Demand for office space reaches a new high in the Netherlands’ major cities
The demand for office space saw an increase throughout the Randstad in 2019, with the exception of Amsterdam. The rental volume in Rotterdam increased by 4% and, at 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 close to major railway stations. For instance, the vacancy rate in Rotterdam was 11.3% at the end of 2019, in The Hague it was 7.5% and in Utrecht it was 5.9%.
Rudolf de Boer, Managing Director of CBRE Netherlands: ‘In the next few years, the Netherlands’ office market will be characterised by a shortage of high-quality office space. Amsterdam seems to have been the first city to reach the limits of its capacity for growth. We saw a clear decline in the take-up of office space in the Dutch capital in 2019 and, at the same time, a large portion of that take-up was related to new-build or newly renovated office space, with rents rising further. Office space is thus becoming somewhat less affordable.
The current long lead times caused by the complexity of multifunctional development, the limited opportunities to make land available and regulations mean that this market situation is unlikely to change in the short term. This gives other cities a real opportunity to respond to these developments. This can be done by creating an attractive business climate to attract national and international businesses.’
Office rents continue to rise
Due to the high demand for offices combined with limited supply, rents are rising. The top rent in the Zuidas area of Amsterdam increased by 7% in one year, reaching € 460 per sq. m. Rents in Rotterdam and The Hague increased by 4% and 2% respectively, to € 245 per sq. m. and € 225 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.