“Record number of investments and high take-up in Rotterdam office market”
In 2018, a record amount was invested in the Rotterdam office market. The investment volume grew to €1.17 billion: a growth of 167% compared to 2017, breaking the 2016 record of €1 billion. According to real estate advisor CBRE, this surge in investor interest is the result of a recovering user market in Rotterdam.
Figure 1: Investment volume in Rotterdam office market 2007-2018
Strong growth in office space rentals
The user market in Rotterdam was again very active in 2018. Last year, over 150,000 sq. m. of office space was leased, a whopping 66% more than in 2017. The vacancy rate in the city on the Meuse fell from 17% in 2017 to 10% at the end of 2018. This decline is a direct result of the recovering user market and the ongoing transformation trend.
This new record shows that investors have faith in the Rotterdam office market. The balance in the Rotterdam market was largely restored in 2018. The city will become increasingly attractive for users and investors, a trend that is partly the result of an updated office stock and modern, improved facilities.
Companies in the business services and financial services sectors were particularly active, especially in the Central Business District (CBD) near Rotterdam Central Station. Examples include Allianz, whose new offices will be located at Coolsingel 120, and Rabobank, who is moving to the FIRST office building at Weena 758. Several major leases were also signed in Rotterdam by organisations in the co-working sector including Regus and Spaces.
Tighter office market
As a result of the high take-up, the available office supply in the city is also decreasing.
Thanks in part to the housing prices that have sky-rocketed in the city, several outdated office buildings in the CBD will be transformed in 2019. The actual vacancy level is already below 10%. This means that, in 2019, it will be more difficult for companies to find suitable offices. A number of major employers in the city will be faced with the limited availability of quality office space. The tighter office market and the positive developments in the city demonstrate the importance of new office buildings. The city’s economic development could be at risk in the event that this demand is not met in the coming years.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers from more than 450 offices (excluding affiliates) worldwide. CBRE offers strategic advice and guidance in property sales and leasing; corporate services; property, facilities and project management; appraisal and valuation; development services; investment management; and research and consulting. Please visit our websites at www.cbre.nl and www.cbre.com.