Key takeaways

  1. Looking into 2023, two factors emerge as particularly important for the occupier market: how occupiers continue to adjust to flexible working arrangements and the forecasted slowdown in office-based employment growth. 
  2. Increased construction costs, labour shortages and supply chain issues are causing delays in office projects. On the flip side, this can prove to be beneficial for keeping the vacancy rate relatively stable. 
  3. Hybrid work and office utilisation will remain in focus. Companies will work on finding an optimal balance between office utilisation and the space they need per employee. 
  4. Poorer quality or poorly located office space is expected to underperform in 2023. Office conversions may therefore arise as a second chance for underutilised space. 
  5. As the importance of sustainability credentials for occupiers and landlords grows, this will lead to a larger bifurcation in rents and values across different categories of office stock. 

Limited growth in office-based employment will constrain growth in the office leasing market 

Office-based employment in Copenhagen, having dipped in 2020 and bounced back in 2021 and 2022, is set to rise further in 2023, but only by 1.2%. This, coupled with an uncertain economic environment, is expected to constrain growth in the office leasing market. 

A large portion of the office space under construction, due to completion in 2023, has already been pre-let. On the other hand, increases in construction costs, labour shortages and supply chain issues are causing delays. On the flip side, this can prove to be beneficial for keeping the vacancy rate relatively stable. 
Hybrid work and office utilisation in focus 

Since the onset of the pandemic, awareness of the benefits of work-life balance and flexibility has grown substantially. Although financial remuneration remains the overriding criterion for most workers, the search for flexibility is increasingly influencing job choices and workplace decisions and is also closely linked to improved sentiment at work. 

The commute time is an important factor for employees in job selection. This is reflected in occupiers' decision-making when committing to new office space. The bifurcation between the demand for prime assets as opposed to secondary and suburban offices could become more pronounced. Poorer quality or poorly located office space is therefore expected to underperform in 2023. 


With most office-based employees embracing hybrid working, flexibility over when and where to work is becoming much more important when choosing a job. Companies that do not offer such arrangements may find it harder to attract talent. Our 2022 survey (see Figure 13) shows a strong desire among employees to continue the shift towards hybrid working, with nearly 20% of respondents currently being office-based all the time but only 12% wanting this to remain the case in the future. Workers who already have a hybrid pattern want to move further in that direction. At the other extreme, the proportion wanting to be fully home-based in the future remains negligible, meaning that almost all workers want to spend at least some time of their working week in the office.

Office conversions: A second chance for underutilised space 

With long-term forecasts calling for structurally higher office vacancies, owners of properties that do not appeal to modern tenants may want to explore office conversions. While this trend has been seen in Copenhagen's central business district (CBD) over the past few years, this option can be attractive in more secondary office locations. A surplus of available office space in these locations will continue to weigh on market fundamentals in the foreseeable future. 


The growing role of ESG 

Environmentally certified office buildings have become a larger component of the European office market over the past few years. However, both Aarhus and Copenhagen are scraping the bottom compared to other European cities in relation to the proportion of sustainability-certified office buildings. 

In Aarhus, the certified share stands at 3% as of mid-2022 compared with 2% in 2019; while in Copenhagen, the share remained unchanged at 7%. This development is worrying - both regarding reaching the national and city climate targets and attracting investors. 

Take-up in office buildings with sustainability certifications is expected to intensify in 2023. Many corporate users of office space have stated their commitments to carbon neutrality goals and need their real estate portfolio to reflect this. 

However, although sustainability certifications are certainly a good selling point, they are just one of the factors occupiers take into account when committing to a new space/location. Therefore, balancing locational preferences with the ESG agenda will be the key to securing tenants.