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Market developments and trends

Economy and demographics

Leading economic indicators have improved

The economic outlook for the Netherlands has improved strongly in recent times. Forecasts show that the Dutch economy is set to book a healthy growth of around 2.0% per year. Employment levels are also set to rise by approximately 1.0% annually. Inflation is expected to remain low. The improved economic outlook creates a solid foundation for the Dutch real estate market.

Randstad ‘winner’ of changing demographics

The number of inhabitants in the Netherlands will continue to grow in the decades ahead. The current 16.9 million people will grow to 17.2 million in 2020. The majority of the growth will be in people above the age of 65. Bouwinvest focuses on Dutch regions with above-average demographic (and economic) growth. The major cities in the Randstad conurbation will see relatively higher growth, in line with the urbanisation trend.

Trends and developments in the office market

Fundamentals improve

Demand for office space is linked to economic growth and employment levels, so is very sensitive to economic cycles. After several lean years, economic growth has picked up and employment levels are rising in the Netherlands. Prospects for the office market now look promising, as rising employment levels will stimulate quantitative demand for office space in the coming years.

Oversupply on national level

In the early years of this century, the economic climate in the Netherlands was largely positive and employment growth was strong. This stimulated demand for office space and meeting this demand led to a major expansion of Dutch office stock. Many of these office development activities were ‘at risk’, meaning that they were built without any certainty that they would have a tenant or tenants. As a result of this widespread construction, the current Dutch office market now has to deal with an oversupply of office space, which is reflected in the long-term vacancy rate of 16% for the national office market.

Major differences between regions and locations

However, there are substantial regional differences in employment and consequently in the demand for office space. The highest demand for office space is concentrated in regions with employment well above the national average. Amsterdam, Utrecht, Rotterdam and The Hague, all located in the Randstad urban conurbation, are the most important cities. As the ageing population will also affect employment, this will exacerbate the regional differences in the office market. The Randstad will be less affected by this demographic trend. In this region, the continued availability of employment opportunities will lead to a steady flow of young people to urban centres, especially in the cities of the Randstad.

Multifunctional, multimodal and multi-tenant

Prime office locations include offices that are high-quality and multi-tenant, with excellent accessibility (by road and by public transport), located in regions with high employment. The concentration of end users in these multifunctional and multimodal accessible locations is leading to an increasing differentiation in the office market. While the market for desirable locations is stable or improving, there is also a group of locations that are gradually losing tenants. These are largely the opposites of the office locations referred to above: mono-functional, sub-optimally accessible areas with obsolete properties. This frequently involves motorway parks, or office locations in the satellite towns of the G4 cities (Amsterdam, The Hague, Rotterdam and Utrecht). This polarisation trend among occupiers and investors is expected to continue in the next few years.

Flexible use of office workplaces

The growing practice of working from various operating bases, rather than one fixed workplace, is one of the main trends in the Dutch office market. The main drivers of this trend are improved IT, the desire for cost cutting and increased traffic congestion. This has led to growing demand for office space located in urban areas, near public transport links. Multi-tenant office space is also increasingly popular, since tenants are looking for smaller office spaces throughout the Randstad, offering employees various operating bases. This flexible use of office workplaces is expected to remain a major trend in the Netherlands. This will lead to rising demand for multi-tenant office buildings located in urban areas. An additional benefit of multi-tenant office complexes is that they are less sensitive to economic fluctuations.


An increasing number of corporate tenants set great store by the environmental sustainability of their office environments. They also value social sustainability, such as pleasant areas where people enjoy meeting. Sustainable construction is often an integral part of the ambition: CO2 neutrality is a frequent requirement for newly-developed offices, as well as high energy efficiency demands for upgrades or refurbishments of existing office buildings. As a result, various construction and real estate-related parties in the Netherlands have now entered into partnerships that focus on sustainable building. For example, The Dutch Green Building Council (DGBC) has developed a system to measure the sustainability of buildings. Additionally, the Association of Institutional Property Investors in the Netherlands (IVBN) has developed guidelines for investments in sustainable buildings.

Focus and cooperation, excellent climate for transformation of office space

Developers, investors and local authorities are now making clear choices for ‘winning’ office locations, where investments and developments are focused. Government policy is aligned with market input and public-private cooperation is seen as a key factor in urban regeneration. At the same time, the climate for the transformation of existing (or former) offices is excellent, as the public and private sectors agree that transforming office space into residential property could help to alleviate the current oversupply. Developers and investors are now joining forces and are working with local authorities to identify and redevelop office space into residential units, such as student accommodation and starter homes for the rapidly growing number of single-person households.

Implications for office real estate

Multifunctional and multimodal locations more popular

The focus of end-users on multifunctional and multimodal accessible locations is leading to an increasing differentiation in the office market. While demand for desirable locations is remaining stable or improving, another group of locations are gradually losing tenants. This polarisation is expected to continue for the foreseeable future.

Healthier outlook for central locations in big cities

Historically, offices located in the centres of big cities have shown the highest average positive growth in value. Over the coming decade, those offices are also expected to deliver above-average performance, with an improved supply/demand ratio, especially as these tend to match trends such as the growing demand for multifunctional, multi-user, flexible office space and sustainability more effectively.

Prime assets attractively priced, yields still attractive

The overall weak fundamentals were offset by the market's continued ‘flight to quality’, resulting in increasing competition for prime assets. Rental contribution to capital growth will be limited in the next few years. Despite a continued hardening of prime yield levels in Amsterdam, where yields fell to 5.5%, prime yields are still relatively attractive, certainly when compared to fixed income investments. The yield gap with the risk-free rate is still high. Prime yield levels in Amsterdam are also attractive when compared to other international core markets, such as London, Paris or Munich. On the Dutch market, a large proportion of invested capital is focused on Amsterdam, with strong interest in Rotterdam, The Hague and Utrecht. Continued interest in prime assets will continue to drive yields down, and investors may be forced to consider second tier cities and attractively priced secondary locations.

Implications for the Office Fund

  • Continuing focus on multifunctional locations with excellent transport links

  • Active acquisition strategy focusing on central locations in the four big cities of the Randstad

  • Divestment of non-core assets has freed up funds for investment and future acquisitions

  • Strong focus on the enhancement of existing core assets

  • Active approach to improve energy efficiency and sustainability

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