Rotterdam seeking new balance in office market

In the years to come, Rotterdam wants to continue to develop from a typical port and industrial city to a port and knowledge city. By focusing on education, housing, gentrification and tourism, it aims to boost the knowledge economy and attract workers and organisations from the creative sector. The office market also plays an important part in achieving the city's objectives. In its publication Rotterdam; The Property Perspective, CBRE analyses and interprets the most important trends in the Rotterdam office market.

Office market
Rotterdam has more than 3.2 million sq m of office space, 80% of which is in the rented sector. The past few years have seen a considerable rise in office take-up by organisations in the technology, creative and business services sector. This is a step in the right direction when the aim is to create a broader economic basis. CBRE has seen an annual rise in the take-up of office space since 2013, with a peak of more than 170,000 sq m in 2015. Companies from the business services sector had an above-average share in this, with a take-up of 80,000 sq m, or 46%. The international real estate advisor expects a stable growth in comparison with the long-term average.

Opportunities for investors
Investors find that transformations and renovations are increasingly feasible, as the book value of empty offices has generally decreased after several crisis years, and the demand for accommodation is rising now that the economy is improving. Investors can stand out in the Rotterdam office market by creating a more suitable and modern supply for occupiers and improving the sustainability of their buildings.

Investors are showing a new interest in the city. In comparison with the other G4 cities, Rotterdam took second place with an investment volume of about €370 million; at the beginning of 2016 it even came first. The latter was the direct result of the sale of the "De Rotterdam" building by Rabo Vastgoedgroep to a consortium of Korean investors, represented by Amundi Real Estate. In addition to this transaction, quite a few other characteristic Rotterdam office buildings have changed hands over the past few years, including FIRST, Central Post, Beurs-WTC and Maastoren.

The city of Rotterdam and various market operators are facing a number of challenges and opportunities. If they focus even more on transformation and continue to give the existing office stock a quality boost, the city will offer interesting opportunities for investors and (future) tenants, who can profit from favourable rents. The balance will then be restored, and rental growth will become possible again for investors.