Commercial - 10. March 2021
Along blue Denmark stretches an 8,750 km long coastline with countless ports, which are all important to local life. Just marinas number close to 400 in Denmark, and there are more than 75 large commercial ports, which are of great importance to Denmark’s reputation as a proud seafaring and shipping nation. In this issue of Market Insight, we take a closer look at the business opportunities offered by properties located in the port areas.
Denmark is the world’s fifth-largest seafaring nation, and Danish ports were in sixth place on the World Economic Forum’s list of the world’s most efficient ports in both 2018 and 2019. Our many ports are diverse, and a principal distinction is made between conventional commercial ports and new port areas. Many port areas are seeing continuous urban development, which is expanding from industry to offices, retail stores, restaurants and, not least, residential areas. In just the past 10 years, a very large number of waterfront homes have sprouted up, and offices at the ports have also become increasingly in demand.
The balance between industry and housing is key
Denmark is a proud seafaring nation, and the large Danish cities are traditionally built around life on the port. This development looks set to continue, but today heavy industry is finding it harder to develop its business activities in the middle of the city, as it is restricted by the residential areas. It is therefore quite natural that we are increasingly seeing the ports move out of the city, or that they are even discontinued in some places.
However, the development in the ports has by no means come to a standstill, but there is a big difference between the strategy followed by the individual port and municipality. We will look at how the different ports develop, what features characterise the ports and how it can be an advantage to investors or tenants.
Many cities adopt the strategy of moving the commercial port out of the city to make room for housing and cultural facilities at the old port. This is done in the recognition that the combination of heavy industry and modern housing is often not compatible.
The transformation of the old industrial ports is just a continuation of the general picture we are seeing in the industrial areas in Denmark. According to Statistics, the commercial area for industrial properties has, for example, decreased by just under 25% in a decade, a trend to which the port areas also contribute. This development is clearly seen for the port areas in the largest Danish cities of Copenhagen, Aarhus, Odense and Aalborg, where the port areas are undergoing great changes, but it is also a trend we are seeing in several other cities like Horsens, Fredericia, Sønderborg, Holbæk, Køge and Vejle. Therefore, our assessment is that the development at the ports of many cities with industry and old storage buildings or warehouses will continue for many decades into the future. We find that there are still many good investment opportunities, both in the cities where this development has been progressing for a long time and in those where it is about to start.
Concurrently with the relocation away from the cities, the large commercial ports are making investments in maintaining their and Denmark’s prominent position in shipping and ensuring efficient distribution of goods.
The balance between residential and industrial port is thus the key to creating urban growth. In fact, the desirable areas attract citizens and investments, and they create jobs for the port, related industries and suppliers as well as the entire hinterland.
Ports are attractive residential areas
Ports are popular residential areas, and the development will continue to spread throughout Denmark. There are still plenty of opportunities in the places where this development has already been in progress for several years. If we look at a map of Denmark, many cities have been built around a port. However, in the past, there has been a lack of cohesion between port and city. Therefore, we see that the urban development has extended right down to the waterfront and is mixing with industry, which, in turn, is relocating completely away from the city elsewhere. This has left room for many attractive new square metres for housing, retail trade and liberal professions.
The great demand and central location, combined with sea views, mean that homes at the port have advantages not found elsewhere in the cities. Consequently investors can achieve attractive rents and sales prices. On page 16, you can, for example, read about a large residential rental project at Lindø port of Odense.
Maritime environment strengthens retail trade and restaurants
It becomes possible to attract investors, locals and tourists to the city when the right
maritime atmosphere is created, which benefits urban development and retail trade, restaurants and hotels. Therefore, it is essential to find the right balance between building attractive homes and ensuring a mix of retail trade, restaurants, cultural facilities and accommodation for tourists when the port areas are developed.
Realdania, with its philanthropic approach to the property market, has helped maintain the maritime charm of several Danish ports while ensuring cohesion with the city. Realdania has projects in Assens, Holbæk, Fredericia and Køge, among other cities. The cohesion between port and city rubs off on everyone in the area, making the areas potentially attractive investment objects.
If cohesion is established between city and port, there is a good possibility that a retail trade which is otherwise under some pressure can create precisely what is in demand at the moment – namely the combination of experiences and shopping. This is clearly seen in both the small ports and the old fishing ports like Skagen and Gilleleje, but also in Odense, where the retail trade is increasingly mingling with kiosks, restaurants and other life in the port areas.
Waterfront offices are in demand
Residential property is not the only attractive type of property in the new port areas. We also see great demand from companies for high-quality waterfront premises. In Copenhagen, large companies are already domiciled at the port, and several large law offices will be relocating to the Nordhavn port area in the coming years, including Accura in 2022. Furthermore, Bech-Bruun is moving into premises in PFA’s prestigious building project on Nordø. This is the same development we see in Aarhus, odense, Aalborg and many other port cities. Iconic buildings are often a prominent feature of office properties located at the ports, such as Fjordenhus at Vejle Fjord.