“Growing shortage office space requires vision large cities in the short term”
After Amsterdam, vacancy rates now also dropping in other Dutch cities
As a result of the rapid decline of available office space in large cities such as Amsterdam, Utrecht, Rotterdam and The Hague, CBRE strongly advises these municipalities to make establishing a clear vision for new office buildings a priority. This scarcity may impact economic growth in the Netherlands if companies are unable to find suitable premises.
Vacancy rate in Amsterdam at lowest level since 2000
The vacancy rate in the Amsterdam office market (Amsterdam, Diemen and Amstelveen) dipped to its lowest level since 2000 in the first quarter of 2018: 5.4% of the total office stock. Vacancy rates in Amsterdam have dropped by 72% since the highest level in 2010.
Same trend in other cities
CBRE also sees a decline in office vacancy rates in other large cities such as Rotterdam, Utrecht and The Hague. In recent years, vacancy rates in these cities have fallen by 20%, 42% and 47%, respectively, compared to the highest recorded vacancy levels. The result is rental growth for the city of Utrecht in particular, but for The Hague as well.
CBRE believes the decline in available office space in major cities will continue in the coming years, which will lead to increasingly lower vacancy rates and higher rents.
In light of the current coalition formations, the rapid decline in available office space is an important trend that must be recognized by municipal authorities. We see that the availability of office space in major cities is shrinking rapidly and at the same time the major political parties have plans to transform more office buildings into residential units. Municipalities should take the growing demand for office space into account in both their housebuilding plans and policy.
For example, we expect that it will be more and more difficult to find suitable housing for companies interested in following EMA to Amsterdam. We believe the same market dynamics will occur in the short term in other important parts of the conurbation as well. The first signs of this are already visible.
The shortage in the country’s largest office market, Amsterdam, has already led companies to consider other cities. There are opportunities there, but these cities also face the challenge of positioning themselves well and offering plenty of available and appealing office space for companies interested in relocating there. Being able to meet the demand for office space is in the interest of both our economic growth and our international position.
CBRE analysed the possible impact of the recent municipal elections on real estate policy in the four major cities. The report can be downloaded here.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.