businessremained relatively healthy. Since approximately 45% ofFinnish GDP accounts from foreign trade, Finland’s recoveryis very much based on the recovery of its trade partners. Anupward turn in the Finnish economy is expected to start late2010 into early 2011.During 2009 the transaction volume in the Finnish propertymarket has been very low. Reasons for this stem from pooravailability, high financing margins and the fact that sellersand buyers have a wide gap in their yield expectations. Fromits highest volume in 2007, transaction volume hasdecreased approximately 80%. At the moment, 65% ofinvestors are domestic compared to 54% in 2008 and 35%in 2007. In the Helsinki Metropolitan Area (HMA), over thespan of the past year the prime office yield level has risenfrom 5% to 6%. During the past year, more than 400,000SM of new office space has been completed in the HMAarea. This has increased the vacancy rates almost 40%compared to last year’s figures. At the same time, rents havedecreased, which has affected Net Operating Income atthe property level and decreased transaction volumes. Thecurrent vacancy rate for 2009 in HMA is approximately6.8% compared to 4.6% in 2008.The past year was not without significant transactions. InQ1 Google bought an old paper industry property from StoraEnso for €40,000,000. In Q2, Etera Mutual Pension InsuranceCompany sold its office properties, Swing Life ScienceCenter, for €120,000,000 to Fund of Commerz Real AG. InQ3, Finnair Facilities Management made a sale-leasebacktransaction and sold its properties for €77,000.000 to NVProperty Fund I.Unemployment has been relatively low during the past severalyears due to the strong growth of the Finnish economy.While the employment rate was near 6.4% in 2008, it isexpected to increase to almost 10% in 2010 based on theGDP’s 1% growth in 2008 versus the prediction of -7%growth in 2009.Interest Rate(%)1.00%Interest Rate(%)1.00%Population (Millions)5.511Population (Millions) 5.34Copenhagen At A GlanceConversion: 5.4824 DKK = 1 US$ RENT/M 2 /YR US$ RENT/SF/YRLow High Low High VacancyCENTER CITY OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)DKK 1,300.00DKK 1,200.00DKK 700.00DKK 900.00DKK 850.00DKK 1,900.00DKK 1,700.00DKK 1,000.00DKK 1,300.00DKK 1,100.00$ 22.03$ 20.33$ 11.86$ 15.25$ 14.40$$$$$32.2028.8116.9522.0318.645.0%4.7%7.0%5.0%5.0%Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDKK 500.00DKK 350.00DKK 350.00DKK 400.00DKKDKKDKKDKK850.00600.00600.00650.00$$$$8.475.935.936.78$$$$14.4010.1710.1711.016.5%2.5%3.0%2.5%DowntownDKK 3,500.00 DKK 15,000.00 $ 59.31 $ 254.18 1.3%Neighborhood Service Centers DKK 900.00 DKK 2,500.00 $ 15.25 $ 42.36 4.5%Community Power CenterDKK 1,000.00 DKK 2,200.00 $ 16.95 $ 37.28 3.0%Regional MallsSolus Food StoresDKKDKK100.00900.00DKK 2,200.00DKK 1 ,500.00$ 16.95$ 15.25$$37.2825.423.0%1.5%DEVELOPMENT LAND Low/M 2 High/M 2 Low/SF High/SFOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidentialDKK 1,800.00 DKK 4,000.00 $ 30.50 $ 67.78DKK 1,500.00 DKK 3,500.00 $ 25.42 $ 59.31DKK 1,200.00 DKK 3,000.00 $ 20.33 $ 50.84DKK 1,500.00 DKK 2,750.00 $ 25.42 $ 46.60DKK 1,800.00 DKK 4,000.00 $ 30.50 $ 67.78DKK 1,000.00 DKK 3,000.00 $ 16.95 $ 50.84Finland At A GlanceConversion: .793 EUR = 1 US$ RENT/M 2 /MO US$ RENT/SF/YRLow High Low High VacancyCITY CENTER OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk Warehouse€€€€€€€22.0022.0017.0017.0015.009.006.00€€€€€€€27.0027.0021.0019.0018.0014.007.50$$$$$$$30.9330.9323.9023.9021.0912.658.44$ 37.96$ 37.96$ 29.52$ 26.71$ 25.31$ 19.68$ 10.54N/A4.7%6.2%10.5%11.1%14.0%5.3%Manufacturing€ 5.00 € 7.00 $ 7.03 $ 9.84 5.3%High Tech/R&DRETAIL€ 6.00 € 8.00 $ 8.44 $ 11.25 5.3%Downtown€ 25.00 € 140.00 $ 35.15 $ 196.82 2.3%Neighborhood Service CentersCommunity Power CenterRegional MallsSolus Food Stores€€€€11.0011.0011.009.00€€€€40.0040.0040.0016.00$$$$15.4615.4615.4615.46$ 56.23$ 56.23$ 56.23$ 56.232.8%2.9%2.9%3.0%DEVELOPMENT LAND Low/M 2 High/M 2 Low/SF High/SFOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidentialN/A N/A N/A N/A€ 275.00 € 500.00 $ 346.78 $ 630.52€ 175.00 € 300.00 $ 220.68 $ 378.31€ 225.00 € 275.00 $ 283.73 $ 346.78€ 250.00 € 400.00 $ 315.26 $ 504.41€ 250.00 € 600.00 $ 315.26 $ 756.622010 Global Market Report ■ www.naiglobal.com 45