CBRE: Demand for office space rising very sharply

Amsterdam, 27 January 2022 – After nearly two years of compulsory home working, the Dutch business community is now welcoming its employees back to the office for some or all of their working hours. At any rate, that is the conclusion that can be drawn from the sharp rise in enquiries for office space. The demand is so high that there is evidence of a ‘backwash’.

These figures are presented in Market Outlook 2022 published by CBRE Netherlands, a subsidiary of the listed company CBRE Group. With over 100,000 employees, it is the world’s largest real estate consultancy. In its annual Market Outlook, CBRE publishes and analyses the figures for the past year and provides a substantiated forecast for the coming year.

Companies ready to take the plunge
The number of enquiries has risen by as much as 52% in less than two years. The number of companies looking for suitable office space and already in concrete negotiations is actually 139% higher than nine months ago. “After a long period of research and procrastination, companies are now ready to take the big step”, says Sebastiaan van Nimwegen, Director Capital Markets at CBRE.

The communal search for suitable hybrid work solutions is in full swing. It is now clear that the office plays a changing role in this. Since time immemorial, cities and offices have been the cement of cooperation and creativity; the market, where ideas and expertise were exchanged as well as goods, was the fuel of the economic engine. In today’s knowledge-intensive economy, the market as a meeting place is even more important. We attach great importance to ensuring a pleasant, social and sustainable working environment where we are always connected to our colleagues and the company we work for. The wave of new property search requests indicates that there is plenty of demand for high-quality workplaces in the city centre.

Cities and offices are binding agents
For the Dutch office investment market 2021 was another tough year. This was due mainly to the wait-and-see attitude adopted by users. Investors therefore remain cautious regarding risky investments in office property: the interest is there, but the difference between what the buyer is prepared to pay and what the seller wants to receive has up to now been too great. Offices in good locations or with longer leases are likely to be more popular. CBRE expects the visible recovery in terms of office users to continue in 2022. This will stimulate the investment market, resulting in a likely volume of 5 billion euros, higher than the 4.5 billion euros in 2021.

Increased rental potential
CBRE also sees the potential for a rise in rentals in 2022: “Economic growth on the one hand and a shortage of high quality office space on the other hand mean a greater potential for a rise in rentals. Furthermore, Dutch real estate is still cheap for investors in comparison with neighbouring countries. All in all, this will lead to a slight rise in the initial yields,” says Van Nimwegen.

Another important trend in the office market is that the ESG criteria are becoming increasingly crucial for investors’ interest. ESG stands for Environmental, Social and Governance, the three major factors in measuring the sustainability of an investment. “This relates predominantly to the certification of buildings and the CO2 emissions of buildings,” according to Van Nimwegen. “We have to reach zero emissions in 2050 and new European Union legislation aims to speed this up. The requirements for sustainable investments are becoming ever stricter. The finance market is now going to set the same sustainability requirements as the investment market. Buildings that do not meet the stricter European climate laws will get lower rents and their value will decrease. Buildings that do meet the ESG requirements will get higher rents and their value will increase”.