A STATE OF AFFAIRS
THE NETHERLANDS
OFFICE MARKET
OFFICE TAKE-UP
MARCH 2017
OFFICE SUPPLY
OFFICE RENTS
OFFICE
INVESTMENTS
The Dutch office market undeniably thrived last year, after cautious recovery in 2015. More offices were sold
and let out, but also vacancy levels dropped for the second year in a row. A better demand-supply ratio was
sensed most strongly in the Randstad area, serving the Netherlands’ four largest cities in particular. Interestingly
enough, rents did not change quite significantly in the Netherlands. Generally speaking, they remained steady
in 2016. The recovery of demand and supply levels was by no means the only positive development that
presented itself last year. The number of office investments skyrocketing was yet another boost.
NVM BUSINESS THE NETHERLANDS OFFICE MARKET
OFFICE TAKE-UP
As economy continued to pick up in the Netherlands, demand
TAKE-UP OF OFFICE SPACE ACCORDING TO BUILDING TYPE
for Dutch offices intensified in 2016. As a result, approximately
1.16 million m² were let out or sold on the open market,
1,600,000
excluding owner-occupier premises. And because quality criteria
1,400,000
changed, more companies decided to exchange their existing
1,200,000
premises for high-quality alternatives, usually combined with
1,000,000
good public transport accessibility and more facilities. Total
800,000
office take-up climbed, but so did the number of lease and
sales transactions. Furthermore, several major transactions were
realised in 2016; this too contributed to higher take-up levels. For
instance, Booking.com purchased an office building yet to be
Source: NVM
m2
600,000
400,000
200,000
0
constructed, covering as many as 62,000 m² at the very heart
2007
2008
2009
2010
of the city of Amsterdam. Because of sizeable transactions such
2011
2012
new development
as these, more new offices were taken up last year compared
2013
2014
2015
2016
existing buildings
to 2015. But still, demand was strongest as far as existing office
space was involved.
Despite a positive office market in general, geographically
speaking opposing tendencies were undeniably visible. One
TAKE-UP OF OFFICE SPACE BY
REGION 2016
interesting detail was that particularly the northern provinces of
the Netherlands faced diminishing demand, the opposite being
the case in the Randstad area, the city of Amsterdam claiming a
key role. Office take-up in the Dutch capital increased by 70%
to 383,000 m². Also more lease transactions were signed in
TAKE-UP OF OFFICE SPACE BY SIZE
CATEGORY 2016
Source: NVM
12 %
16 %
5%
Source: NVM
10 %
33%
15 %
5%
11 %
8%
the city of Utrecht compared to last year. The Hague, however,
could not but settle for modest take-up rates, even below those
4%
10 %
of 2015. Lower take-up levels in this city followed from the
6%
authorities’ poor demand and the almost non-existence of major
9%
25 %
23 %
8%
Amsterdam
West South other
200–499 m2
2,500–4,999 m2
The Hague
Central other
Netherlands’ four largest cities in the first place, the Randstad
500–999 m2
5,000–9,999 m2
Rotterdam
North East
1,000–2,499 m2
10,000 m2 and more
conurbations represented about 80% of total transaction volumes.
Utrecht
West North other
East
South
lease transactions. As demand for office space involved the
Outside the Randstad, a mixed picture presented itself. As
mentioned previously, demand in the three northern provinces
has been something of a let-down. What’s more, Zwolle suffered
a serious loss; demand was also very poor in Nijmegen. The
large cities in southern parts of the Netherlands were doing much
better. More offices exchanged occupiers in Tilburg and Breda
TAKE-UP OF OFFICE SPACE BY REGION
600,000
as well as Den Bosch. As for Tilburg, the city benefited from
500,000
the municipality’s decision to temporarily rent office space in a
400,000
building previously home to insurance company VGZ.
Source: NVM
m2
300,000
200,000
100,000
0
2007
2008
West North
2009
2010
West South
2011
Central
2012
2013
North East
2014
2015
East
2016
South
OFFICE SUPPLY
Stronger demand for office space was not the only factor pushing
SUPPLY OF OFFICE SPACE ACCORDING TO BUILDING TYPE
the market in a positive direction in 2016 Supply levels dropped
significantly, as approximately 7.75 million m² were available for
9,000,000
rent or sale at year-end 2016, that is 15.9% of total office stock
8,000,000
in the Netherlands. To compare, approximately 8.47 million m²
7,000,000
were available in 2015, equivalent to a 17.1% vacancy rate.
6,000,000
Not only did total supply drop, but also the number of offices
5,000,000
that have been available for a long time went down in 2016
4,000,000
(4.4 to 4.2 million m²). Supply levels dropped as demand
3,000,000
intensified but mainly because quite a number of buildings had
been withdrawn from stock (approx. 1.08 million m²). Three-
Source: NVM
m2
2,000,000
1,000,000
0
quarters involved vacant offices being transformed into homes;
2007
2008
2009
2010
224,000 m² were taken down. Most of these offices were
2011
2012
new developments
old. Especially in Randstad, where the alarming lack of homes
2013
2014
2015
2016
existing buildings
for rent or sale persisted last year, more residential space was
provided at former office buildings. Interestingly, transformations
have taken place in areas that had been excluded so far (e.g.
industrial sites). In Weesp, an industrial site office building has
been converted into homes. The same happened in The Hague
SUPPLY OF OFFICE SPACE BY
REGION 2016
and Nijmegen.
The most eye-catching drop in supply presented itself in
Source: NVM
10 %
14 %
14 %
Source: NVM
10 %
6%
8%
8%
Amsterdam, Amstelveen, Breda, The Hague, Dordrecht,
Eindhoven, Hoofddorp and Rotterdam. Amsterdam’s city centre
SUPPLY OF OFFICE SPACE BY SIZE
CATEGORY 2016
20 %
10 %
30 %
5%
and the western garden cities benefited the most. When it comes
to the city centre, decline was substantial to such an extent real
estate agents even claimed a lack of office space was a fact.
9%
15 %
15 %
Another interesting detail is that supply levels hardly changed in
the popular South Axis business district, even though much more
space had been taken up. One of the reasons has been the
speculative construction of offices. Also quite a number of Dutch
municipalities faced an increase in vacancy levels in 2016,
26 %
Amsterdam
West South other
The Hague
Central other
Rotterdam
North East
Utrecht
West North other
East
South
Roosendaal. In Groningen, Essent’s building was abandoned
NVM Business expects vacancy rates to continue to drop in 2017,
SUPPLY OF OFFICE SPACE
BY AGE 2016
transforming or tearing down many old offices. The obligation to
Source: NVM
1% 1%
make sure that by 2023 all office buildings must have at least
energy label C, is pivotal. The bottom end of the market will
7%
19 %
suffer the consequences the most, as the costs required to make
buildings sustainable cannot be covered by pushing up rents.
72 %
0–2 years
13–17 years
3–7 years
18 18 years and older
8–12 years
5,000–9,999 m2
1,000–2,499 m2
10,000 m2 and more
2,500–4,999 m2
like Arnhem, Gorinchem, Groningen, Meppel, Roermond and
after discontinuing business activities.
500–999 m2
OFFICE RENTS
Despite better demand for office space, and even though
AVERAGE RENTS OF OFFICE SPACE
supply levels dropped, rents hardly climbed if at all in most
Source: NVM
⁄ m²
places. Also average office rents remained at approximately €
190
130 per m². One of the few exceptions in general presented
180
itself in Amsterdam where rents did go up in districts like the
170
city centre and the South Axis (+ 5% and 10% respectively).
160
Nevertheless, the average rent level in the Dutch capital hardly
150
changed last year. Steadiness was also reported by the city
140
of Utrecht. Average rents, however, did drop in The Hague,
130
maintaining the trend of previous years. A modest decline was
120
also experienced by the city of Rotterdam. And as far as the
110
other regions are involved, average rents were under even
100
2007
2008
2009
2010
more pressure particularly in eastern and southern parts of
2011
2012
new developments
the Netherlands. Just like 2015, investors provided incentives,
2013
2014
2015
2016
existing buildings
which slightly interfered with a true understanding of pricing.
The availability of reliable information on rents realised was
yet another problem. Many office space suppliers were very
reluctant to share details.
AVERAGE RENTS OF OFFICE SPACE BY REGION
Source: NVM
⁄ m²
160
150
140
130
120
110
100
2007
2008
West North other
2009
2010
2011
West South other
2012
2013
Central other
2014
North East
2015
East
AVERAGE RENTS OF OFFICE SPACE
2016
South
Source: NVM
⁄ m²
220
200
180
160
140
120
100
2007
2008
Amsterdam
2009
2010
2011
The Hague
2012
2013
Rotterdam
2014
2015
2016
Utrecht
NVM BUSINESS THE NETHERLANDS OFFICE MARKET
OFFICE INVESTMENTS
The positive mood on the office market was also incepted by
OFFICE INVESTMENTS ACCORDING TO BUILDING TYPE
the fact that in 2016, a lot more office investments were made
compared to the previous year. Investors’ intensifying demand
9,000
for offices was to a great extent fed by low interest rates and
8,000
the widespread availability of capital. Based on existing sales
7,000
data, and without taking share transactions and funding into
6,000
consideration, last year investors spent almost € 4 billion on
5,000
office buildings. In 2015, investments in this segment of the
4,000
commercial building market amounted to approximately
3,000
€ 3 billion. In 2016, offices made a significant investment
category, as 60% of total volumes invested in commercial
Source: NVM
x miljoen
2,000
1,000
0
property involved office buildings.
2007
2008
2009
2010
2011
new development
Geographically speaking, most investments were made
2012
2013
2014
2015
2016
existing buildings
in Randstad offices. The three western provinces together
represented approximately 85% of the total amount investors
spent on offices last year. And just like in previous years, the city
of Amsterdam played a key role, as investors were spending
about € 1.6 billion on offices most of which are located in the
OFFICE INVESTMENTS BY
REGION 2016
city centre, Southeast and South Axis. Out of the Netherlands’
3 %2 %
3%
6%
four largest cities, Rotterdam too was able to attract investors’
attention, selling its prestigious building known as De Rotterdam
Source: NVM
3%
3%
Different city centre buildings exchanged owners as well.
Source: NVM
8%
42%
6%
on Kop van Zuid, taking investments volumes to the next level.
OFFICE INVESTMENTS BY SIZE
CATEGORY 2016
20 %
11 %
69 %
In line with previous years, international investors were the
15 %
most active buyers, although Dutch investors were also fairly
visible. A Dutch insurance company purchased a substantial
9%
Amsterdam
West South other
1,000–2,499 m2
5,000–9,999 m2
The Hague
Central other
Interestingly, most investors were particularly interested in slightly
2,500–4,999 m2
10,000 m2 and more
Rotterdam
North East
bigger office buildings starting at 10,000 m².
Utrecht
West North other
East
South
office portfolio mainly with buildings close to railway stations.
Investors’ stronger demand for offices allowed prices to climb
in 2016, with Randstad’s best locations benefiting the most.
As initial yields dropped, prices at these locations increased
by nearly 25%. Office prices also skyrocketed outside the
Randstad area. But just like in 2015, offices at less popular
locations came with serious discounts to be able to welcome
AVERAGE GROSS INITIAL YIELDS OF OFFICES
11
new owners. Real estate agents believe yields for Randstad’s
10
premium locations have reached an all-time low, and so prices
9
should climb no further.
Bron: NVM
%
8
7
6
5
2007
2008
Randstad best locations
2009
2010
Randstad other locations
2011
2012
2013
The Netherlands other best locations
2014
2015
2016
The Netherlands other other locations
DEFINITIONS
OFFICE
RENT
A spatial and independent unit used for office
The basic rent paid per square metre of lettable floor
activities or support activities in the first place. Office
area, exclusive of VAT, service charges and lessees’
spaces that are part of industrial buildings, universities
specific fitting-out costs.
or hospitals are not considered to be offices.
GROSS INITIAL YIELD
TAKE-UP
The gross annual rent upon acquisition as a
Lease and sales transactions concluded in the
percentage of the total investment.
open market. Users who provide for their own
accommodation requirements (the so-called owneroccupier development) are not included in the take-up
volume. The same applies to sale-and-leaseback
agreements as well as contract extensions. NVM
registers transactions starting at 200m².
SUPPLY
Office space immediately available for rent or sale.
Supply does not include offices under construction
and those yet to be built. Supply includes vacant
and developing offices as well as spaces that are
still being used but which are soon to be released.
Supply is measured in buildings providing at least
500m².
COLOPHON
March 2017
Composed by
Drs. R.L. Bak
Data source
NVM Data &
Research,
Nieuwegein
Design
PROOF
the alignment agency
Photography
MS Fotografie,
­Rotterdam