“2018 to be record year for investments in Rotterdam offices”

Investor interest in Rotterdam office buildings is on the rise. The interest is so great that CBRE expects 2018 to show a record number of investment transactions. Investors anticipate the emerging new balance between supply and demand in the market, as shown in the international real estate advisor’s most recent report.

Based on actual and anticipated transactions, CBRE expects that the investment volume in Rotterdam will exceed the 1 billion euro mark reached in the 2016 peak year. Recent transactions include the Maastoren property at Wilhelminaplein, the Unilever offices at the Weena, Blaak 16 and the Groothandelsgebouw building.

Falling vacancy rates and shrinking supply

Growing interest from investors is due in part to the modernisation of the office stock. This stock was given a quality boost as a result of renovations and the withdrawal of properties that had fallen into disuse. Although the Rotterdam office market has a relatively high vacancy rate compared to other towns in the Randstad conurbation, this rate has now dropped from 18% in 2013 to 14% in Q1 2018.

Recovery in the user market

Interest is growing partly as a result of recovery in the user market. CBRE expects to see a steady but cautious growth in this market due to the gradual change of the tenant mix. The office market traditionally relied on transport and industry, but these sectors will soon be joined by the business services and high tech sectors eager to claim a slice of the rental market pie. A testimony to this is the popularity of serviced office operators such as Spaces and the CIC. Renovated and modern office buildings are also profiting from this development. These buildings have successfully attracted tenants.

Further drop in vacancy rates

CBRE expects to see a further drop in vacancy rates in the coming years due to a continued growth of conversions and the rise in take-up. Interest from companies no longer able to find office space in other towns in the Randstad conurbation as a result of the current shortage may also increase. Once the market becomes more balanced, there will be room for new construction projects.

First signs of future rent increases

CBRE forecasts rental growth for the A-class offices in Rotterdam. There is limited availability in this category.

The report can be downloaded here.