copenhagen retail market update 2009

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THE COPENHAGEN RETAIL MARKET

Market update January 2009


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CONTENTS

1. Introduction to the Copenhagen retail market 2

2. The retail property occupational market 6

2.1 The high-street retail market in the Copenhagen city centre 62.2 The Copenhagen Latin Quarter/Grnnegade area 82.3 Other important shopping areas in Copenhagen 112.4 The provincial high-street retail markets 14

2.5 The regional shopping centres 162.6 The local shopping centres 202.7 The retail warehouse market 22

3. The retail property investment market 24

4. Key retail transactions 27

5. List of retail locations (cf. location map on page 19) 28


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1. Introduction to the Copenhagen retail marketIn recent years, Copenhagen has been able to attract a great deal of foreign

visitors as well as new inhabitants, who have created good conditions for

shopping and leisure activities. Its central location has made Copenhagen a

notable metropolitan city in the Scandinavian region. Furthermore, the re-

sundsbroen, has created a fixed link between Denmark and Sweden and thus

increased Copenhagens catchment area significantly. The Copenhagen retail

market benefits from Danish designs, which are highly recognised, and

several hereof have created strong brands both internationally and domesti-

cally. A high level of tourist trade has arisen due to an increasing number of

foreign visitors both through traditional tourists and Copenhagens ability to

attract conferences and exhibitions. Denmark in general enjoys easy access by

sea, air and land due to its central location and large investments in infra-

structure during the last decades. The population masters excellent language

skills, English being considered a natural second language. Furthermore, the

fact that the Scandinavian languages are closely related makes cross-border

shopping easy. The development in the Copenhagen area has created a wide

range of shopping and leisure-time options, which satisfies all consumers

needs and customers segments.

Danish economy

The Danish fundamentals have been very strong the last couple of years,

mainly driven by increasing employment and low interest rate levels. However,

in the recent year interest rates and prices have been increasing and thus

caused a downward pressure on disposable real incomes of the households.

Unemployment rates have continued to decline until recently but have now

increased prompted by low growth forecasts due to the real economic effects

of the credit crunch. In addition, homeowners have experienced decreasing

equity values in the last year and have thereby put an end to the high growth

levels in private consumption observed in recent years. For some time the

Danish government has been reluctant to conduct an expansive fiscal policy

due to record-low unemployment rates and rising inflation. However, the re-

cent development in the financial market has been a cause for concern regard-


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ing a prolonged recession, and the fiscal policy is expected to be made more

lenient than anticipated some months ago. The expansionary fiscal policy is

expected to boost consumption through both tax cuts and public consump-

tion. The suspension of the specific compulsory pension saving has already

been extended to include the fiscal year 2009 to realise income for consump-

tion. In addition, interest rates have dropped and are expected to decrease

even further, as interest rate reductions are expected from the European Cen-

tral Bank.

The recent increase in the interest rate spread between the euro interest ratesand Danish interest rates of 50 bp has already disappeared, as the pressure

on the Danish foreign exchange reserves has dampened. The current spread

between the official lending rate of the European Central Bank and the Danish

Central Bank is 125 bp. The recent interest rate reductions will surely dampen

the negative effect on consumer spending, according to the gloomy growth

forecasts.

Danish consumer spending has developed favourably for more than a decade,but the growth is expected to decrease significantly in 2008 and actually falls

with 1.1 per cent in 2009, according to the latest forecasts. Since 2003, the

increase in private consumption has been most pronounced with an increase

of almost 17 per cent from DKK 633.5bn to DKK 739bn.


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Private consumption (index 100 = 2000)

90

95

100

105

110

115

120

125

130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E

Source: Statistics Denmark and Danske Bank

The primary explanation for the decreasing growth rates is to be found in the

last 18 months where the Danish property market has seen climbing interest

rates and falling housing prices. This has reduced the spending power of pri-vate households and means curbing consumer spending in the years to come,

which is affecting Danish retail trade. Private consumption is expected to ex-

perience negative growth in the next 12 months, which would be the first time

after the turn of the millennium. Consumers have surely been affected by the

current situation on the financial markets and a stressed housing market,

which has the effect that the population is having a very pessimistic view of

the countrys economy in the coming year.

Despite current prospects of the future consumption growth, recent years

increase in consumer spending has translated into a stable, strong demand

for retail units in Copenhagen, especially in the high-street areas and in the

district known as the Latin Quarter/Grnnegade area. Although the growth in

private consumption is expected to decrease significantly, the consumer

spending has grown to a stable high level. Combined with historically speak-

ing low unemployment rates expected to prevail in the following years, the

retail market is expected to remain strong within the traditional retail areas in

Copenhagen.


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The high-street area is increasingly dominated by international and Scandina-

vian retail chains, whereas more local and domestic shops tend to relocate in

the side streets, which have seen a significant development in recent years.

Shops account for about 70 per cent of retailers at Strget, which have af-

fected retail rent levels positively. High-street rent levels have been stabilising

at a high level, while a rather strong demand for retail units in the surround-

ing areas, such as the Copenhagen Latin Quarter/Grnnegade area, have had

significantly increasing rent levels over the last couple of years. However, rent

levels in these areas are expected to stabilise in the years ahead.

General overview

The retail property market of Copenhagen counts around 4,000 shops, of

which around 1,700 shops are located in the inner city1.

In addition to a wide range of shops in Greater Copenhagen, a considerable

number of shopping centres are located in the Copenhagen area. More than

half of all Danish shopping centres are situated in the Copenhagen region,

and this share has been increasing in recent years. With the opening of twonew shopping centres in the second half of 2007 and several expansions of

shopping centres launched, the number of shopping centres is set to increase.

On a national level, the number of inhabitants per shopping centre has de-

creased from 56,000 to 53,000 in 2008. In the Copenhagen region it is as low

as 40,000. In 2007, Danish shopping centres posted revenues of almost DKK

50bn (EUR 6.7bn) in total, with nearly 50 per cent generated in shopping cen-

tres located in the Copenhagen area. There is a large dispersion in the turn-

over between the centres, with the 10 largest shopping centres based on turn-

over accounting for about 38 per cent of the total turnover of the 103 largest

shopping centres in Denmark. Parking facilities are highly prioritised by cus-

tomers, who are willing to accept a rather long travelling distance to get a

wider supply and variation in goods.

1Alt om Kbenhavn, www.aok.dk


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2. The retail property occupational market

2.1 The high-street retail market in the Copenhagen city centre

The Copenhagen high-street retail market is located in the area between Rd-

huspladsen (the City Hall square), Kongens Nytorv and Nrreport station. It

consists of the two main pedestrian streets, Strget and Kbmagergade.

Strget is 1.2 kilometres long, which makes it the longest pedestrian shop-

ping street in the world. The streets off the main high streets have an abun-

dance of shops and seem to be steadily spreading and including new districts.

Shops located in the high-street area are predominantly Scandinavian and in-

ternational retail chains and include some local retailers. Pronounced interna-

tional retailers include Hennes & Mauritz, Miss Sixty, Benetton, Vero Moda,

Diesel, Mango andEsprit.The most exclusive part of Strget is the eastern

part between Kongens Nytorv and Amagertorv, called stergade. Many high-

profile shops are located here and offer brands such as Burberry, Mulberry,

Louis Vuitton, Gucci, Hermes, Chanel, Sand, Hugo Boss, Max Mara, Georg Jen-

sen, Bang & Olufsen and Tommy Hilfiger. A majority of these shops have been

located in stergade for many years and have thereby attracted additional

prestigious shops and made the area even more exclusive. Tommy Hilfiger,

COS and Burberryhave recently opened new shops at stergade, where also a

Ben & Jerrys shop opened in 2008. Additionally, the area contains the de-

partment stores of Magasin, Illum and Illums Bolighus and the shopping

venue of Galleri K. Galleri K, which is facing stergade, comprises about 25

shops and offers brands such as Topshop, Dyrberg/Kern, Urban Outfitters,

Day Birger et Mikkelsen, The Moood, Adidas, Agent Provocateur, Replay and

Evisu.

In November 2008, a major Jack & Jones shop opened at Vimmelskaftet, com-

prising 2,200 sqm of retail space, making it the largest shop in the Nordic

region within the Bestseller Group. By the end of 2008, Pandora, Jewellery and

Skagen Denmark watches opened new shops next to each other at Vimmel-

skaftet as well.


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The streets off Strget and Kbmagergade have experienced a strong footfall,

which has attracted additional retailers. This has prompted increasing rent

levels in these areas the last couple of years (see table below).

Due to the Danish seasons, department stores experience strong footfall dur-

ing winter, whereas the pedestrian streets attract a rather strong traffic in the

summer. For this reason several of the largest brands and retailers often have

shops in both locations.

Typical retail rent levels, Greater Copenhagen

(DKK/sqm/annum)

2003 2004 2005 2006 2007 2008 2009

(1) Area up to 100 sqm 12,000-19,000 12,000- 19,000 13,000-19,000 14,000-19,000 15,000-20,000 15,000-20,000

Area 100-300 sqm 9,000-14,000 9,000- 14,000 11,000-14,000 12,000-15,000 12,000-16,000 12,000-16,000

Area 300 sqm + 6,000-12,000 6,000-11,000 8,000-11,000 8,000-12,000 9,000-14,000 9,000-15,000

Area up to 100 sqm 6,500-9,000 6,500-9,000 7,000-11,000 7,000-12,000 8,000-14,000 8,000-14,000

Area 100-300 sqm 4,000-8,000 4,000-8,000 5,500-9,500 5,500-10.500 8,000-12,000 8,000-12,000

Area 300 sqm + 3,500-5,500 3,500-5,500 4,500-7,500 5,000-8,500 8,000-12,000 8,000-12,000

(2) Area up to 300 sqm1,200 - 3,300 1,400 - 3,800 1,800 - 4,500 2,200-6,500 3,000-7,000 3,500-7,000

Area 300 sqm + 1,200 - 1,800 1,200 - 2,500 1,200 - 3,500 1,300-5,000 2,200-6,000 2,800-6,000

(3) Area up to 300 sqm1,000 - 2,800 1,000 - 3,200 1,200 - 3,800 1,250-3,900 1,400-3,900 1,400-3,900

Area 300 sqm + 1,000 - 1,800 1,000 - 2,200 1,000 - 2,800 1,000-3,000 1,200-3,000 1,200-3,000

(4) Area up to 100 sqm1,800-3,400 1,800-3,400 1,800-3,600 1,800-3,600 1,800-3,600 1,800-3,600

Area 100-300 sqm 1,500-2,600 1,500-2,600 1,500-3,000 1,500-3,000 1,500-3,000 1,500-3,000

Area 300 sqm + 900-1,800 900-1,800 900-1,800 900-1,800 950-1,800 950-1,800

(5) Anchor food 1,200-1,600 1,100-1,400 1,100-1,400 1,100-1,600 1,200-2,000 1,400-2,200

Anchor non-food 1,400-2,200 1,400-2,200 1,400-2,200 1,400-2,200 1,400-2,200 1,400-2,200

Area up to 100 sqm2,000-7,500 2,000-7,500 2,000-8,000 2,000-7,500 2,000-7,500 2,000-7,500

Area 100-300 sqm 1,500-4,500 1,500-4,500 1,500-4,500 1,500-4,800 1,500-4,800 1,500-4,800

Area 300 sqm + 1,200-3,500 1,200-3,500 1,200-3,500 1,200-3,500 1,200-4,000 1,200-4,000

(6) Anchor food 1,000-1,800 900-1,500 900-1,500 900-1,600 900-2,000 1,100-2,200

Area up to 100 sqm1,300-2,500 1,300-2,500 1,300-2,500 1,300-2,800 1,300-3,500 1,300-3,500

Area 100-300 sqm 1,100-2,000 1,100-2,000 1,100-2,000 1,100-2,200 1,100-3,000 1,100-3,000Area 300 sqm + 800-1,650 800-1,650 800-1,650 800-1,700 800-2,200 800-2,200

(7) Retail warehouses Area 300 sqm + 950-1,650 950-1,650 950-1,850 950-1,850 950-1,850 900-1,650

Regional shopping centres

Local shopping centres

Copenhagen High Street (lower

end)

Copenhagen City Latin &

Grnnegade area

Copenhagen other important

shopping areas

Provincial High Street

Market

expectations

(Exclusive of operating costs and taxes)

Copenhagen High Street (upper

end)

Source: Sadolin & Albk

An increasing number of cafs and bars have opened in the last couple of

years at Strget and the surrounding streets, some chains with several shops,

e.g. Baresso.Entertainment and leisure facilities are mainly located at either

end of Strget, in the City Hall area and Kongens Nytorv/Nyhavn area in par-

ticular. These areas are characterised by a mix of shops and restaurants.


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Copenhagen offers a wide range of international and domestic designer goods

within clothing as well as home accessories and leisure facilities and enter-

tainment, earning Copenhagen a ranking as the third best shopping city in the

world, according to Shermans Travel.The continuing development of new

and better shops in the city centre as well as improvements of the prestigious

department stores means that Copenhagen holds this position.

However, in recent years the traffic in the Copenhagen city centre has in-

creased significantly and enforced the problem of limited availability of park-

ing spaces. An improvement of the public transport facilities has somewhatcompensated for this, for instance the Copenhagen metro line. It links the end

of the pedestrian street, Kbmagergade, and the eastern part of Strget, Kon-

gens Nytorv. An additional expansion of the metro line is planned to link the

city centre and Vesterbro, sterbro and Nrrebro. Furthermore, the Copenha-

gen city centre is relatively easy to cover on foot.

2.2 The Copenhagen Latin Quarter/Grnnegade area

The Latin Quarter/Grnnegade area is surrounded by the streets of stergade

and Kbmagergade, and in recent years it has advanced to become a prime

shopping location, which has attracted a lot of high-profile shops. This has

benefited local designers as well as newcomers in this area, since prestigious

shops attract both local inhabitants and tourists. Nearby shops in the area

include Lacoste, Perla, Georg Jensen, Munthe plus Simonsen, M-Store, Gossip,

A Pair, Kassandra and Filippa K as well as several trendy cafs, bars and res-

taurants. The firstJoe and the Juice, a local coffee and juice bar, opened in

this area in 2002 and has subsequently opened two further outlets, one inMagasin and one in Tivoli. Kronprinsensgade, which is a side street to Kb-

magergade, is especially well-known for its high concentration of exclusive

shops. Shops in Kronprinsensgade include Flying A, Stig P, Alexandra, Bruno

& Joel, Miss Sixty, OZ, Bruuns Bazaar, Ilse Jacobsen, Notabene and Feet Me.

Despite the fact that most of these shops are local shops, they offer prestig-

ious international brands as Marc Jacobs, Paul & Joe, Cacharel, Prada, Dolce &

Gabbana, Stella McCartney, etc.


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The area has been expanding during the last decade and is now also including

the street of Chr. IXs Gade. Other streets in the surrounding areas seem to

experience a mounting interest due to the increasing pedestrian flow in the

area in general. This development will be fuelled by the opening in 2009 of a

rather large shopping complex in the former Berlingske newspaper building,

developed by the property company Jeudan.

Krystalgade and Fiolstrde located in the area between Kbmagergade and

Strget have been and still are undergoing a major transition with several

high-profile shops opening in the area. Since the five-star hotel Sankt Petriopened in 2004 at Krystalgade in a former department store building, com-

prising Daells Varehus, the area has been given revived interest. Shops in the

area include Apartment No. 7, Wood Wood, Nike, Tiger of Sweden, ParisTexas

and G-Star.The area has prospects to develop into a new trendy shopping

area in the Copenhagen city centre with significant redevelopment potential,

especially at Fiolstrde.


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Important retail areas in Copenhagen


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2.3 Other important shopping areas in Copenhagen

In addition to the Copenhagen city centre, the five most important retail areas

are Frederiksberg, Amagerbro, Nrrebro, Vesterbro and sterbro. The three

districts, Frederiksberg, Amagerbro and Nrrebro have local shopping centres

and one or two main shopping streets, whereas sterbro and Vesterbro have

one main shopping street.

Frederiksberg

Gammel Kongevej at Frederiksberg has seen a significant transition in recent

years. A broad selection of almost all kinds of goods is available here, and thestandards of the goods have increased considerably. Recent years new shops

include Vero Moda, Peter Beier Chokolade, Egefeld (Organic Supermarket) and

Sticks n Sushi. There is some vacancy present in the area while some of the

well-established shops are currently expanding. Home furnishing and kitchen

unit retailers are also located in the area.

Frederiksberg Centret is a local shopping centre located at Falkoner All,

comprising 18,200 sqm of retail space. There are around 50 retailers, 9 units

offering restaurants and personal care shops and the shopping centres anchor

Ftex with a 3,200 sqm department store. Frederiksberg Centret is rarely hit

by vacancy. Falkoner All has a wide range of shops, traditionally mostly elec-

tronic equipment outlets, but several fashion shops have also turned up in

recent years. Overall the shops and restaurants at Falkoner All and

Frederiksberg Centret supplement the shopping facilities available at Gammel

Kongevej.

Generally, retailing at Frederiksberg benefits from the Copenhagen Business

School, located next to Frederiksberg Centret and Falkoner All, with more

than 15,000 students and staff. Additionally, Frederiksberg is characterised by

households with high purchasing power.

Nrrebro

In Nrrebro retailers are located in some minor clusters, Nrrebrogade being

the main shopping street. Originating from Dronning Louises bridge, Nrre-

brogade offers a wide range of shops and restaurants, while it is the side


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streets that seem to be attracting more trendy, albeit still local shops. The

assortment of cafs and restaurants is also wide, attracting mainly young

people.

The retail street ofNrrebrogade ends at the local shopping centre, Nrrebro

Bycenter, comprising 10,000 sqm of retail space. A lot of people are passing

by every day, as it is a traffic hub for public transportation by rail and road.

Nearby stores include Silvan, Fona, Imerco and Elgigantenand some specialty

shops. Nrrebro Bycenter differs from other shopping centres in Copenhagen,

because it does not comprise a convenience store. However, there are a lot ofconvenience stores nearby. The shopping centre was constructed in 1995 and

is virtually fully let, with Hennes & Mauritzrecently opening a 850 sqm store

here.

Overall the district is slightly outdated due to lack of renovating schemes and

investments. Despite this, vacancy rates are low in the area, with rent levels

following a stable trend.

Amagerbro

The main shopping street on the island of Amager is Amagerbrogade. How-

ever, also Holmbladsgade has developed into an attractive retail area due to

notable urban renewal schemes in recent years, which thereby has paved the

way for new shops, restaurants and cafs. In recent years the area has bene-

fited from a significantly increasing interest prompted by the opening of the

Amagerbro metro station. Formerly being dominated by local retailers, the

area now offers brands from several domestic retail chains, for instance Vero

Moda, Triumph, Baresso, Hunkemller andSaint Tropez.

The local shopping centre, Amager Centret, is located between the two main

streets of Amagerbrogade and Holmbladsgade, with good accessibility by

both private and public transport. Amager Centret comprises 16,000 sqm of

retail space, distributed on more than 60 shops, including Hennes & Mauritz,

Feet Me, Bianco Footwear and Vero Moda. The shops located in the nearby

streets provide a good complement to the shopping centre. Vacancy rates in

the area are low.


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sterbro

In the district of sterbro, the main shopping street is sterbrogade. It has

been refurbished in recent years, attracting numerous fashionable shops of-

fering a wide range of goods. Mainly domestic and Scandinavian shops are

present in the area. sterbro has for many years been known for a great

number of cosy cafs and attractive restaurants, and the area seems to main-

tain this position in the future. Unlike other areas in Copenhagen, sterbro

has several green spaces and small squares with cafs and restaurants, which

are attracting more customers to the area. A non-traditional retail street,

Nordre Frihavnsgade, has been renovated within recent years and has henceattracted several new shops to the area. As seen in other developing districts

of Copenhagen, this area is expected to develop even further and thus im-

proving the shopping facilities of sterbro as a whole.

Vesterbro

Vesterbro is the area in Copenhagen which is deemed to have experienced the

most striking development during the last 10-15 years. Traditionally Vesterbro

has been a predominantly low-income area, however, recent extensive urbanrenewal schemes have earned the area a rather high social status. The main

shopping street, Vesterbrogade, has, as well as similar districts, attracted both

new local shops as well as domestic chains. In addition, the area benefits from

a considerable ethnic and cultural diversity, which has made it a very popular

and modern place to live and to visit. Many tourist hotels are located in

Vesterbro because of its central location. They secure a great flow of tourists

from which retailers and restaurants in the area benefit.

Furthermore, the district benefits from a high concentration of young inhabi-

tants, who have been able to find affordable housing possibilities in the past.

However, because of the attractiveness of the districts, residential prices and

rents have caught up, and they are on a par with other attractive districts in

Copenhagen today. Some residences are still addressed to the low-income

bracket due to the dominance of old and worn out buildings in the area secur-

ing a high proportion of young people. Young inhabitants typically have a

great influence on the developing of a new area with shops and cafs, as they

typically spend a significant amount of time and money on shopping and caf


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visits. In May 2008, the shopping venue, Toves Galleri,opened at Vesterbro-

gade, comprising 20+ shops as well as a fitness centre. In addition, the shop-

ping centre of Fisketorvet is situated on the waterfront connecting the area

between Vesterbrogade and Kalvebod Brygge, and thereby bringing a rather

large part of Vesterbro into play. Gammel Kongevej runs parallel to Vesterbro-

gade, and the evolvement of these areas have involved that today these two

areas have almost merged into one.

2.4 The provincial high-street retail markets

In the provinces traditional high-street areas are found in the centre of towns

like Hellerup, Lyngby, Roskilde, Kge and Helsingr (in English known as Elsi-

nore). Common for them all are their easy access from the motorway grid and

the main roads. The retail areas are dominated by both national and interna-

tional retail chains as well as local shops. Vacancy levels are currently around

2-3 per cent.

The most important shopping street in Hellerupis Strandvejen, running from

the new Waterfront shopping centre in Tuborg Harbour and northbound.

Strandvejen is dominated by upmarket retailers, which benefits from the ex-

tremely affluent catchment area in Hellerup.

The main shopping streets in Lyngby are Klampenborgvej and Lyngby

Hovedgade, close to Lyngby Storcenter and the department store of Magasin

Lyngby.Mainly domestic retail chains and local shops are located in these

streets serving as a good complement to Lyngby Storcenter by offering a wide

range of shops such as Noa Noa, Jackpot, Triumph, Peak Performance andBang & Olufsen. The shopping area is located close to the S-train station, of-

fering a lot of parking spaces along the streets and Lyngby Storcenter with a

total of 3,000 spaces.

Hillerd is located in the central part of northern Zealand and has with its two

main pedestrian shopping streets and shopping centres become a central lo-

cation for trade in the region. Domestic retail chains and local shops dominate

the pedestrian streets, whereas the recently expanded shopping centre of


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SlotsArkaderne and the newly built shopping centre of Gallerierne, attract an

increasing number of both domestic and Scandinavian retail chains to the

town. The two modern shopping centres and the main shopping streets draw

customers from a large catchment area, and the ongoing development of the

town centre and the development of the new shopping centre, Herluf Trolles

Torv, reflects a rather strong demand from the neighbouring town and areas.

In addition, Hillerd has been able to attract several big international firms

like Novo Nordisk, Genmab and Biogen and has thus created many jobs for

the highly educated segment thus boosting the purchasing power of the in-

habitants as a whole.

Roskilde is located around 30 kilometres west of Copenhagen and has a uni-

versity, Roskilde University. The city has a fairly large catchment area, and

combined with all its attractions, e.g. Roskilde Cathedral, many tourists are

drawn to the area as well as benefiting local retailers. In the city centre most

of the shopping facilities are located in one main pedestrian street and in side

streets, offering customers a broad range of goods supplied by both local

shops as well as domestic and Scandinavian chains. The regional shoppingcentre, Ros Torv, currently comprises around 20,000 sqm of retail space, and

this area will be more than doubled when the current expansion is completed.

The expansion was scheduled to open at the beginning of October 2008 but

due to someturmoil within the developer, Landic, the opening has been in-

definitely postponed. Ros Torv is deemed to complement the shopping facili-

ties in the city centre very well.

With a location 40 kilometres south-west of Copenhagen, the shopping area of

Kge primarily attracts customers from the nearby districts. Retailing in Kge

mainly takes places in three main pedestrian streets unified by the central

square of Torvet. Most of the shops are local and domestic retail chains, how-

ever, several of them offer brands from both domestic and international fash-

ion houses. Historically, Kge has been an industrial town and has therefore

not been characterised by a high level of retail sales.

Helsingr (Elsinore) is situated in the north-eastern part of Zealand. Retailing

in Helsingr benefits from its sealink to Helsingborg in Sweden and thus the


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many customers in the town are Swedish. Shopping areas are found in the

pedestrian streets, offering a mix of local shops and domestic retail chains. In

the centre of the town and near the pedestrian streets, the shopping centre,

Helsingr Bycenter, is situated. The centre has 32 specialty shops, including a

2,700 sqm Ftex store, and 560 parking spaces. The last decade Helsingr

has been undergoing a significant development, developing from a local shop-

ping district with local retailers to a much better shopping area with several

retail chains. Several of the local shops offer well-known and international

brands. In addition to the many tourists, Helsingr has a catchment area,

which enjoys a very strong purchasing power.

2.5 The regional shopping centres

There are several regional shopping centres in Greater Copenhagen, including

Fisketorvet on the waterfront close to the city centre, Fields in restad,

Lyngby Storcenter to the north of Copenhagen, Rdovre Centrum, Ros Torv

and City 2 to the west, and to the south of Copenhagen Hundige Storcenter

and Ishj Bycenter.

The regional shopping centres are typically located near main traffic junctions

and train stations. As opposed tolocal shopping centres, the regional centres

are able to attract day trippers by car, as they are able to offer specialty

stores and convenience stores as well as restaurants and other leisure facili-

ties appealing to consumers in groups and families.

In 2007, the average annual turnover in regional shopping centres was DKK

1,628 million (EUR 218 million), corresponding to an average turnover of DKK40,411 (EUR 5,421) per sqm sales area.

The largest regional shopping centre in Denmark, Fields, is located in restad

with easy access from the motorway grid or by public transport either by

metro or train. The shopping centre comprises 67,500 sqm of retail space and

has about 120 specialty shops and four anchor shops, including Elgiganten,

Magasin, Stadium and a Bilka OneStop, comprising 12,000 sqm. Because of its

many specialty shops and large convenience stores the shopping centre at-


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tracts consumers from a large catchment area. So is the case for any other

region centre. Parking facilities are excellent at Fields with a total of about

3,000 designated parking spaces. The shopping centre is performing very

well, however, some minor vacancies are found. As was the case in 2006,

Fields posted the largest turnover in 2007 among the shopping centres in

Copenhagen, viz. DKK 2,725 (EUR 365 million).

On a waterfront site south of the city centre the shopping centre, Fisketorvet,

is located. It comprises more than 120 shops and a cinema of 10,000 sqm.

Fisketorvet comprises 39,000 sqm of retail space and about 2,000 designatedparking spaces. Shops in the centre are including Hennes & Mauritz, Elgigan-

ten, Ftex, Stadium, Silvan, Vero Moda and Bang & Olufsen. A bicycle/

pedestrian bridge between the shopping centre and the opposite side of the

port has secured a short way to the shopping centre from the district of Is-

lands Brygge on the Island of Amager.

Lyngby Storcenter is located at Klampenborgvej, between the two motorways

of E45 and 201 (to Birkerd). The centre comprises 34,000 sqm of retail spaceand 109 shops. In 2007, the average retail sales per sqm were approximately

DKK 57,000 (EUR 7,640), which are the highest amongst regional shopping

centres in the Copenhagen area. Thus vacancies are rare in Lyngby Storcenter.

Next to Lyngby Storcenter, the department store of Magasin is located, com-

prising about 11,000 sqm of retail space and more than 4,600 sqm parking

spaces. Magasin has several attractive shops, including Bruuns Bazaar, Filippa

K and Karen Millen. They serve as a good complement to the shopping facili-

ties in the local high-street area and Lyngby Storcenter.

Two kilometres off the Holbk motorway, the shopping centre of Ros Torv is

located. Ros Torv is along with Fields and Fisketorvetthe most recently built

regional shopping centres and when the current expansion is completed, the

centre will have more than doubled its current retail space of 20,000 sqm.

Ros Torv will then contain 96 shops in addition to the existing restaurants,

cafs, offices and cinema. The expansion opens the possibility for new entries

of international chains, which are expected to attract customers from a much

wider catchment area than up till now. The construction process has had a


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significant negative impact on the 2007 turnover, standing at DKK 564m (EUR

75,6m).

The four regional shopping centres City 2, Hundige Storcenter, Ishj Bycenter

and Rdovre Centrum are constructed in the 1960s and 1970s and are charac-

terised hereby. Their close locations seem to benefit them all, as they attract a

strong customer flow to the area in general, being within a radius of only 7

kilometres of each other. Mainly local shops and domestic retail chains are

located in these centres, and vacancy rates are low. Hundige Storcenter is cur-

rently experiencing development in terms of expansion, and renovation andcompletion be one of the largest shopping centres in Copenhagen. Upon

completion in 2009, the centre will total some 68,000 sqm retail space dis-

tributed on 135 shops and will have 3,200 parking spaces. In addition, the

expansion and upgrading will certainly make it easier for the centre to attract

bigger international and Scandinavian retail chains.

All of the regional shopping centres have been updated by either renovation

or expansion to meet the current requirement. Apart from Fisketorvet andIshj Bycenter, all regional shopping centres have development plans.


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19

Retail locations in the Greater Copenhagen area

Note: For a complete list of the retail locations shown in the map, please see pages 28-29


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2.6 The local shopping centres

Local shopping centres are typically situated near train or metro stations and

near rather large residential areas, whereas visits to regional shopping centres

often require a car. The retail segment in local shopping centres is dominated

by convenience goods, as the customers often do not own a car and do their

shopping locally. Hence, most local shopping centres are often anchored by

large convenience stores and then complemented by specialty shops.

Local shopping centres are not considered immediate competitors to the re-

gional shopping centres, as they do not offer as wide a range of specialtyshops as the regional shopping centres and therefore address different con-

sumer needs and requirements.

Shops selling convenience goods account for nearly 50 per cent of retail space

in the local shopping centres, whereas clothes and fashion shops account for

almost 22 per cent of the retail space. Vacancies are quite rare, however,

some of the newly constructed shopping centres may experience modest va-

cancies in the first couple of years, e.g. Gallerierne and Spinderiet.Overall, the

demand for retail space in local shopping centres continues to be strong, and

therefore a continued construction and development in the local shopping

centre segment is expected.

The gross lettable areas (GLA) in the 28 local shopping centres with retail

space exceeding 5,000 sqm, ranges from 5,000 sqm to 24,000 sqm, with an

average GLA comprising about 12,000 sqm. The average turnover of local

shopping centres is down from DKK 458 million (EUR 61.4 million) in 2006 to

DKK 454 million (EUR 60.8 million) in 2007. Frederiksberg Centret tops the

list with a turnover of DKK 1,075 million (EUR 144.1 million).

North of Copenhagen, in Hillerd, there has been a major development in the

shopping centre segment with the opening of Gallerierne in November 2006

and the shopping centre of SlotsArkaderne, whichrecently expanded. Galleri-

erne is owned by Ei Invest European Retail and comprises 10,900 sqm of retail

space and about 24 shops, including convenience stores and specialty stores

from both international and domestic retail chains, such as Hennes & Mauritz,


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Stadium, Benetton, Arnold Busck and Esprit. The shopping centre had a quite

turbulent start with many unsatisfied lessees, which has resulted in some

shops being replaced and some vacant retail areas.

The shopping centre of SlotsArkaderneis owned by Danica Ejendomme A/S,

and the recent expansion with 6,000 sqm has increased the total retail space

to 24,000 sqm, comprising some 57 shops in total. Among the new shops in

the centre are Selected, Intersport, Peak Performance, Kaufmann andB-young.

Near the town centre, the shopping centre of Herluf Trolles Torv is approach-

ing completion. This shopping centre will house 32 residential units and sevenshops distributed on 2,400 sqm retail space.

Two new shopping centres have opened during the second half of 2007 in the

Copenhagen area.

In Hellerup, north of Copenhagen, Braaten + Pedersen has developed a shop-

ping centre, Waterfront, located near the waterfront of Tuborg Havn. The cen-

tre comprises 8,682 sqm retail space housing around 30 shops, cafs and afitness centre. Among the shops in the centre are Netto, Inspiration, Matas,

Baresso, Irma, Triumph and Hennes & Mauritz.Waterfront opened at the end

of September 2007.

In Valby, the shopping centre, Spinderiet, opened 15 November and comprises

18,000 sqm retail space. The centre consists of more than 50 shop units and

contains office space, residential units and a 5,000 sqm fitness centre as well.

There is only limited vacant retail space, hence almost all shops had been pre-

let with shops such as Esprit, Vero Moda, Jysk, Hennes & Mauritz, Sportsmas-

ter, 7-eleven and Kvickly. Spinderietcomprises around 45,000 sqmin total

and was developed by TK Development.

More than half of the local shopping centres have development plans for the

near future.


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2.7 The retail warehouse market

The retail warehouse market has become very popular in recent years even

though this market segment has been only moderately developed in Denmark.

The retail warehouse areas are characterised by central locations in near prox-

imity to main and ring roads and motorways. The most busy retail warehouse

areas are located in Kongens Lyngby/Gentofte and Hje Taastrup anchored by

stores like Ikea and Ilva, which are only located in these two areas in Zealand.

In addition, these anchor shops seem to attract other outlets such as Toys R

Us, Adidas Factory Outlet, Elgiganten andJysk.

Besides Kongens Lyngby/Gentofte and Hje Taastrup, there are seven other

retail warehouse areas in Greater Copenhagen.They are located in Gladsaxe,

north of the Copenhagen city centre, and to the west in Rdovre, the Glostrup

and Albertslund areas along Roskildevej, and to the south in Ishj. Near the

Copenhagen city centre in Valby, there is a minor retail warehouse area lo-

cated at Gammel Kge Landevej, and on the island of Amager, in Kastrup,

there is a retail warehouse area located at Kirstinehj, south of the town cen-

tre.

These retail areas include a combination of furniture stores, electronic and

appliance stores, kitchen retailers as well as car dealers and garden centres.

Among outlet chains are Elgiganten, Jem & Fix, Biva, Jysk, Silvan, Kvik Kkken,

HTH Kkkencenter, Bauhaus, Skousen, Boconcept, Harald Nyborg and T. Han-

sen. These outlet chains attract a fair number of customers, however, some

vacancies are found in some of the areas.

Compared to the other Scandinavian countries the Copenhagen retail ware-

house market is only showing modest building activity, which can be ex-

plained by a fairly large supply of shopping centres in the region offering the

same brands and outlets. The development activity has in general slowed

down in Denmark due to the turmoil on the financial market this last year. In

particular, the downturn in the residential market has affected retail trade and

occupational demand from furniture and kitchen dealers.


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Retail warehouse chains require build-to-fit premises and central locations in

the form of main road or motorway proximity, where visibility and access is

good. The amendment of the Danish Planning Act came into force on 1 July

2007 and created limitations for retailers in relation to settling in out-of-town

locations. Prior to this, all types of retailers were allowed to settle as outlets

dealing with goods that required unusually large quantities of space. Now the

list of outlets categorised as dealing with bulky goods has been made exhaus-

tive ,and this means that dealers in kitchen units and electronic appliances are

forced to locate in central city districts. This is a disadvantage for these stores

since there is only a limited number of large-sized premises in the central citydistricts and typically, the rent is significantly higher. However, there was a

liberal initiative in the amendment, which meant that large space food outlets

were now allowed to expand to 3,500 sqm from previously 3,000 sqm. Simi-

larly, the upper area limit of non-food outlets was expanded with 500 sqm to

2,000 sqm. Home furnishing stores are still allowed to settle in out-of-town

locations subject to certain conditions.

It is believed that the amendment of the Danish Planning Act has had a nega-tive effect on further development in this segment for some of the above-

mentioned retail warehouse outlets.


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3. The retail property investment market

Due to limited investment opportunities in retail property, boosted by the

planning restrictions on retail developments, prices have increased for retail

properties in Copenhagen. A strong occupational market has spurred in-

creases in rent levels hence strengthening the price increases. The financial

crisis and the following slowdown in the Danish economy has resulted in a

current increase in net initial yield requirements, as the risk premium has be-

gun to increase and equity requirements are increasing.

Over the last couple of years, net initial yields on high-street retail propertieshave been historically low, however, they have been increasing recently in the

wake of the financial crisis to around 4.5 per cent. Overall, net initial yields

have increased in the recent year due to the turmoil on the financial market,

which has driven liquidity out of the market.

Net initial yields, retail

3%

4%

5%

6%

7%

8%

High Street Retail Warehouses Regional Shopping

Centres

Regional Shopping

Centre

developments

Local Shopping

Centres

Local Shopping

Centre

developments

Note: Arrows indicate market expectations for 2009

Source: Sadolin & Albk

In recent years, the retail property investment market has primarily been

dominated by private investors through tax-driven limited partnerships. How-

ever, increasing interest rates combined with limited potential for capital re-


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turns have pushed these investors out of the market. In addition, several of

the recent years speculative investors have been hit by credit limitations and

have also been pushed out of the market. Traditionally, international investors

have been significant market players in the Copenhagen retail investment

market, however, they have pulled out of the market, as have many other in-

vestors due to the financial crisis. In 2007, international investors accounted

for around 30 per cent of all investment property acquisitions worth DKK 100

million+ (EUR 13.33 million), whereas property companies accounted for

about 45 per cent.

The most significant transaction in the Copenhagen high-street market last

year was the acquisition of Galleri K (EUR 141 million)by Bank of Ireland.

Local shopping centres have primarily been in demand from private investors,

but in recent years property companies as well have shown interest in this

segment. This was demonstrated in 2007, when Jeudan entered the retail

property market with an investment of DKK 1,700 million (EUR 228 million) in

retail properties. Over the recent year, due to difficult funding terms, therehave not been any noticeable transactions within the local shopping centre

segment.

The regional shopping centre market is primarily dominated by institutional

investors and major property companies, e.g. DADES which has bought Ros

Torv and a part of Hundige Storcenter in the recent 18 months for a total

amount of DKK 2,900 million (EUR 389 million). It is mainly regional shopping

centres under development that are traded, whereas well-established shop-

ping centres only are traded very rarely. It is, however, worth mentioning that

in 2008, the largest shopping centre in Copenhagen, Fields, changed hands,

as the owner, Steen & Strm, was sold to a consortium of French Klepierreand

Dutch APV Pension Fund.

In the last couple of years, tax-driven limited partnerships have been focusing

increasingly on investment in the retail warehouse segment. The explanation

for this should be found in a positive yield spread in this segment despite

increasing interest rates levels enabling the investors to cover their interest


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payments from income return and still take advantage of the personal tax

deduction. High street and shopping centre segments have made high-

leverage strategies disadvantageous, as net initial yields have been decreas-

ing. Many tax-driven investors have in recent years also begun to look abroad

for investment opportunities, as net initial yields in Denmark have been de-

creasing.

In 2007, the 103 largest shopping centres in Denmark were owned by 66 dif-

ferent owners. Danicawas accounting for around 23 per cent of the gross

lettable areas and 20 per cent of the retail sales. In general, retail investmentproperties have been hit - like all other segments - by the financial crisis, and

investment activity will remain low as long as the lack of liquidity continues.


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4. Key retail transactions

Retail

Property District Seller Buyer Sqm

Field's Copenhagen Steen & Strm Klpierre and ABP 11Ros Torv Roskilde Essex Invest DADES 4Bauhaus Ishj South corridor KPC Rolf Barfoed 1

sterbro Centret sterbro Private investors JeudanHyskensstrde/Vimmelskaftet CBD Nordea Pension et al. A. FonnesbechFrederiksberggade 15 CBD Private investor Private investorKbmagergade 47 CBD Limited partnership Ejendomsselskabet NordenGyngemose Parkvej 74 Gladsaxe Sjls Gruppen EjendomsinvestGyngemose Parkvej 76 Greater Copenhagen Sjls Gruppen EjendomsinvestSluseholmen 18 Greater Copenhagen Sjls Gruppen EjendomsinvestLyngby Hovedgade 33-35 Lyngby Limited partnership Private investorNy stergade 14 CBD Lgernes Pensionskasse Ny stergade Ejendommestergade 15 CBD Private investor stergade 15TV-byen Gladsaxe Sjls Gruppen M. Goldschmidt EjendommeFrederiksborggade 8 CBD Jyske Bank Ejendomsselskabet af 18. juni 1992Kbmagergade 7 CBD Private investor Ejendomsselskabet Kbmagergade 7

*) Yield in this context denotes estimated direct yield (approximate figure)

**) Portfolio saleSource: Sadolin & Albk


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5. List of retail locations (cf. location map on page 19)

Regional shopping centres1 City 22 Fields3 Fisketorvet4 Hundige Storcenter5 Ishj Bycenter6 Lyngby Storcenter7 Ros Torv8 Rdovre Centrum

Local shopping centres

Region Hovedstaden (Capital Region)9 Albertslund Centrum

10 Amager Centret11 Ballerup Centret12 Brndby Strand Centret13 Espergrde Centret14 Farum Bytorv15 Frederiksberg Centret16 Frihedens Butikscenter17 Gallerierne18 Glostrup Butikstorv19 Glostrup Storcenter20 Helsingr Bycenter21 Herlev Bymidte22 Herluf Trolles Torv under construction23 Holte Midtpunkt24 Humlebk Centret25 Hvidovre Stationscenter26 Hje Gladsaxe Centret27 Hrsholm Midtpunkt28 Kongevejscentret (Hrsholm)29 Niv Center30 Nrrebro Bycenter31 Prvestenscentret32 Skovlunde Centret33 SlotsArkaderne34 Sorgenfri Torv35 Spinderiet36 Stenlse Center37 Vrlse Bymidte38 WaterfrontRegion Sjlland (Zealand Region)39 Greve Midtby Center40 Jyllinge Butikscenter41

Solrd Center42 lby Centret


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Important shopping areas

43 Helsingr city centre44 Hillerd city centre45 Kge city centre46 Lyngby city centre47 Roskilde city centre

Retail warehouse areas48 Lyngby49 Gladsaxe50 Jyllingevej51 Hje Taastrup52 Glostrup53 Rdovre54 Ishj55 Valby56 Kirstinehj

copenhagen retail market update 2009

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