JERNHUSEN STOCKHOLM PORTFOLIO · central station portfolio pl anned full development (with over -decking) - economic impact1 2 3 $. . . jernhusen stockholm portfolio - economic impact

COPYRIGHT © 1976-2014 BUROHAPPOLD ENGINEERING. ALL RIGHTS RESERVED

Presentation by Dr Jim ColemanHead of Economics, BuroHappold Engineering

JERNHUSEN STOCKHOLM PORTFOL IOE CON O MIC I M PAC T

3 0 T H J U N E 2 0 1 7

JERNHUSEN STOCKHOLM PORTFOLIO - ECONOMIC IMPACT

JUNE 2017

STOCKHOLM

Socio-economic change


JUNE 20173

B A S E L I N EE C O N O M Y

Sweden has one of the highest per capita levels of

GDP in Europe.

An economy driven by strength in high-value

services, high-tech manufacturing and high-

productivity standards.

In 2016, the economy expanded by 3.4%

According to the IMF1, Sweden is expected to grow

2.6% annually over the next five years;

unemployment rate projected to drop to 7.3% by

2020.

Stockholm region and Stockholm County have been

expanding at a faster pace than the overall economy

– indicating the importance of Stockholm within

the national economy.

90

100

110

120

130

140

2006 2007 2008 2009 2010 2011 2012 2013*

Stockholm County Stockholm Region Sweden

Economic growth within Sweden2

GDP measured in billion SEK current prices, Index= 2006

1 :Source: IMF, World Economic Outlook; Newsec Property Outlook Spring 20172 : Source: Statistics Sweden


JUNE 2017

S TO C K H O L M – P O P U L AT I O N G R O W T H

4

Source: Timetric

Gothenburg

Stockholm


JUNE 2017

S W E D I S H E M P LOY M E N T R AT E S

5


JUNE 20176

S TO C K H O L M – P O P U L AT I O N G R O W T H

Stockholm’s population is

growing at a faster rate

than most other

European cities


JUNE 2017

S TO C K H O L M – O F F I C E R E A L E S TAT E

7

The office market in Stockholm remains very strong with rising rental rates and extremely low

vacancy


JUNE 2017

STOCKHOLM CBD

Comparative Performance


JUNE 2017

C I T Y C E N T R E S & C B DT H E I R R O L E A N D S I G N I F I C A N C E

9

1 Brookings Institution; Centre for Cities, UK

Knowledge

Spill over

Connectivity

Agglomeration

Benefits

Vibrancy and

Character

CBDs have a key role in the competitiveness of cities.

Agglomeration Benefits: physical and functional

proximity between various elements of the economic

system coexisting in and around city centres.

Knowledge Spillovers: the ability to share and spread

knowledge across industries/specialisms. CBDs play a key

role in facilitating this exchange.

Connectivity: hubs providing connectivity for businesses,

employees and visitors. Transport infrastructure plays a

major role by connecting jobs (typically in city centres)

and places of residence (typically outside the city core).

Vibrancy and Character: City centres play a central role

in shaping the perception and attractiveness of the

overall city.


JUNE 2017

C I T Y C E N T R E S & C B DT H E I R R O L E A N D S I G N I F I C A N C E

10

1 Ihlanfeldt 1995

Significant linkages: There are significant linkages

between city centres and the suburbs. Suburb based

companies might depend heavily on suppliers of services

that are located in the centre.

Information exchange: Information exchange can occur

more efficiently in dense urban environments because of

physical proximity.

Accessibility: The impact of new employment is

heightened where the opportunities are accessible to a

large and wide-ranging population and diverse labour

pool

Economic

Linkages:

Centre +

suburbs

Accessibility:

Employment

impacts

Information

exchange:

Dense central

environment


JUNE 2017

0 42 km

B A S E L I N ES PAT I A L I N S I G H T : K E Y E C O N O M I C C L U S T E R S

11

Main economic clusters are in northern

Stockholm, plus an additional ICT cluster in the

southern part of the city.

Most clusters are close to the CBD with driving

time from the centre varying between 7 and 15

minutes.

The CBD area is approx. 1.8 km2 and accounts for

approx. 1% of the city area.

Main rail station is in the CBD

Arlanda Express services enable travellers to

reach the CBD within 20 minutes.

1 ESRI World Population Estimate

STOCKHOLM CITY

CBD

Kista

Information and communication

10 min driving from CBD

Södermalm

Higher Education, Medicine, Science


SU, KTH, Karolinska Institute


Wholesale and retail trade

Public administration and defence

Financial and insurance activities

Professional, scientific and technical activities

Accommodation and food service activities

Higher Education



Financial and insurance activities





"

"

"Solna

"

"


JUNE 2017

E U R O P E A N C I T Y C LU S T E R C O M PA R I S O N

12

City STOCKHOLM BARCELONA BERLIN COPENHAGEN EDINBURGH ZURICH

CBD map

(Scale: 1:200,000)

Size (km2) 1.8 13.8 1.1 3.9 3.4 0.7

CBD Office Space

Share33% 44% 14% 48% 46% 11%

CBD GDP Share 23% 30% 11% 41% 36% 8%

Driving time to

other clusters

(min)

7-15 12-25 10-18 15 - 15-27

Driving time to

the airport(s)23-37 26 32 17 31 17

Population 911,989 1,620,943 3,450,889 583,348 492,680 380,500


JUNE 2017

HISTORIC RANKING LATEST RANKING

33

26

43

19

31

24

44

10

5

10

15

20

25

30

35

40

45

50

2008 2010 2012 2014

Stockholm

Amsterdam

Copenhagen

Berlin

Zurich

Barcelona

Milan

New York (Highest)

C I T Y B E N C H M A R K I N GAT K E A R N E Y C I T I E S I N D E X

13

Source: AT Kearney Cities Index, AT Kearney, 20141 Criteria based performance is discussed in the subsequent section

AT Kearney Cities Index: Ranking Trend

Ranking

6 Y

R T

REN

D

4Y

R T

REN

D

2Y

R T

REN

D

N/A

The AT Kearney Cities Index – an annual industry recognised cities benchmarking exercise

New York emerges as the leading city globally in terms of its overall competitiveness1

Stockholm’s performance over the last 6 years has been declining (as highlighted in red)

Currently ranked at 39 (2017) – a decline of 12 places since 2012


JUNE 2017

STOCKHOLM CBD

ORIGINAL STUDY


JUNE 2017

O R I G I N A L P O RT F O L I OP R O F I L E

15

Based on available

information1, the overall

portfolio comprised 63%

office space followed by

retail, hotel and other uses

like parking, warehousing

etc2.

Jernhusen Central Station

area is approx. 12% of this

total.

1 Received by the date of issue of this version of the report2 Source: Property owners


JUNE 2017

O R I G I N A L P O RT F O L I OE C O N O M I C I M PA C T M E T H O D O L O G Y

16

Portfolio Space by use 1 (Office, Retail, Hotel)

Employees by job type in portfolio1,4

(Service, Retail, Hotel)

Input

Portfolio Space by use 1 (Office, Retail, Hotel)/

Employees by job type in portfolio1,4

(Service, Retail, Hotel)

Weighted average

space per employee

Portfolio total space by Use/ Weighted Average Space per employee by type4

Employ-ment by

type

GDP per employee for services retail and accommodation 5*Employment by type

GVA by type

Portfolio GVA per use * GVA multiplier per use2, 3

Indirect GVA

Portfolio employment per use * employment multiplier per use2, 3

Indirect Employment

Input

Estimate

Result

Indirect Result


JUNE 2017

O R I G I N A L P O RT F O L I OC U R R E N T E C O N O M I C I M PA C T M E T H O D O L O G Y - M U LT I P L I E R S

17

Employment Gross Value

Added

Space

Category

Internat. Nat. Internat. Nat.

Office 1.7 4.05 1.6 2.95

Retail 1.6 2.4 1.6 2.8

Hotel 1.3 2.2 1.6 4

Economic impacts can be disaggregated into: direct, indirect and

induced impact

Economic impact multipliers are created to estimate the additional

employment and value-added that is generated as result of an

increment in the production of a specific economic sector.

Indirect impacts are the employment and value-added created across

the supply chain as a result of an increment of the production of a

good or a service.

Induced impacts result from the expenditures of employees in the

local economy. These expenditures further increase local demand

and therefore the production of products and services.

To calculate the indirect and induced impacts of the portfolio, Type II

multipliers were used for employment and GVA. The study uses two

different sets of multipliers. The first set is the Swedish 2010

multipliers as used in the Airport City Stockholm study. The second

and more conservative set of multipliers is derived from the Scottish

government’s multiplier. Because we use both of these in each

scenario, two different results are provided.

National (Swedish) multipliers were tested against official national

accounting Input-Output tables and although they are somewhat

optimistic, are not considered particularly unrealistic.


JUNE 2017

O R I G I N A L P O RT F O L I OC U R R E N T E C O N O M I C I M P A C T R E S U L T S U S I N G I N T E R N A T I O N A L M U L T I P L I E R S

18

Estimated Economic Impact

$

Approx. SEK 21 bnDirect GVA Impact

Approx. SEK 34 bnIndirect & Induced GVA Impact

Estimated Employment Impact

Approx. 24,000 Direct Jobs

Approx. 41,000 Indirect & Induced Jobs

Other Impacts and contribution

Business agglomeration

Knowledge and Innovation

Retail and destination offer

…

Overall attractiveness

and competitiveness ofStockholm City and CBD

Based on available data, secondary market research and benchmarking analysis, it is estimated that the current client portfolio has the following

economic impact on the city economy …


JUNE 2017

O R I G I N A L P O RT F O L I O - S C E N A R I O SS U M M A R Y - G R O S S VA L U E A D D E D

19

-20 000

-10 000

-

10 000

20 000

30 000

40 000

50 000

60 000

Current portfolio Planned portfolio

with maximum

utilisation

Replace 1% of

office space with

retail

Planned portfolio

+3% office space

with maximum

utilisation

Planned portfolio

+8% office space

with maximum

utilisation

Risk of doing

nothing

Miljo

nta

l

Direct GVA SEK

Indirect & Induced GVA SEK

International Multipliers


JUNE 2017

S TO C K H O L M C B DO F F I C E S PA C E I M PA C T C I T Y C E N T R E A N D S U B U R B S

20

The estimated GDP per service job produced in the city centre is 10% higher

than that produced in the suburbs of the city

The city centre seems to attract the service jobs with the highest economic value

compared to the ones in the suburbs.

This result suggests that an additional m2 of office space in the CBD will make a

more significant contribution than locating it in suburban areas.


JUNE 2017

JERNHUSEN STOCKHOLM

CENTRAL STATION AREA

CURRENT PORTFOLIO


JUNE 2017

Based on available data, secondary market research and benchmarking analysis, it is estimated that the current client portfolio has the

following economic impact on the city economy …

C E N T R A L S TAT I O N P O RT F O L I OC U R R E N T E C O N O M I C I M PA C T 1

22

Estimated GVA Impact2 Estimated Employment Impact4

Estimated Income Impact6

1 The estimates presented here are based on portfolio data received till the date of issue of this version2 Estimation of GVA impact is based on the assumption that service sector constitutes majority of the business activity in the CBD. Furthermore, the apportionment of GVA is based on share of office space.3 Indicating indirect and induced GVA created in the wider Stockholm economy due to the economic activities taking place in businesses located in the portfolio buildings. Calculated using industry standard GVA multiplier . Source:

Scottish Input-Output table (URL: www.gov.scot)4 Estimation of employment impact is based on the share of office space in the portfolio vis-à-vis Stockholm CBD5 Indicating indirect and induced employment created in the wider Stockholm economy due to the economic activities taking place in businesses located in the portfolio buildings. Calculated using industry standard employment multiplier

. Source: Scottish Input-Output table (URL: www.gov.scot)

$Other Impacts and contribution

Approx. SEK 182 millionDirect GVA Impact

Approx. SEK 309 millionIndirect & Induced GVA Impact3


Approx. 3,900 Indirect & Induced Jobs5

Transport Hub

Support business around

transport hub

http://www.gov.scot/



JUNE 2017

JERNHUSEN CENTRAL STATION

PORTFOLIO

FUTURE SCENARIOS

23


JUNE 2017



C E N T R A L S TAT I O N P O RT F O L I OP L A N N E D F U L L D E V E L O P M E N T ( W I T H O V E R - D E C K I N G ) - E C O N O M I C

I M PA C T 1 I N T E R N AT I O N A L M U LT I P L I E R S

25








Approx. SEK 1.5 billionIndirect & Induced GVA Impact3


Approx. 16,600Indirect & Induced Jobs5

Transport Hub


transport hub




JUNE 2017



P O RT F O L I OP L A N N E D F U L L D E V E L O P M E N T ( W I T H O V E R - D E C K I N G ) - E C O N O M I C

I M PA C T 1 N AT I O N A L M U LT I P L I E R S

26








Approx. SEK 2.6 billionIndirect & Induced GVA Impact3


Approx. 38,700Indirect & Induced Jobs5

Transport Hub


transport hub




JUNE 2017

C E N T R A L S TAT I O N S C E N A R I O S : O U T P U T S U M M A RY

International Multipliers National Multipliers

Direct jobsIndirect and

Induced Jobs Direct GVA Indirect GVA

Indirect and

Induced Jobs Indirect GVA

Number Number SEK SEK Number SEK

Existing 2,390 3,900 181,900,000 309,300,000 7,600 530,700,000

Planned Full

Development (with

overdecking)9,800 16,600 908,500,000 1,544,500,000 38,700 2,674,000,000

Area A (ETAPP) is the Area schedule is excluded as per client email dated 30th March 2017


JUNE 2017

If no (or limited) planned development is taken forward:

− An additional 7,400 direct jobs may not be available

− An additional 34,000 indirect jobs may not be available

− A potential gain of SEK 726million may be lost to the economy

− The overall risk is a loss of competitiveness for Stockholm’s CBD relative to

other competitor cities

C E N T R A L S TAT I O N - ‘ D O N OT H I N G ’ S C E N A R I O

28


JUNE 2017

CONCLUSIONS &

RECOMMENDATIONS


JUNE 2017

O V E R A L L C O N C LU S I O N S

30

• Economic growth in European cities is driven by:

highly skilled sectors, knowledge transfer,

infrastructure development and introduction of

new technologies

• Stockholm's CBD is an integrated part of the

city's economy as a whole and has an important

role in supporting high value activities

• Projections indicate a significant employment

growth in Stockholm - it cannot be

accommodated in the CBD with its current

characteristics and real estate portfolio

• A job in the CBD provides a 10% higher

contribution to the city's economy than a job

outside the centre

• Not utilizing CBD space properly may limit

economic growth

• The risk of not changing the CBD is a ‘loss’ of

potential new jobs – over 7,00 direct jobs

• The reduction in employment is likely to consist

of high-quality jobs that are important to the

economy: in information, communication,

finance, insurance, real estate and business

services.

• These jobs may not move to other parts of

Stockholm County or other cities in Sweden.

Instead, they may be attracted to other Nordic

or European cities.

• Other locations in Sweden are not necessarily

equivalent replacement for Stockholm's CBD.


JUNE 2017

K E Y R E C O M M E N DAT I O N S

31

The scale, quality and location of high quality

office space in Stockholm’s CBD area must be

allowed to increase over time in order to attract

high-value economic activities and maintain the

competitiveness of the city overall.

New space will be needed to host anticipated

new employment and its development must be

actively facilitated

To be as competitive as other European cities,

Stockholm’s CBD must expand

Expanding office space in the CBD area will

enable the city to attract higher value jobs than

those which may be attracted to more peripheral

areas of the city.

Improvements in terms of access to high quality

CBD based employment from all parts of the

wider city will be important to ensure that the

widest cross section possible of residents is able

to take advantage of CBD-based employment.

Documents

JERNHUSEN STOCKHOLM PORTFOLIO · central station portfolio pl anned full development (with over -decking) - economic impact1 2 3 $. . . jernhusen stockholm portfolio - economic impact