1

CBRE Global Research and Consulting

The Netherlands Office
MarketView
STRONG GROWTH IN OFFICE INVESTMENT
Further consolidation of
occupiers - growing polarisation
The Netherlands has emerged from a
double dip and forecasts are showing
carefully improving conditions. The
growing optimism has not yet
translated into a higher demand for
office space, and in fact the opposite
was true for 2013: nationwide vacancy
increased while take-up has remained
more or less stable. Particularly
corporate tenants are consolidating
their operations, opting for high-grade
and often new properties. These
relocations are causing vacancy in
older premises, thus polarising the
market further. Meanwhile, the
implementation of flexible workspace
strategies can now be observed across
the entire range of end users, instead
of only for large corporate tenants.
Effectively, this is also increasing
vacancy on an aggregate level as it is
triggering office space reduction.

The CBDs of the G4 cities have
witnessed different developments in
2013. Zuidas Amsterdam, The Hague
CBD and Schiphol Centre have seen a
decline in vacancy, while vacancy has
slightly increased in the CBD of
Utrecht. Still, these markets can be
described as tight. The opposite is true
for Rotterdam, where vacancy in the
CBD is comparable to the high
aggregate levels. Rotterdam has faced
a large increase in prime stock due to
completion of De Rotterdam and
other developments dispersed over the
city. These schemes have created a
very competitive office market, where
differentiation is mostly occurring on
asset level, rather than on submarket
level as is the case in the other major
cities.














Sharp increase in office
investment
The office market in the Netherlands
has seen a strong increase in
investment activity compared to
previous years. The first two quarters of
2013 were still rather calm, but when
the signs of economic recovery became
visible and international investor
appetite grew, the situation changed.
In the second half of the year,
investment activity accelerated as
multiple large offices and portfolios
were sold, amounting to a total
investment volume for 2013 of nearly
2 billion, the highest figure in three
years. In fact, Q4 recorded the highest
investment turnover since Q4 2009. An
important component of this increase
was the market entry of several private
equity buyers.














Role of G4 strengthening
Office demand has increasingly
focused on the G4 agglomerations. In
order to manage costs and choose the
right location for growth, large
corporates are focusing on the
economic and demographic core cities
and their prime office markets. On an
aggregate level this has meant a
concentration of tenant activity towards
the G4 agglomerations and in
particular Amsterdam.

Total take-up of office space in the
Netherlands has largely been stable,
but a differentiation can thus be made
for the G4 and the rest. Troubling
office dynamics can be witnessed
particularly in smaller regional centres,
whereas a number of strong regional
cities, most notably Den Bosch, are still
performing well.

H2 2013
Source: Oxford Economics
Chart 1: Economic Indicators
NL TAKE-UP
-3% y-o-y
G4 VACANCY
1% y-o-y
G4 TAKE-UP
+9% y-o-y
PRIME YIELD
20 BP y-o-y
INVESTMENT VOLUME
+64% y-o-y
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
2004 2006 2008 2010 2012 2014 2016 2018
%

GDP growth Employment growth Consumption growth
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Location Submarket Building/project Status Tenant/user Size (sq m)
The Hague CBD Haagse Poort Existing CB&I 17,250
Amsterdam Southeast ArenA Entree I Existing DAS Insurances 15,250
Utrecht Rijnsweerd ArchiParc A Existing Hogeschool Utrecht 13,500
The Hague CBD - Existing University Leiden 12,500
Amsterdam Centre Prins & Keizer Existing Spaces 12,125
Amsterdam Zuidas New Nauta Dutilh 10,500
Location Building/ project Purchaser Price (mio ) Size (sq m)
Zuidas Amsterdam Symphony Offices Deka Immobilien 215 34,600
Nationwide (DOF Portfolio) 6 assets Blackstone 165 96,975
Nationwide (Seven Portfolio) 7 assets PPF Group 140 96,800
Nationwide (DOF Portfolio) 8 assets Archon Group 116 60,155
Zuidas Amsterdam Atrium Victory Advisors Approx. 100 32,500
Zuidas Amsterdam Akzo Tower Union Investment 82 14,700
Table 1: Major Letting Deals in 2013
Table 2: Major Investment Deals in 2013
Last year, private equity has mostly
targeted core-plus assets in and
around the G4, aiming at an
expansion of the core market and a
future sharpening of yields. Equally
important, though, was an increased
appetite for core assets, mostly
exercised by the currently active
German funds. Amsterdam has always
been the focus of such cross-border
investments, but in 2013 the total
volume doubled compared to 2012.
Special interest was raised for Zuidas
Amsterdam: more than 70% of all
investment in Amsterdam and 36% of
the total nationwide volume was
invested in the capitals CBD. This
included the sale of Symphony Offices,
the largest investment transaction of
2013.
The renewed investor appetite for the
Dutch office market can be traced
back to the large availability of capital.
In the current low-interest environment
capital is flowing to property in a
search for yield, and the core yield
levels in the Netherlands are still higher
than in most other European key
markets. Moreover, due to the
increasingly visible split between prime
and secondary markets, a clearer risk
assessment of the Dutch office market
is possible and this is triggering
investor demand.

Prime yield levels for all office
categories have remained stable
during 2013, with the exception of
Zuidas Amsterdam which already saw
a slight sharpening in Q4. Yields for
secondary property have continued to
move out further, though, again
reflecting the increasing market
differentiation.

Rents and incentives
In general, the wide market conditions
are exerting downward pressure on
market rents, but corporate demand for
prime locations is providing a reverse
picture for selected top districts, most
notably Zuidas Amsterdam.

The continuing differentiation and
concentration is increasingly
influencing the role of incentives in
different locations and for different
grades of office property. Ranges for
incentives can go from 10 to 15% at
Zuidas to 50 or even 60% of the rental
value in the worst performing districts.

However, both at the top and at the
bottom of the market incentives are
being squeezed out, in the first case
due to tightening market conditions, in
the second case due to an increased
sense of reality and a strive to trigger
liquidity. It is the middle segments of
the market where incentives are still
abundantly being used.


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Source: CBRE
Source: CBRE
Source: CBRE Source: CBRE
Source: CBRE
Source: CBRE
Chart 2: Take-up & Investment Volume Chart 3: Prime Yields (net)
Chart 4: G4 Take-up Chart 5: G4 Take-up Ratio
Chart 6: G4 Vacancy Chart 7: CBD Vacancy
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Take-up Investment volume
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Take-up G4 Cities Take-up Other NL
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Utrecht The Hague Rotterdam Amsterdam
Other NL
G4 agglomeration
00%
05%
10%
15%
20%
25%
Zuidas
Amsterdam
Rotterdam
CBD
The Hague
CBD
Utrecht
CBD
Schiphol
Centre
Vacancy rate
1,155
780
707
492
17%
20%
14%
14%
0% 20% 40% 60%
0 200 400 600 800 1000 1200 1400
Amsterdam
Rotterdam
The Hague
Utrecht
x 1,000 sq m
Vacancy (in sq m) Vacancy rate
4.5
5.0
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6.0
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CBD Periphery Major Provincial
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OUTLOOK

Machiel Wolters
Director
CBRE Research and Consulting
Gustav Mahlerlaan 405
PO Box 7971
1008 AD AMSTERDAM
t: +31 20 626 26 91
e: machiel.wolters@cbre.com
www.cbre.nl

David Vos
Consultant
CBRE Research and Consulting
Gustav Mahlerlaan 405
PO Box 7971
1008 AD AMSTERDAM
t: +31 20 626 26 91
e: david.vos@cbre.com


CONTACTS
For more information about this MarketView, please contact:
The stable trend in demand for office space will probably hold in the near future. Key variables such as a declining labour
force, subdued economic growth and an implementation of flexible workspace strategies across the entire range of end users
leave little perspective for a net growth in take-up. This presents challenges, as the total office stock is still too large and the
options for transformation are limited. It also presents new opportunities as tenants are now more than ever able to choose.
On the one hand this is leading to more flexibility in tenant agreements, with an increasing number of landlords offering
various contract options with differing terms. On the other hand the location choices of end users are often similar, resulting
in an increasingly visible market differentiation. Very tight and very wide market conditions can now be observed at close
distance from each other, and on selected locations, such as Zuidas Amsterdam, new developments are necessary to be able
to feed occupier demand. This also causes upward pressure on rents.

Despite the subdued occupier market the investment market has shown a strong boost in activity, both from the known
domestic and German investors, as well as from new private equity funds, that are attracted by the higher yield levels in the
Dutch market against comparable risks. Although the investment volume was high in 2013, it was still mainly focused on
core office properties. This is a reflection of the differentiated market conditions in the Netherlands and the occupier focus on
prime districts. As market conditions in selected top locations are becoming tight, a perspective on a gradual spread to
surrounding districts is emerging. This is especially the case in Amsterdam, where the availability of high-grade office space
along the southern ring road (Zuidas, Omval, Arena) is low, which on the longer term offers perspective for growth to the
northern districts such as IJ-oevers and, also, the vacancy-ridden Sloterdijk submarket. The latter is suffering from a
monofunctional character and an oversupply of large-scale office towers, but offers an excellent accessibility and high quality
property.
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This report was prepared by the CBRE Netherlands Research Team which forms part of CBRE Global Research and
Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research,
econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.
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