The Copenhagen Retail Market

THE COPENHAGEN RETAIL MARKET

Market update  January 2009

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 6 2.2 The Copenhagen Latin Quarter/Grønnegade area 8 2.3 Other important shopping areas in Copenhagen 11 2.4 The provincial high-street retail markets 14 2.5 The regional shopping centres 16 2.6 The local shopping centres 20 2.7 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

1. Introduction to the Copenhagen retail market In 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 Øre- sundsbroen, has created a fixed link between Denmark and Sweden and thus increased Copenhagen’s 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 Copenhagen’s 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 recent development in the financial market has been a cause for concern regard-

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 consumption. The suspension of the specific compulsory pension saving has already been extended to include the fiscal year 2009 to realise income for consumption. 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 rates and 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.

Private consumption (index 100 = 2000)

130

125

120

115

110

105

100

90 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 private households and means curbing consumer spending in the years to come, which is affecting Danish retail trade. Private consumption is expected to experience 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 country’s 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/Grønnegade 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.

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 Strøget, which have affected 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 surrounding areas, such as the Copenhagen Latin Quarter/Grønnegade 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 two new 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 centres located in the Copenhagen area. There is a large dispersion in the turnover between the centres, with the 10 largest shopping centres based on turnover accounting for about 38 per cent of the total turnover of the 103 largest shopping centres in Denmark. Parking facilities are highly prioritised by customers, who are willing to accept a rather long travelling distance to get a wider supply and variation in goods.

1Alt om København, www.aok.dk

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 Råd- huspladsen (the City Hall square), Kongens Nytorv and Nørreport station. It consists of the two main pedestrian streets, Strøget and Købmagergade. Strøget is 1.2 kilometres long, which makes it the longest pedestrian shopping 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 international retail chains and include some local retailers. Pronounced international retailers include Hennes & Mauritz, Miss Sixty, Benetton, Vero Moda, Diesel, Mango and Esprit. The most exclusive part of Strøget is the eastern part between Kongens Nytorv and Amagertorv, called Østergade. 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 Østergade for many years and have thereby attracted additional prestigious shops and made the area even more exclusive. Tommy Hilfiger, COS and Burberry have recently opened new shops at Østergade, where also a Ben & Jerry’s shop opened in 2008. Additionally, the area contains the department stores of Magasin, Illum and Illum’s Bolighus and the shopping venue of Galleri K. Galleri K, which is facing Østergade, 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, comprising 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.

The streets off Strøget and Købmagergade 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 during 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)

Market expectations (Exclusive of operating costs and taxes) 2003 2004 2005 2006 2007 2008 2009

(1)Copenhagen “High Street” (upper 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 end) 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

Copenhagen “High Street” (lower 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 end) 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)Copenhagen City Latin & Area up to 300 sqm 1,200 - 3,300 1,400 - 3,800 1,800 - 4,500 2,200-6,500 3,000-7,000 3,500-7,000 Grønnegade area 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)Copenhagen other important Area up to 300 sqm 1,000 - 2,800 1,000 - 3,200 1,200 - 3,800 1,250-3,900 1,400-3,900 1,400-3,900 shopping areas 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)Provincial High Street Area up to 100 sqm 1,800-3,400 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)Regional shopping centres 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 sqm 2,000-7,500 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)Local shopping centres 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 sqm 1,300-2,500 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 1,100-3,000 Area 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

Source: Sadolin & Albæk

An increasing number of cafés and bars have opened in the last couple of years at Strøget and the surrounding streets, some chains with several shops, e.g. Baresso. Entertainment and leisure facilities are mainly located at either end of Strøget, in the City Hall area and Kongens Nytorv/Nyhavn area in particular. These areas are characterised by a mix of shops and restaurants.

Copenhagen offers a wide range of international and domestic designer goods within clothing as well as home accessories and leisure facilities and entertainment, earning Copenhagen a ranking as the third best shopping city in the world, according to Sherman’s 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 increased significantly and enforced the problem of limited availability of parking spaces. An improvement of the public transport facilities has somewhat compensated for this, for instance the Copenhagen metro line. It links the end of the pedestrian street, Købmagergade, and the eastern part of Strøget, Kon- gens Nytorv. An additional expansion of the metro line is planned to link the city centre and Vesterbro, Østerbro and Nørrebro. Furthermore, the Copenha- gen city centre is relatively easy to cover on foot.

2.2 The Copenhagen Latin Quarter/Grønnegade area The Latin Quarter/Grønnegade area is surrounded by the streets of Østergade and Købmagergade, 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 cafés, bars and restaurants. The first Joe and the Juice, a local coffee and juice bar, opened in this area in 2002 and has subsequently opened two further outlets, one in Magasin and one in Tivoli. Kronprinsensgade, which is a side street to Køb- 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 prestigious international brands as Marc Jacobs, Paul & Joe, Cacharel, Prada, Dolce & Gabbana, Stella McCartney, etc.

The area has been expanding during the last decade and is now also including the street of Chr. IX’s 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 Fiolstræde located in the area between Købmagergade and Strøget have been and still are undergoing a major transition with several high-profile shops opening in the area. Since the five-star hotel Sankt Petri opened in 2004 at Krystalgade in a former department store building, comprising 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 Fiolstræde.

Important retail areas in Copenhagen

2.3 Other important shopping areas in Copenhagen In addition to the Copenhagen city centre, the five most important retail areas are Frederiksberg, Amagerbro, Nørrebro, Vesterbro and Østerbro. The three districts, Frederiksberg, Amagerbro and Nørrebro have local shopping centres and one or two main shopping streets, whereas Østerbro 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 the standards 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 Allé, 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 Føtex with a 3,200 sqm department store. Frederiksberg Centret is rarely hit by vacancy. Falkoner Allé has a wide range of shops, traditionally mostly electronic equipment outlets, but several fashion shops have also turned up in recent years. Overall the shops and restaurants at Falkoner Allé 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 Allé, with more than 15,000 students and staff. Additionally, Frederiksberg is characterised by households with high purchasing power.

Nørrebro In Nørrebro retailers are located in some minor clusters, Nørrebrogade being the main shopping street. Originating from Dronning Louise’s bridge, Nørre- brogade offers a wide range of shops and restaurants, while it is the side

streets that seem to be attracting more trendy, albeit still local shops. The assortment of cafés and restaurants is also wide, attracting mainly young people.

The retail street of Nørrebrogade ends at the local shopping centre, Nørrebro 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 Elgiganten and some specialty shops. Nørrebro Bycenter differs from other shopping centres in Copenhagen, because it does not comprise a convenience store. However, there are a lot of convenience stores nearby. The shopping centre was constructed in 1995 and is virtually fully let, with Hennes & Mauritz recently 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 cafés. In recent years the area has benefited 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, Hunkemöller and Saint 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.

Østerbro In the district of Østerbro, the main shopping street is Østerbrogade. It has been refurbished in recent years, attracting numerous fashionable shops offering a wide range of goods. Mainly domestic and Scandinavian shops are present in the area. Østerbro has for many years been known for a great number of cosy cafés and attractive restaurants, and the area seems to main- tain this position in the future. Unlike other areas in Copenhagen, Østerbro has several green spaces and small squares with cafés 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 hence attracted 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 Østerbro 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 urban renewal 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 inhabitants, 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 cafés, as they typically spend a significant amount of time and money on shopping and café

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 shopping 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, Køge and Helsingør (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 international retail chains as well as local shops. Vacancy levels are currently around 2-3 per cent.

The most important shopping street in Hellerup is 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 and Bang & Olufsen. The shopping area is located close to the S-train station, offering a lot of parking spaces along the streets and Lyngby Storcenter with a total of 3,000 spaces.

Hillerød is located in the central part of northern Zealand and has with its two main pedestrian shopping streets and shopping centres become a central location for trade in the region. Domestic retail chains and local shops dominate the pedestrian streets, whereas the recently expanded shopping centre of

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, Hillerød 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 inhabitants as a whole.

Roskilde is located around 30 kilometres west of Copenhagen and has a university, 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 shopping centre, Ro’s 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 some turmoil within the developer, Landic, the opening has been in- definitely postponed. Ro’s Torv is deemed to complement the shopping facilities in the city centre very well.

With a location 40 kilometres south-west of Copenhagen, the shopping area of Køge primarily attracts customers from the nearby districts. Retailing in Køge 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, however, several of them offer brands from both domestic and international fashion houses. Historically, Køge has been an industrial town and has therefore not been characterised by a high level of retail sales.

Helsingør (Elsinore) is situated in the north-eastern part of Zealand. Retailing in Helsingør benefits from its sealink to Helsingborg in Sweden and thus the

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, Helsingør Bycenter, is situated. The centre has 32 specialty shops, including a 2,700 sqm Føtex store, and 560 parking spaces. The last decade Helsingør has been undergoing a significant development, developing from a local shopping 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, Helsingør 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, Field’s in Ørestad, Lyngby Storcenter to the north of Copenhagen, Rødovre Centrum, Ro’s Torv and City 2 to the west, and to the south of Copenhagen Hundige Storcenter and Ishøj Bycenter.

The regional shopping centres are typically located near main traffic junctions and train stations. As opposed to local 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 facilities 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 DKK 40,411 (EUR 5,421) per sqm sales area.

The largest regional shopping centre in Denmark, Field’s, is located in Ørestad 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-

tracts consumers from a large catchment area. So is the case for any other region centre. Parking facilities are excellent at Field’s 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, Field’s 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 designated parking spaces. Shops in the centre are including Hennes & Mauritz, Elgigan- ten, Føtex, 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 Birkerød). The centre comprises 34,000 sqm of retail space and 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, comprising 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 facilities in the local high-street area and Lyngby Storcenter.

Two kilometres off the Holbæk motorway, the shopping centre of Ro’s Torv is located. Ro’s Torv is along with Field’s and Fisketorvet the 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. Ro’s Torv will then contain 96 shops in addition to the existing restaurants, cafés, 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

significant negative impact on the 2007 turnover, standing at DKK 564m (EUR 75,6m).

The four regional shopping centres City 2, Hundige Storcenter, Ishøj Bycenter and Rødovre Centrum are constructed in the 1960s and 1970s and are characterised 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 currently experiencing development in terms of expansion, and renovation and completion be one of the largest shopping centres in Copenhagen. Upon completion in 2009, the centre will total some 68,000 sqm retail space distributed 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 and Ishøj Bycenter, all regional shopping centres have development plans.

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

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 regional shopping centres, as they do not offer as wide a range of specialty shops as the regional shopping centres and therefore address different consumer 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 vacancies 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 Hillerød, 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, which recently 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,

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 SlotsArkaderne is 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 and B-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 seven shops 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 shopping centre, Waterfront, located near the waterfront of Tuborg Havn. The centre comprises 8,682 sqm retail space housing around 30 shops, cafés and a fitness 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. Spinderiet comprises around 45,000 sqm in total and was developed by TK Development.

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

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 proximity to main and ring roads and motorways. The most busy retail warehouse areas are located in Kongens Lyngby/Gentofte and Høje 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 and Jysk.

Besides Kongens Lyngby/Gentofte and Høje 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 Rødovre, the Glostrup and Albertslund areas along Roskildevej, and to the south in Ishøj. Near the Copenhagen city centre in Valby, there is a minor retail warehouse area located at Gammel Køge Landevej, and on the island of Amager, in Kastrup, there is a retail warehouse area located at Kirstinehøj, south of the town centre.

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 Køkken, HTH Køkkencenter, 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 warehouse 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.

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 city districts 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 negative effect on further development in this segment for some of the above- mentioned retail warehouse outlets.

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 increases 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 begun to increase and equity requirements are increasing.

Over the last couple of years, net initial yields on high-street retail properties have 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% High Street Retail Warehouses Regional Shopping Regional Shopping Local Shopping Local Shopping Centres Centre Centres Centre developments developments

Note: Arrows indicate market expectations for 2009 Source: Sadolin & Albæk

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-

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 investors 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, there have 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 Ro’s 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 shopping centres only are traded very rarely. It is, however, worth mentioning that in 2008, the largest shopping centre in Copenhagen, Field’s, changed hands, as the owner, Steen & Strøm, was sold to a consortium of French Klepierre and 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

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 decreasing. Many tax-driven investors have in recent years also begun to look abroad for investment opportunities, as net initial yields in Denmark have been decreasing.

In 2007, the 103 largest shopping centres in Denmark were owned by 66 different owners. Danica was accounting for around 23 per cent of the gross lettable areas and 20 per cent of the retail sales. In general, retail investment properties 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.

4. Key retail transactions

Retail Property District Seller Buyer Sqm Price MDKK Yield *) Field's Copenhagen Steen & Strøm Klépierre and ABP 115.000 na** na Ro´s Torv Roskilde Essex Invest DADES 40.000 1.600 5,50% Bauhaus Ishøj South corridor KPC Rolf Barfoed 14.600 235 5,85% Østerbro Centret Østerbro Private investors Jeudan 5.100 172 na Hyskensstræde/Vimmelskaftet CBD Nordea Pension et al. A. Fonnesbech 1.333 80 4,00% Frederiksberggade 15 CBD Private investor Private investor 1.140 73 na Købmagergade 47 CBD Limited partnership Ejendomsselskabet Norden 1.870 69 4,00% Gyngemose Parkvej 74 Gladsaxe Sjælsø Gruppen Ejendomsinvest 825 39 5,20%** Gyngemose Parkvej 76 Greater Copenhagen Sjælsø Gruppen Ejendomsinvest 825 incl. incl. Sluseholmen 18 Greater Copenhagen Sjælsø Gruppen Ejendomsinvest 815 21 incl. Lyngby Hovedgade 33-35 Lyngby Limited partnership Private investor 2.161 58 4,65% Ny Østergade 14 CBD Lægernes Pensionskasse Ny Østergade Ejendomme 728 54 2,54% Østergade 15 CBD Private investor Østergade 15 325 53 4,75% TV-byen Gladsaxe Sjælsø Gruppen M. Goldschmidt Ejendomme 1.000 39 na Frederiksborggade 8 CBD Jyske Bank Ejendomsselskabet af 18. juni 1992 455 30 na Købmagergade 7 CBD Private investor Ejendomsselskabet Købmagergade 7 800 29 na *) Yield in this context denotes estimated direct yield (approximate figure) **) Portfolio sale Source: Sadolin & Albæk

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

Regional shopping centres 1 City 2 2 Field’s 3 Fisketorvet 4 Hundige Storcenter 5 Ishøj Bycenter 6 Lyngby Storcenter 7 Ro’s Torv 8 Rødovre Centrum

Local shopping centres

Region Hovedstaden (Capital Region) 9 Albertslund Centrum 10 Amager Centret 11 Ballerup Centret 12 Brøndby Strand Centret 13 Espergærde Centret 14 Farum Bytorv 15 Frederiksberg Centret 16 Frihedens Butikscenter 17 Gallerierne 18 Glostrup Butikstorv 19 Glostrup Storcenter 20 Helsingør Bycenter 21 Herlev Bymidte 22 Herluf Trolles Torv – under construction 23 Holte Midtpunkt 24 Humlebæk Centret 25 Hvidovre Stationscenter 26 Høje Gladsaxe Centret 27 Hørsholm Midtpunkt 28 Kongevejscentret (Hørsholm) 29 Nivå Center 30 Nørrebro Bycenter 31 Prøvestenscentret 32 Skovlunde Centret 33 SlotsArkaderne 34 Sorgenfri Torv 35 Spinderiet 36 Stenløse Center 37 Værløse Bymidte 38 Waterfront

Region Sjælland (Zealand Region) 39 Greve Midtby Center 40 Jyllinge Butikscenter 41 Solrød Center 42 Ølby Centret

28 29

Important shopping areas 43 Helsingør city centre 44 Hillerød city centre 45 Køge city centre 46 Lyngby city centre 47 Roskilde city centre

Retail warehouse areas 48 Lyngby 49 Gladsaxe 50 Jyllingevej 51 Høje Taastrup 52 Glostrup 53 Rødovre 54 Ishøj 55 Valby 56 Kirstinehøj