Instead of converting the older office space into housing, it can be good business to identify and highlight the hidden features of an office property and finding the right tenants for the lease.
Ny Christiansborg is a good example of this. With our help, the property is currently undergoing a major upgrade of the interior so that the company behind an ambitious coworking concept can move in early next year.
A planned conversion from office space into flats in Ny Christiansborg in the centre of Copenhagen proved much more difficult to realise than initially expected. Consequently, the owners were faced with a dilemma: Should they gamble and complete a residential conversion? Or should they undertake a less expensive modernisation of the office property, improve the quality of the premises to a contemporary level and accordingly future proof a secure a solid rent income?
We analysed the opportunities of the property and presented a business case that showed that the better business case was to keep the property as an office building rather than converting it into a residential property.
If the owners of a property in a location with these characteristics are willing to modernise sufficiently, the office occupier market today can reward that type of investment and provide a good rent income
Jan Dahl, Head of Lettings
But it requires hitting the right balance. If you do not modernise enough, the facilities will not live up to the standards expected of modern office space. If you modernise too much, you might end up with a chrome-plated product that no tenant is willing to pay a sufficient rent for, says Jan Dahl, Head of Lettings.
- In that sense, it's a case characteristic of the times. Nowadays letting of office properties requires the ability to increase the value of the lease without necessarily spending a lot of money, but by identifying the right opportunities. To put it simply, you can turn a 5 into a 10. This cannot be done just by taking pretty photos, putting together a lease prospectus and completing showings. It requires preparation and a thorough analysis of the potential, says Jan Dahl.
Prepared design line and visualisations
We identified a number of areas that could increase the value of Ny Christiansborg. Firstly, it was suggested that the property should have a new AC system so that the indoor climate can be regulated and handle an increasing number of people working together in less and less space. Secondly, it was suggested that the windows of the property were changed - partly for indoor climate reasons, but also to reduce the traffic noise that comes with the central location.
- We also produced a design line specifically for the property where we, with respect for the building from 1907, updated the style to match 2019 standards. Among other things, we ensured that some of the original red brick walls are exposed and not covered. To enable tenants to envision the future look of the property, we worked with our marketing department to create visualisations of the most important features so they could picture the changes, says Jan Dahl.
Match between property and tenant profile
With plans in place and a clear strategy for the office property, we proactively approached a tenant that matched the profile of the property. A tenant that worked with subletting office space to smaller businesses that prioritise views of the waterfront, close proximity to the city and Christiansborg, and that required office space of a high quality would be an obvious choice. All of this plays a significant role for members of the coworking company Work Share Grow (WSG).
Our concept is based on cosy corporate. It should be comfortable to go to work, but it should also be easy to be efficient. Our business model caught their eyes right away, and they have succeeded in getting the landlord to accept the changes needed to make the property functional for us, so that we could create the desired office environment for our members
Bo Frausing, Chairman of the Board at WSG
- In addition, we are a growing company, and we do not have time for lengthy processes. We have been thrilled with the speed of the process. The course from idea to action to signature has been extremely quick, says Bo Frausing.
Ny Christiansborg is in the process of being modernised and the new tenants are ready to move in on January 1, 2020. There are still 1,170 sqm of vacant office space on the 3rd floor of the property, which have not yet been assigned a new tenant.
