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Office take-up fell by 20% compared to the first half of 2019

Jan Verhaegh • 01/07/2020
Economic recession will increase the supply of high-quality offices in prime locations.

The most recent figures from international advisor Cushman & Wakefield show that the total office take-up in the first half of 2020 was 490,000 m2. This is a decrease of 20 percent compared to the same period last year. The consultant compared the office take-up in the first half of 2020 with that of the same period in the past five years.

Compared to the long-term average - the first six months of the past five years - the national take-up fell by 11 percent. The researchers at Cushman & Wakefield point out that this decrease is not exclusively attributable to the COVID-19 pandemic, the continuing scarcity of high-quality office space in the most important office locations in the Netherlands is also an important cause. This scarcity has long been visible in the best locations in the largest cities in the Netherlands.

Office take-up in G5 declines most

Office take-up fell in the past six months (-37%) in the five major cities more sharply than in other cities. There is a decrease of 27 percent compared to the five-year average. Where traditionally the share of G5 in office admission is above 50 percent, in the past six months it was 40 percent of total admission in the Netherlands. Until 2017, the take-up in the G5 increased due to the wider supply of high-quality office real estate at that time to facilitate demand. The greater pressure on the admission into the G5, and the difference between the admission within the G5 versus the rest of the Netherlands, is caused by scarcity instead of COVID-19, according to the consultant.

Jan Verhaegh, Head of Office Consultancy: “The structural shortage of good offices in the best locations has a greater influence on the lagging office take-up in the five major cities than the COVID-19 outbreak. We do see here, just as in the rest of the Netherlands and in Europe, that office users who do not yet have to deal with an expiring lease contract are taking longer to start and focus on short-term measures as a result of the pandemic. Office users in the major cities do not consider a "second best" location an option and so relocation plans are postponed if at all. After all, a move must also bring a quality improvement and that is practically impossible in the current market in the big cities. ”

Within the 5 major cities, there is a difference between the Amsterdam and Rotterdam office markets and the office markets in The Hague, Eindhoven and Utrecht. Take-up in Amsterdam and Rotterdam fell less sharply in the first half of 2020 than in the other three cities. Here too, the scarcity plays a role in combination with the size of the deal flow that was initiated per city for the outbreak of COVID-19 in the Netherlands. 75 percent of all transactions completed in the first six months of 2020 were already underway before April this year. At that time, the difference between the cities was already visible. The researchers nuance the differences between them with the caveats that 6 months is a short timeframe for office transactions, that a new deal flow has already started again in a number of cities and that the office markets in The Hague, Eindhoven and Utrecht have had a strong 2019.

Preview office admission 2020

On April 1, 2020, Cushman & Wakefield issued an expectation that total office take-up this year would come to 1.2 million m2, a decrease of 14 percent compared to total take-up in 2019. At that time, it was assumed that the limiting measures resulting from the corona pandemic would continue for three months. It is now clear that, despite the relaxation, these persist longer. As a result, the consultant now assumes that - if the restrictive measures continue for 6 months - the total take-up for 2020 will amount to approximately 1 million m2. That would mean a 29 percent drop in admission compared to 2019 and a 17 percent drop from the five-year average. In addition, Cushman & Wakefield plans to create space in high-quality office buildings in prime locations in major cities due to the recession caused by the corona pandemic. For example, organizations will opt for subletting as part of cost-cutting measures by the company.

Verhaegh adds: “The COVID-19 pandemic has accelerated the new role and function of offices. We are convinced that the office is becoming more important than ever and has a key role in creating social interaction, inspiring, learning and developing and working together on the organizational goals. The combination of working in the office and at home ensures a better work-life balance, while in the offices more space is created for diversity of workplace typologies. This creates new, better healthier workplace concepts that facilitate collaboration, information sharing and concentration. So the question is not whether, but for what and when we go to the office. ”

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