International real estate advisor Savills has released its Netherlands office market reports this week, in which it finds that yields are stabilising and the majority of cities are seeing a significant increase in tenant demand.
The reports find that within the four areas, prime yields in the first quarter of the year ranged between 5.7% in Amsterdam to 5.9% in The Hague and Rotterdam, with Utrecht showing 6.3% yields. Of these cities Rotterdam has led the way in terms of increases in tenant demand seeing a 24% rise in Q110 compared to Q109 whilst Utrecht recorded take up figures at 14% lower than Q109. Jeroen Jansen, Savills head of research in The Netherlands, says: "Investment markets are typically showing signs of increase but tenant demand is slower with some cities, such as Utrecht, showing slight falls."
Rotterdam saw the largest increase in demand compared to The Hague, Amsterdam and Utrecht.Demand increased by 24% in Q110, compared to Q109, totalling 39,800 m². Manufacturing and construction, and financial service sectors were the major occupiers for this increased demand and focused on CBD, which accounted for 21% of total take up. The market supply increased, however, and this affected rents which moved downwards in some areas. CBD rents stand at 200/m²/year.
Investment levels in The Hague reached 55 million, which is significant given 2009 total investment was 125 million. This was boosted by KPMG's office purchase by Lloyd Fonds. Tenant demand accounts for over 42% of total demand across the four major areas but private sector demand has diminished with the public sector, including health care, responsible for 78% take up. Prime rents stand at 200 195/ m²/year. Utrecht saw investment at the highest amount of the four areas featured in Savills reports with levels of 93 million compared to 40 million in Q109. This was largely due to a single purchase of 65 million, which accounted for two thirds of investment turnover.
Leasing demand in Utrecht market dropped to 14% lower than Q109, indicating the market has not entered recovery. In Amsterdam, take up increased by 10% to 640,000 m² with a third of demand from public sector. The increase, Savills suggests, indicates a small but fragile recovery in this market, which saw vacancy rates rise to 16.1% as supply reached 1.13 million m². Prime rents remain the highest of the four locations at 340/m²/year, the top prices are paid in the South Axis of the city.