Expanding office investment, concentration of occupier demand
Investment in the Dutch office market has strongly expanded in the first half of 2014, while activity on the occupier market fell back, according to the latest MarketView Offices of real estate adviser CBRE.
Almost € 1.2 billion was invested in offices in the first half of the year, a doubling on annual basis and the strongest opening half year since the financial crisis. Almost 70% of the total turnover landed in Amsterdam, where the purchases of ITO|SOM and The Edge at Zuidas Amsterdam were the largest transactions. Due to the ongoing investment pressure, prime property in the top districts is becoming scarce and a shift to the peripheral locations of the four major cities is visible.
The occupier market has seen modest activity and is increasingly focusing on the big cities. The take-up volume declined in the first half by over 20% year-on-year, but this is partly offset by a higher volume of renegotiations. The stable vacancy rate also shows that the market is mainly characterised by low mobility, rather than by declining occupancy rates. The G4, and mostly Amsterdam, were most popular with office users and have registered more than half of the total take-up. The shift from the periphery to the inner cities and prime locations continues unabated. Illustrative in this respect is that the CBD of The Hague has shown the highest net absorption since the crisis. The need for high-quality, modern offices also continues. At Zuidas Amsterdam this combination has already led to new office development and an upward pressure on rents.
Scarcity of prime product and the recovering economy are leading to a higher risk appetite among investors. A further shift in the market towards the regional cities lies ahead. The continuing need for multi-functionality and a suitable work/leisure environment for office staff is increasingly combining occupier demand in the office, retail and residential markets and directing it to the largest inner cities, most importantly Amsterdam.