Havnestad

Copenhagen, Denmark

Project Type: Mixed-Use/Multi-Use

Case No: C033014

Year: 2003

SUMMARY A 1.6 million-square-foot (150,000-square-meter) industrial area along the harborfront in Copenhagen, Denmark, that is currently being transformed into a new urban development that at buildout will include between 800 and 1,200 residential units and almost 10.5 million square feet (975,000 square meters) of commercial space. The project not only is an innovative example of how a significant postindustrial, brownfield remediation was accomplished through a process that was self-financing, but also is projected to net a handsome financial return of approximately DKK225 million, or approximately US$32 million.

FEATURES

Brownfield remediation Special effort by the developer to enter into a dialogue with the surrounding community Self-financing project Havnestad

Copenhagen, Denmark

Project Type: Mixed-Use/Multi-Use

Volume 33 Number 14

July–September 2003

Case Number: C033014

PROJECT TYPE

A 1.6 million-square-foot (150,000-square-meter) industrial area along the harborfront in Copenhagen, Denmark, that is currently being transformed into a new urban development that at buildout will include between 800 and 1,200 residential units and almost 10.5 million square feet (975,000 square meters) of commercial space. The project not only is an innovative example of how a significant postindustrial, brownfield remediation was accomplished through a process that was self-financing, but also is projected to net a handsome financial return of approximately DKK225 million, or approximately US$32 million.

SPECIAL FEATURES

Brownfield remediation Special effort by the developer to enter into a dialogue with the surrounding community Self-financing project

PROJECT ADDRESS

Islands Brygge, Copenhagen www.havnestad.com

OWNER/DEVELOPER

DS Industries ApS Islands Brygge 81, 2. 2300 Copenhagen S, Denmark +45 32 54 66 00 Fax: +45 32 57 76 57 www.eac.dk

ARCHITECT

PLH Arkitekter AS Pampfærgevej 10 2100 Copenhagen Ø Denmark +45 35 43 00 55 Fax: +45 35 43 10 55 www.plh.dk GENERAL DESCRIPTION

A 1.6 million-square-foot (150,000-square-meter) industrial area along the harborfront in Copenhagen, Denmark, that is being transformed into a new urban development that at buildout will include between 800 and 1,200 residential units and almost 10.5 million square feet (975,000 square meters) of commercial space. The project not only is an innovative example of a developer overcoming a significant postindustrial, brownfield remediation through a process that was self-financing, but also is projected to net a handsome financial return of approximately DKK225 million, or approximately US$32 million.

The developer responsible for Havnestad is DS Industries, a subsidiary of Denmark’s East Asiatic Company (EAC). EAC is a company with diverse interests in nutrition, food, bulk industrial ingredients, and international moving and relocation services. EAC’s activities are primarily based in Denmark and Asia. DS Industries operated a soybean import and production facility on the site and has led the development process for Havnestad. The subsidiary’s activities in real estate development are outside the scope of business for EAC, but may serve as a model for other such company initiatives in the future.

The real estate market in Copenhagen has been operating at record-high levels. There is a high demand for housing in Copenhagen, and both the public and private sectors have been racing to meet this demand. Also, companies have been constructing build-to-suit offices along the harborfront, which are very attractive to employees who enjoy the central location, the views of the water, and the modern, light-filled office space.

THE SITE AND ITS SURROUNDINGS

Havnestad is a significant part of the Copenhagen harborfront’s current transformation. Historically, the harborfront has been home almost exclusively to industry and shipping, but over the last ten to 15 years these functions have been dwindling or moving to locations away from the central harbor. In the wake of these changes, large areas of the harborfront have become available for development. During the same period, the city of Copenhagen has actively encouraged the replacement of industry in these areas with a mix of functions including commercial, residential, cultural, and recreational uses. Havnestad is a recent reflection of this effort. The proximity of Havnestad to the central city and its unique location between the water and a large, protected nature reserve make it one of the most attractive of the harborfront transformation areas.

Havnestad is part of the Islands Brygge area of the harbor, located on the island of Amager, in central Copenhagen. The six-acre (2.4-hectare) site was formerly the home of the Danish Soyakage factory, which imported soybeans from Manchuria and extracted soybean oil for sale. There are several notable historic structures on the site, among which the best preserved and most adaptable are a series of large silos and a big machine hall. The silos, in particular, have figured prominently in Copenhagen’s skyline for nearly 100 years.

Surrounding Havnestad to the east is an extensive nature preserve called Amager Fælled and typical, five-story Copenhagen urban housing from the first quarter of the 1900s to the north. To the west of the site lies the waterfront, with further harbor development to the south. Similar development, primarily commercial in use, can be found on the western side of the harbor immediately opposite Havnestad.

Like most of Copenhagen, the flat development site was reclaimed from the sea around 1900. Natural vegetation exists in the form of heath grasses and shrubs that thrive on the relatively wet soil and in the wind constantly blowing in off the Baltic Sea.

DEVELOPMENT AND PLANNING PROCESS

EAC terminated operations on the site in the late 1980s. This left the company with a large property that had pollution issues on a scale that made redevelopment economically unviable and technically impossible. The property was not a financial burden on the company, since several of the old warehouses were leased out for storage and artist studios. In addition, the pollution that was hindering redevelopment also kept property taxes low. Nevertheless, there was still a strong desire to redevelop and sell the property.

The first step in remediation was a two-year analysis and registration of the pollution on the site. When a precise map was completed, it revealed that the problem was concentrated on the southern end of the site and that redevelopment could actually start immediately on the site’s northern end. DS Industries then began a dialogue with the municipality and consulted with a traditional real estate developer to explore specific development options. During this period, significant advances in pollution remediation technology were made, which made cleanup not only economically viable but also physically possible.

The planning process for Havnestad was based on open and honest communication between DS Industries and both the municipality and residents in the surrounding neighborhood. A steering committee with representatives from DS Industries, the city of Copenhagen, and the environmental regulation authorities was established very early in the process. The committee met once a month and DS Industries maintained an open flow of information through this forum. This arrangement created a high level of trust among the parties involved and focused their efforts on the common goal. Residents in the adjacent neighborhood were kept informed of the planning process. In addition, DS Industries took out whole-page advertisements in the local newspaper twice a year explaining the current status of the project. Also, local residents were invited to events held on site during the initial stages of development. DS Industries gained a tremendous amount of support from local groups and the project passed through the approvals process without significant complaints from either the private or public sector.

FINANCING

Orders from the parent company, EAC, were clear from the beginning: the development project had to be self-financing. In order to accomplish this, an environmental fund was established. Income from the sale of individual parcels went into this fund, which then financed the remediation of the old factory area and the development of new infrastructure. Money placed into the fund was to be used only for environmental cleanup, and the municipality was allowed to inspect the fund’s accounts twice a year to ensure that the money was being used as promised. The fund served as a guarantee to the municipality that remediation would be completed as well as a guarantee to potential buyers of the individual parcels that polluted areas adjacent to their development site would be cleaned up.

The industrial area was divided into parcels for sale according to overall design guidelines generated for DS Industries by PLH, a Copenhagen-based architecture firm. This guide formed the basis for a new “Lokalplan,” or local plan, which was approved by Copenhagen’s planning department. Sale of the individual parcels went faster than anticipated and was completed over the span of a single year from 1999 to 2000. The area was sold to developers through six separate purchases. The first developer to buy parcels was NCC, a large Scandinavian developer and construction company. After NCC, the next group of parcels was purchased by Sjælsø Gruppen, a Danish investment group that later purchased additional areas as part of a consortium under the name of Havnestad Syd. Other buyers include JM Danmark, a Swedish-owned housing developer; AKB, Lejerbo, and Kuuber, all Danish housing developers; and St. Frederikslund A/S, which forms the Havenstad Syd consortium together with Sjælsø Gruppen.

DS Industries purchased another property along the wharf to the north of the site, which will be developed as a recreation area. The addition of this parcel to the original development property allowed the maximum density of the project to be raised from an average of 110 percent up to 130 percent, provided that no building will be built on the additional property.

Sale of all the properties together totaled DKK500 million (approximately US$70 million). Cleaning and removal of the 258,000 tons (258 million kilograms) of polluted soil and construction of infrastructure on the site including roads, sewer, and reinforcement of the old wharf cost DKK225 million (approximately US$32 million). Latest projections from EAC indicate a net profit for the project of around DKK225 (approximately US$32 million) after cleanup and establishment of infrastructure.

DESIGN AND CONSTRUCTION

DS Industries issued a design guide, and together with the municipality’s local plan, it lists a set of rules for development of the individual properties to ensure an overall harmony of scale, use, and material variation throughout the area.

Some of the rules stipulated the adaptive use of a few of the buildings. After a thorough inspection of all the industrial buildings remaining on site at the start of the project, it was decided that four of the existing industrial buildings would be preserved and adapted to new functions. Three of the adapted buildings initially were large silos, which are being converted into housing units, and the fourth is the unique Machine Workshop Hall, which has been converted into office space. The Machine Workshop Hall was originally imported from Germany, where it was used as a production hall for Zeppelin airships. The remaining buildings on site either were not in a condition worth saving or were not able to be efficiently adapted for new uses.

The urban design of the new site plan is expected to grow over an extended period of time and be developed by several different investors. This required a clear strategy that would secure a consistent structure while simultaneously allowing for flexibility for future development. The site has been divided into three main “theme” areas: green, urban, and blue. These areas are arranged to maximize views to the water and parks that flank the site longitudinally to the east and west. The green area, located at the northern end of the site, is planned primarily for housing that will open onto a park wedge that runs diagonally. Residential buildings will be 6.5 stories tall and feature units approximately 1,076 square feet (100 square meters) in size. The urban area, located in the middle of the site, is centered around Axel Heides Gade, a new boulevard planned to be lined with mixed-use buildings that are larger and denser than those in the housing area immediately to the north. The blue area, located at the southern end of the site, is built up around a new harbor and will include offices surrounding a water feature.

The primary vehicular access to the site is planned from Artillerivej, a major road along the eastern border of the site. Traffic from Artillerivej will enter the site via Axel Heides Gade; the remaining areas of the site can be reached via north-south feeder roads. Bicycle and pedestrian traffic is accommodated by walkways and bicycle paths that traverse the area. Public transportation—a bus line and the nearby Islands Brygge underground subway station—also serves the area.

Parking is accommodated along the main boulevard, Axel Heides Gade, and in parking areas between individual blocks. Additional parking will be provided along the wharf in connection with the development of the silo buildings.

The design guide also takes the environment into consideration by proposing principles for sustainable development. These principles focus on the selection of building materials with longer life spans, the proper use of resources, and internal climate, among others.

MARKETING

The marketing for the area began with a ceremony on June 22, 1999, during which the mayor of Copenhagen, Jens Krammer Mikkelsen, officially named the area “Havnestad” and declared it a new neighborhood in the city. From this point forward, DS Industries was in constant negotiations with potential developers of the individual parcels in Havnestad. The existence of the design guide and the environmental fund attracted developers who felt secure that their property would develop according to a predefined plan and involve with relatively little risk. Press releases and a thorough home page also allowed easy access to information and plans regarding the area. After all the parcels had been sold, the individual developers began marketing the residential units and office space themselves through newspapers and their own home pages.

The design guide calls for the establishment of an owner’s association that will maintain common areas as well as be a forum for discussion of common issues facing the area.

EXPERIENCE GAINED

DS Industries benefited tremendously from the credibility and trust won from proactively engaging both public authorities and local residents in an open and honest dialogue. The establishment of the environmental fund also proved to be a successful strategy with respect to both financing and relations with public authorities. These factors were combined with a will to see the development through what initially must have seemed to be overwhelming challenges.

DS Industries believes that this process can be a model for redevelopment of other industrial properties. With no injection of capital from EAC, aside from the property it had owned since 1909, DS Industries was able to clean up and redevelop what previously was a potential financial burden for the company and an eyesore for the city into a profitable and attractive new waterfront neighborhood. PROJECT DATA LAND USE INFORMATION Site area (acres/hectares): 6/2.4

GROSS BUILDING AREA Use Planned Square Feet/Square Meters Office 1,032,960/96,000 Retail 32,280/3,000 Residential 1,248,160/116,000 Total GBA 2,313,400/215,000

LEASABLE AREA Use Planned Office 2,000–3,000 workstations Residential 800–1,200 units

LAND USE PLAN Use Acres/Hectares Percentage of Site Buildings 1.2/0.48 20 Streets/surface parking 1.2/0.48 20 Landscaping/open space 3.4/1.3 57 Other (water feature) 0.2/0.08 3 Total 6/2.4 100

DEVELOPMENT COST INFORMATION Site improvement costs: DKK115 million (approximately US$16.4 million) Cleanup and removal of polluted soil: DKK100 million (approximately US$14.3 million) Soft costs: DKK10 million (approximately US$1.4 million) Total development cost: DKK225 million (approximately US$32 million)

DEVELOPMENT SCHEDULE Site purchased: 1909 Planning started: 1997 Construction started: June 1999 Sale of individual parcels started: December 1999 Sale of individual parcels completed: December 2000 Project (cleanup and infrastructure) completed: 2003

DIRECTIONS

From Copenhagen Airport: Take the second road from the roundabout, Indenrigsvej, to a right onto Amager Landevej. Amager Landevej becomes Amagerbrogade after approximately 0.74 mile (1.2 kilometers). Turn left onto Amager Boulevard and continue approximately 1.8 miles (three kilometers) to a right onto Ved Langebro. From Ved Langebro turn left onto Islands Brygge. Continue along Islands Brygge until the development begins (approximately 1.2 miles/two kilometers).

Driving time: 15 minutes in nonpeak traffic.

Kelly Nelson, report author Leslie Holst, editor, Development Case Studies David James Rose, copy editor Joanne Nanez, online production manager

This Development Case Study is intended as a resource for subscribers in improving the quality of future projects. Data contained herein were made available by the project's development team and constitute a report on, not an endorsement of, the project by ULI–the Urban Land Institute.

Copyright © 2003 by ULI–the Urban Land Institute 1025 Thomas Jefferson Street, N.W., Suite 500 West, Washington D.C. 20007-5201 Newly completed offices and apartments adjacent to each other. Former industrial hall originally constructed for assembly of Zeppelin airships, now renovated as leasable office space. New housing under construction in the northern portion of the site. Silo originally used for pressing soy beans, now renovated as housing. Completed office renovation/addition across from silo buildings currently being converted into apartments. Recently completed office building located on the wharf. Recently completed apartment blocks located on Islands Brygge. Computer montage of Havnestad from the southwest. Site plan.