Related to the economic growth and positive outlook, companies are anticipating (further) growth, are more inclined to relocate and are more willing to invest in their office accommodation. The Netherlands in general and Amsterdam in particular consistently score high in terms of quality of life, level of education, innovative strength and infrastructure. In the struggle to attract and retain talent, companies see an attractive office in a representative and thriving location with excellent access as an essential asset.
Over the course of 2019, take-up of office space amounted to 1.2 million m2 and fell 13% short of last year's demand. Take-up increased by 10% in the total Randstad area, while dropping by 40% in the areas outside of the Randstad.
At the best locations in the Netherlands, vacancy is currently so low that relocating there is very challenging, while available supply is also dropping substantially in more secondary locations. The latter is also partly due to the ongoing trend of converting empty offices to other uses.
Vacancy rates in the office market are expected to continue to decline in the coming years. The office market will, however, remain primarily a replacement market at national level and an expansion market only in the strongest cities.
Prime rents continued to increase in 2019, especially in top locations, and currently stand at € 425 per m2 in the Amsterdam Zuidas business district, € 450 per m2 in the centre of Amsterdam and € 275 per m2 in Utrecht city centre. In all cases, these are previously unheard of rent levels. The largest relative increases over the past four quarters were registered in Amsterdam Sloterdijk and Amsterdam Zuidoost, as these office locations are developing into mixed-use areas.
For the upcoming plan period, we expect the best locations to continue to benefit from the high demand and shortage of good office supply, even if economic growth declines somewhat. Especially as a substantial part of this growth will come from the fast-growing IT sector, which generally aims for high-quality urban office locations. Other regions will have to continue to transform outdated office space to other uses.
Occupier key factors
Prime rent (/m²/yr, year-end)
Sources: JLL, Bouwinvest Research & Strategic Advisory