Amsterdam | Offices
At a Glance Q4 2015
Very positive investment climate for Netherlands’ real estate - February 2016Investment volume in Amsterdam continued to outperform at €1.86 bn in 2015
Office take-up stays unchanged for 4 years
Dutch economic growth is likely to be solid in 2015-2016, standing over the 2% mark. The labour market is tightening and job creation is expected to increase over 2016, which will drive the unemployment rate downwards below 7%. Despite this favourable backdrop, office take-up in Amsterdam attained the same levels seen each year since 2012 ending up at 220,000 m² in 2015. A few large transactions over 10,000 m² contributed to this level of activity. For instance, ING took the opportunity to relocate in the South-East district in a 24,000 m² building, with the aim of cost reduction as large premises have attractive rents in this non-core area. As well as ongoing rationalisation processes, expansion is also occurring with a few international companies entering the Amsterdam office market to get closer to target businesses in the Netherlands.
No change in rental value despite decreasing vacancy rate
Even though the office market did not see any major improvement on the demand side, the vacancy rate experienced further reduction to reach around 15%, its lowest point in more than 10 years. A significant amount of obsolete office space continued to be withdrawn from the market and converted into mixed-used, residential or hotel properties. Some owners also took advantage of incentives granted by public authorities to host refugees in their vacant office properties. Even though new completions like Zuidas are to be delivered into the market in the near future, no increase in the vacancy rate is expected. Rents remained stable during the 4th quarter of 2015 in most of the districts; headline rents are sustained by significant incentives.
Very positive investment climate for Netherlands’ real estate
Investment volume in Amsterdam continued to outperform at €1.86 bn in 2015, boosted by several large single office properties, which remain by far the most sought-after assets (67%). Foreign investors continued to support the market as they focused on Amsterdam prime properties; Asian investors are now entering the market to add to competition. Conversely, US players are starting to target value-added properties in other cities in the Netherlands, mostly in office and logistics assets, or initiated the purchase of large real estate portfolios. Opportunistic strategies were also implemented on nonperforming loans through refinancing debt. On the other hand German institutional investors are now selling assets they bought before the crisis. The compression in net prime yields has sharpened over 2015, below 5% for offices, with the sale of The Bank to DEKA being an extreme outlier at circa 4.25%, and around 5.75% for logistics.