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Office vacancy at historically low level

Jan Verhaegh • 04/07/2022

The office market will remain stable in the first half of 2022 compared to the first half of 2021, despite declining vacancy rates. This is apparent from the latest figures from Cushman & Wakefield on transaction dynamics, supply and vacancy in the Dutch office market. Of all office space offered on the commercial real estate market in the Netherlands, 8.2% is vacant. This is the lowest level in 20 years.

Over the past six months, market sentiment was mainly determined by the lack of excellent office space in prime locations. This scarceness has a dampening effect on the transaction volume. The take-up for the half year (390,000 m²) is at a previous level as around this time last year (402,000 m²). Compared to the first quarter (180,000 m²), there was also an increase in the second quarter. This uptake could have been higher, had the offer been available in the locations where users search.

Jan Verhagh, Head of Office Consultancy at Cushman & Wakefield: “The supply of office space on the Dutch real estate market has been steady for years. On the one hand by new use and initially by the result of transformation to other functions such as housing, dynamics of housing for special target groups such as students and more recent refugees. Two years of the corona pandemic has not put an end to this downward trend.”

Nederlandse gebruikersmarkt kantoorruimte

 

Working from home does not lead to vacancy

The outbreak of the corona pandemic has led to speculation about redundant office space due to the embrace of working from home. Although it has a permanent place in the office worker's work week, it has not resulted in any vacancy so far. In fact, compared to January 2022, the vacancy rate has fallen by 0.2 percentage points to 8.2% and is at the lowest level in 20 years.

The major cities of the Netherlands can count on lower vacancy percentages than the Dutch average. In Utrecht and The Hague the vacancy percentage is below the friction level and Rotterdam also has a vacancy rate significantly below the Dutch average for the first time in a long time. In Amsterdam, however, an opposite trend is visible: vacancy rates rose from 6.4% to 7.1% during the year, because a number of new developments were completed in the past six months.

Jos Hesselink, Research Lead Netherlands at Cushman & Wakefield: "If all known relocations are also realized, this will lead to an annual take-up of approximately 1.0 million m² in 2022. A crucial result is the availability of sufficient high-quality supply. in the top locations in the Netherlands, which is currently about the same level as at the end of 2020 (8.4%). In the largest cities there is even a supplier market, because the vacancy rate there (except for Rotterdam) is below the frictional vacancy level. This could lead to further polarization in the office market as demand is increasing in cities with the least supply.”

The take-up by sector underlines the stable development in the office market and is in line with their long-term averages.

Kantorenopname naar huurdercategorie

 

Urban frontrunners

The largest transaction realized in the first half of 2022 concerns the lease of 6,500 m² by the municipality of Rotterdam in the Groot-Willemsplein office building in the center of the port city. In Zwolle, ABN AMRO insurance (again) signed for 4,400 m² in the IJsseltoren. Online auction website Catawiki occupied approximately 4,000 m² in the former shop of V&D on the Kalverstraat, where the co-tenant Bestseller relocated to the fashion cluster in the Amsterdam Houthavens (2,200 m²). The list is concluded in Utrecht, where communication platform Trengo has taken up residence in the Central Park with approximately 4,000 m². The successful Utrecht IT incubator Dotslash has put an end to ten vacant offices in the Drommedaris office building on Europaplein with the lease of 4,000 m².

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