Demand for office space also reaches a record high in Rotterdam
- Remarkably, Rotterdam is growing mainly under its own steam
- Tech companies in Rotterdam are important drivers of the demand for office space
- Rotterdam is following the trend set by other European cities
The demand for office space saw an increase throughout the Randstad in 2019, with the exception of Amsterdam. The total rental volume in Rotterdam increased by 4% and, with a volume of 158,500 sq. m., it reached its highest level since the financial crisis of 2008. This was also the case in The Hague and Utrecht. In these cities, the volume increased by 13% and 12% respectively, to 137,600 sq. m. and 157,500 sq. m.
High demand for offices is leading to shortages
Last year, 306,000 sq. m. of office space was leased in Amsterdam, a fall of 21% compared to 2018. This lower rental volume coincides with a very tight office market. The vacancy rate for offices in our capital city had fallen to 3.5% by the end of 2019. The vacancy rate is also low in the other major cities, particularly in the most modern office zones around the major stations. For instance, the vacancy rate in Rotterdam was 9.1% at the end of 2019, in The Hague it was 7.5% and in Utrecht it was 5.9%.
Office rents continue to rise
Due to the high demand for offices combined with limited supply, rents are rising. Rents in Rotterdam and The Hague increased by 4% and 2% respectively, to €245 per sq. m. and €225 per sq. m. The top rent in the Zuidas area of Amsterdam increased by 7% in one year, reaching €460 per sq. m. Rents also rose in other major office cities: in Eindhoven by 14% and in Zwolle by 11% to €210 and €155 per sq. m., respectively.
The recent dynamism in the rental market has led to a sharp drop in vacancy rates and has already resulted in shortages around attractive public transport locations such as near Central Station, Blaak and Kop van Zuid. New-build offices are very much in demand there. Unfortunately, most of the planned new-build will not be ready until 2024. The shortfall may therefore increase significantly over the next few years. Generally speaking, Rotterdam is following the trend being set in other European cities.
Rotterdam is growing mainly under its own steam
The record volume in Rotterdam illustrates the dynamism of the city's new office market. In addition to companies from the more traditional sectors such as Unilever, Rabobank and the architectural firm OMA, it is also larger and smaller tech companies and flex office operators that are pushing up the city’s rental volume. In 2019, the share of tech companies and flex office operators was 27.9% of the total rental volume, while in 2010 this was just 5%. Examples include Mendix, MediaMonks, EV Box, Webhelp, Burst and Fabrique, all of which expanded their use of office space last year.
But less well-known start-ups and scale-ups are also becoming increasingly important in the city’s office market. These types of companies provided the city with around 10,000 jobs, as outlined previously in the report by Dealroom, Techleap and CBRE: ‘Start-ups: jobs growth engine of the Netherlands’. The growth in the number of small start-ups and scale-ups has led to growth in the number of smaller letting transactions in the office market. The average transaction size in 2019 was 1,700 sq. m., compared to 2,700 sq. m. in 2010.
Due to the rise of local start-ups and the growth in scale-ups, the city is growing mainly under its own steam, without the arrival of many large companies from other cities.