8/10/2019 CW Office snapshot Q3 2014
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OVERVIEWThe Dutch economy has been slowly
recovering in 2014; however, this gradual
improvement has not translated into
increased occupier confidence, which was
subdued in Q3. Space optimisation moves
drove market activity as tenant demand is focused on
achieving
well-accessible and multifunctional office spaces, with
hard-to-find
larger floorplates in most demand. Prime rents held firm in
Q3,
although the use of incentives is declining.
OCCUPIER FOCUSOccupier demand was steady over the quarter, with
sustained
demand contingent on the availability of high-quality,
space-
efficient office supply in well-connected areas. As a whole,
supply
availability has risen and take-up is weakened. However,
exceptions to this are the larger cities, such as Amsterdam
and
The Hague, are performing well and recording healthy
activity
levels. The majority of deals in Q3 were for smaller spaces of
less
than 2,000 sq.m, and indeed, larger floorplates are scarcely
available on the market and difficult for tenants to obtain.
Vacancy rose over the quarter, with a country average rate
of
14.5%. However, the proportion of available outdated
ordeteriorated supply is growing, and as a result the gap
between
demand preference and the quality of vacant supply is
widening.
Indeed, open office space in the prime business locations is
scarce. The development of new supply is limited, with nearly
the
entire pipeline already secured at a pre-lease agreement,
exacerbating the demand-supply mismatch.
INVESTMENT FOCUSThe Dutch office market witnessed a surge in
investment activity
in Q3. Indeed, the second largest portfolio deal since the
economic downturn in the office sector was completed over
the
quarter: Lone Stars acquisition of a secondary portfolio of
32
assets around the country for 385 mn, purchased from vendor
CBRE Global Investors Dutch Office Fund. Robust investment
activity instigated prime yield hardening across the majority
of
submarkets in Amsterdam as well as in the other major
cities.
OUTLOOKThe Dutch office market is forecast to see a strong
year-end,
helping to push 2014s performance in line with and in terms
of
investment, ahead of what was witnessed last year. This
positive
outcome is anticipated to be boosted by a strong Q4, which
is
forecast to post the highest take-up for the year and in turn
buoy
rents in the majority of submarkets. Concerning investments,
prime yields should be sheltered by steady investor interest
against a backdrop of limited investable-grade supply.
MARKET OUTLOOK
Prime Rents: Prime rents are expected to hold, although theuse
of incentives to maintain rates is lessening.
Prime Yields: Prime yields are anticipated to remain stable
inthe best submarkets of the major cities.
Supply: Supply levels in secondary locations or of lowquality
are expected to see further rises.
Demand: Demand is likely to hold firm and yield a highlevel of
take-up in the final quarter of 2014.
PRIME OFFICE RENTS SEPTEMBER 2014MARKET (SUBMARKET) US$ GROWTH
%
SQ.M/YR SQ.FT/YR 1YR 5YR CAGR
Amsterdam (South Axis) 370 43.4 2.8 0.5
Amsterdam (Central) 270 31.7 0.0 0.0
Amsterdam (South-East) 195 22.9 0.0 0.0
Rotterdam 180 21.1 0.0 0.0
The Hague 195 22.9 -2.5 -0.5
Utrecht 195 22.9 0.0 0.0
Eindhoven 170 20.0 0.0 0.0
PRIME OFFICE YIELDS SEPTEMBER 2014
MARKET (SUBMARKET)
(FIGURES ARE GROSS, %)
CURRENT LAST LAST 10 YEAR
QUARTER QUARTER YEAR HIGH LOW
Amsterdam (South Axis) 6.20 6.25 6.30 7.00 5.25
Amsterdam (Central) 6.30 6.40 6.45 7.00 5.25
Amsterdam (South-East) 8.25 8.50 8.50 8.50 5.50
Rotterdam 6.75 6.75 6.75 7.00 5.75
The Hague 6.60 6.60 6.50 7.40 5.75
Utrecht 7.00 7.00 7.00 7.25 5.75
Eindhoven 7.50 7.75 7.60 7.75 6.25With respect to the yield data
provided, in light of the lack of recent comparable market evidence
in many areas of
Europe and the changing nature of the market and the costs
implicit in any transaction, such as fi nancing, these are very
much a guide only to indicate the approximate trend and
direction of prime initial yield levels and should not be used
as a comparable for any p articular property or transaction
without regard to the specifics of the property.
RECENT PERFORMANCE
Source: Cushman & Wakefield
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%8.0%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14
Rentalgrowth(y/y)
Yields
Yield - Prime Yield - Country Average
Rental Growth - Prime Rental Growth - Country Average
THE NETHERLANDS
OFFICE SNAPSHOTMARKETBEAT
A Cushman & Wakefield Research PublicationQ3 2014
