Coronavirus crisis leads to temporary deferment of demand for office space in Amsterdam
More than two months after the implementation of the coronavirus measures, the first effects on the Amsterdam office market are becoming visible. As of the end of May, the demand for office space in Amsterdam showed a drop from 332,000 sq. m. at the start of the year to 235,000 sq. m. In other words, a 29% decline. These are the results of a recent analysis performed by real estate advisor CBRE.
Not a total drop in demand – but deferred decisions
Of the total demand for office space, 127,000 sq. m. was put on hold by the end of May. 15,000 sq. m. worth of searches had been cancelled since the start of the crisis, while leases for another 19,000 sq. m. of office space were signed. Since the outbreak, companies have also been looking for new office space for a total of 64,000 sq. m.
Decisions deferred or reconsidered
“Despite the continuing interest in office space, office workspaces are being viewed in a completely different light since the start of the coronavirus crisis. In addition to the question of how this crisis has effected business operations and operating results, companies are now working on plans for a return to the office. The new way of working will require more flexibility in housing in order to adapt to changing circumstances. We have also observed that the searches and contract negotiations currently underway are taking longer than before. Expiring lease contracts are carefully reviewed by tenants and housing plans are being reconsidered.”
Tech companies remain active
In the last 2.5 years, the tech sector has been responsible for almost a quarter of the total rental volume in the Amsterdam office market. At the moment, tech companies in the travel and transport sectors are taking the hardest hits and several businesses have had to defer decisions about housing as a result. This concerns a total of 43,000 sq. m. of office space. Research conducted by Dealroom (data partner for CBRE) among tech companies in Amsterdam shows that other tech companies are currently benefiting from a rise in the demand for online service provision. Well-performing tech companies are still looking for new office space. This group is looking for a total of 46,000 sq. m. of office space.
Sustained activity by variety of Amsterdam businesses
Although demand has declined, the Amsterdam office market is in relatively good shape. The vacancy rate reached a historical low in March with a percentage of 3.4 and the pipeline of new builds is limited. Amsterdam also boasts a great variety of businesses. The presence of businesses in the corporate and financial services sector, the creative industry and the above-mentioned tech sector form a solid foundation for the office market.