RETAIL in the HAGUE International City with an Authentic Flavor

RETAIL IN THE HAGUE International city with an authentic flavor

Contact

Cushman & Wakefield – Research Strawinskylaan 3125 1077 ZX Amsterdam – The Netherlands Tel: 0031 (0) 20 800 2000 Fax: 0031 (0) 20 800 2060 www.cushmanwakefield.nl

Carien in ´t Veld Senior Research Consultant

Tel: 0031 (0) 20 800 2093 Mob: 0031 (0) 6 5058 9756 [email protected]

Michiel Boonen Research Consultant

Tel: 0031 (0) 20 800 2092 Mob: 0031 (0) 6 1396 7315 [email protected]

This report has been produced independently by Cushman & Wakefield on behalf of the Municipality of The Hague for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman 2& Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. ©2011 Cushman & Wakefield. All rights reserved. RETAIL IN THE HAGUE International city with an authentic flavor

Introduction The Hague’s city centre is one of the oldest in The Netherlands yet the combination of a history and new large-scale retail developments is what attracts both businesses and visitors alike to the city. On a weekly basis the inner-city attracts over 430,000 visitors (Locatus).

Amsterdam is the official capital of The Netherlands, but The Hague is the seat of the Government, home to a number of national administrative functions as well as foreign embassies, bringing an international feel to the city. It is also famous for holding the United Nations’ International Court of Justice which often generates a large amount of press and thus brings worldwide attention to the city.

With the current worldwide economic uncertainties and other factors like declining retail expenditures there are several dangers that could potentially have a negative impact on The Hague retail market. Over the recent past both retail spending and consumer confidence have been subdued and the effects of increased internet shopping and building enhancement projects are becoming more apparent in the overall retail landscape, emphasising a clear distinction between winners and losers and making the retail market more dynamic than ever. International retailers are focussed on the winning cities and are still expanding significantly in these cities. One of the winners is The Hague where the municipality has a clear strategy which focuses on identifying the factors impacting the retail market. With investment over the last few years into the retail segment, the quality of the inner-city has improved significantly and with the several projects currently in the planning stage the quality of the city centre will further improve over the next few years.

RETAIL IN THE HAGUE International city with an authentic flavor The Hague: An International Perspective

When retailers are looking to enter a country they would typically focus on the capital city. For example in the UK this would be London, in France this would be Paris and in The Netherlands this would be Amsterdam. Within The Netherlands, The Hague, along with Rotterdam and Utrecht, can be seen as a second tier city. The annual Cushman & Wakefield publication - “Main Streets Across the World” - indicates Bordeaux, Lille, Manchester and Newcastle as European cities with a comparable prime retail rent to The Hague and are also examples of second-tier cities. In The Netherlands competition between the three second tier cities is often fierce, with Rotterdam and The Hague competing for first place. However, the three cities each have very different identities, where Rotterdam is known for its availability of larger sized units, Utrecht for its authenticity and The Hague for its international character. Additionally, The Hague is trying to improve its attractiveness for international retailers by increasing its offer of large-scale units, especially in the inner-city. Within the Benelux countries competition between cities is also strong, with Antwerp, Brussels, Amsterdam, Rotterdam, The Hague and Utrecht all competing to attract new retailers. The Cushman & Wakefield report The “Benelux Retail Monitor” that ranks the attractiveness of cities for retailers reveals that The Hague is ranked fifth, scoring well in terms of future potential yet performing less in other categories such as footfall and specialty offerings.

The annual Cushman & Graph 1: Prime rent comparables Wakefield publication “Main Streets Across The World” Strasbourg Rue des Grandes Arcades gives an overview of the highest retail rents by country which Nice Rue Jean Médecin also implicitly indicates what Lyon Rue de la République the most attractive cities or locations are worldwide for Lille Rue Neuve retail performance. Bordeaux Rue St Catherine

In The Netherlands Amsterdam The Hague Spuistraat comes out top and is ranked 22nd globally, with the US, Hong Euros/sq.m/year Newcastle Northumberland Street

Kong, Japan and the United Manchester Market Square Kingdom dominating the top positions of the most expensive Leeds Commercial Street retail locations for several Birmingham High Street years. At a country level The Hague is ranked as the fifth Ghent Veldstraat most expensive retail location in The Netherlands where the 1.420 1.440 1.460 1.480 1.500 1.520 1.540 1.560 prime rent on the Spuistraat is EUR 1,500 per sq.m/year. Source: Cushman & Wakefield, Main Streets Across the World

RETAIL IN THE HAGUE International city with an authentic flavor

Whilst retailers typically focus on the capital city when entering a country, they tend to turn their attention to the second tier cities when employing expansion strategies. The Hague would be one such city in The Netherlands, alongside Rotterdam and Utrecht. On a European scale The Hague can be compared to cities such as Bordeaux, Lille, Manchester and Newcastle where rental levels are similar. In the uncertain economic climate, retailers are focusing on the prime stock in core and select secondary cities, with less dominant cities feeling the impact of this and losing retailer attention in place of the more favoured secure business environments found within the top tier cities.

With some retailers finding rents for the best stock on prime streets in Amsterdam too expensive and the supply of large shop units limited, The Hague is coming to the fore as one of the preferred locations along with Rotterdam as they can both provide good retail spending profiles and catchment areas, often at the expense of Utrecht due to the historic structure of the inner-city and typically small shop units. Rotterdam is attractive due to its larger floorplates stores and largely young and big catchment area. While its relatively low purchasing power and less attractive inner-city are considered as potential weaknesses, one of the key strengths of The Hague for retailers is the high purchasing power (highest of the four major cities) and large-scale retail developments and although this is positive it is counteracted by the lower amount of visitors and footfall.

Other pull factors of The Hague are the typical Dutch historic inner-city, adding an authentic feel and the international allure. In the competition between Amsterdam and the second tier cities The Hague has accomplished to attract several retailers to The Hague first. The retailer COS is a good example of an operator that opened first in The Hague (2007) and then in Amsterdam (end 2011). Other examples of this include Massimo Dutti, Pull & Bear and Vapiano.

Major city within the Benelux The strengths and weaknesses of The Hague are well documented in the recent Cushman & Wakefield survey of the most attractive retail destinations in Belgium, The Netherlands and Luxembourg (Benelux) entitled the “Benelux Retail Monitor”. The survey ranks 30 cities across the Benelux and reflects their attractiveness as a retail destination. The scores are based on a series of non perceptive, hard-figure founded factors including potentiality1, mix2, accessibility3, footfall4, and specialty5.

1 Potentiality: this factor reflects the strength of the considered major retail hub or city center’s catchment area. 2 Mixity: this factor reflects the degree of diversification of the offer featured by the considered major retail hub or city center. 3 Accessibility: this factor reflects the accessibility of the considered major retail hub or city center. 4 Footfall: this factor reflects the level of footfall in the considered major retail hub or city center. 5 Specialty: this factor reflects the level of specialization of the offer featured n the considered major retail hub or city center 5

RETAIL IN THE HAGUE International city with an authentic flavor The results of the study underline the attractiveness of the inner-city of The Hague for retailers as The Hague is ranked fifth after Brussels, Amsterdam, Antwerp and Rotterdam. Compared to the other top-5 cities The Hague performs very well in terms of potentiality, yet underperforms in other categories, such as footfall and specialty. The conclusion of the survey is that The Hague will have to focus on improving the factors that influence footfall in a bid to increase the number of shoppers. In addition, The Hague needs to investigate ways of creating a higher amount of specialized retail areas, as its current level of specialty offering is insufficient to compete with the other cities in the top-5 ranking. If followed through, its existing prominence in antiques, art and furniture, which is currently scattered in several areas of the city, could become The Hague’s speciality offering and thus positively impacting footfall. As previously mentioned The Hague is home to a large number of governmental institutions as well as being a pivotal UN centre. This image could fuel the city’s attraction for tourists, which will in turn bring better scores in terms of international appeal.

The Hague´s Retail Market

The Hague is one of the largest cities in The Netherlands and has an important function as shopping city. With a good combination of a historic inner-city and newly added large-scale retail units, the city offers a unique combination for consumers. Furthermore the city has a high share of local retailers on its market which contribute to an authentic and intimate feeling in the inner-city.

The city outperforms all other major shopping cities on the purchasing power in its region. The purchasing power is also well above the national average.

The Hague is the third largest city of The Netherlands with approximately 488,600 inhabitants (municipality of The Hague). Retail floor space is approximately 710,000 sq.m which equates to 1.5 sq.m per inhabitant, below the national average of 1.8 sq.m per head. Some 652,400 people live in a fifteen minute catchment area from the city centre stretching to include residents of Delft, Leidschendam, Wassenaar and Zoetermeer. However, as a result of the relatively short distances between the different cities, not all of the 652,400 inhabitants can be exclusively attributed to the catchment area of The Hague. In addition the two major shopping centres Leidsenhage in Leidschendam and In de Bogaard in Rijswijk are also located in this region with these schemes attracting some of the regional consumer spend due to their good accessibility and availability of free parking.

RETAIL IN THE HAGUE International city with an authentic flavor

The inner-city of The Hague is characterised by a historic structure and a large amount of small-scaled shops in the historic streets, although there have been additions of large-scale shops over the past years as well. The main shopping streets in the inner-city are:

Table 1: Overview main shopping streets in The Hague inner-city Street name Prime rents Footfall (sq.m/year) (on an average Saturday) Spuistraat EUR 1,500 15,900 – 34,700 Venestraat EUR 1,250 18,600 – 30,300 Wagenstraat EUR 1,000 4,900 – 34,700 Grote Marktstraat EUR 1,000 15,000 – 29,000 Hoogstraat EUR 850 17,100 – 21,700 Vlamingstraat EUR 825 17,300 – 30,300 Source: Cushman & Wakefield based on Locatus

The inner-city of The Hague has, in addition to the prime high street, also a number of shopping centres:

 Spuimarkt (37,500 sq.m);  Haagsche Passage (12,000 sq.m);  Haagsche Bluf (6,500 sq.m).

From these schemes, the Spuimarkt has been the most recent completion within the city centre of The Hague. The Spuimarkt is also the largest shopping centre in the inner-city, containing mostly large scale floorplates. The shopping centre Haagsche Passage is the oldest shopping centre in The Hague and also in The Netherlands. The Haagsche Passage is located between the Spuistraat, Hofweg and Gravenstraat. The Haagse Bluf is a relatively small shopping centre, located just off the prime streets of the inner-city.

Retail sectors in the inner-city The Hague has a relatively high share of independent retailers, with a level similar to that seen in Amsterdam, standing at 80%. This confirms a good mix of both local and international retailers in the city- centre and furthermore contributes Graph 2: Overview of retail sectors in the inner-city to the authentic and intimate feeling of The Hague (in number of stores) consumers have when shopping 70,0% within the inner-city area. 60,0%

50,0% The Clothing and luxury sector is the 40,0% most dominant retail sector in the 30,0% centre of The Hague accounting for nearly 60 percent of all shops. The 20,0% Home and garden and Convenience 10,0% sector are ranked second and third 0,0% Clothing and Home and ConvenienceRecreational Other both accounting for approximately 15 luxury garden goods retailing percent of all shops in the inner-city of The Hague. Source: Cushman & Wakefield, based on Locatus

RETAIL IN THE HAGUE International city with an authentic flavor Expenditure profile The table below shows the purchasing power in 10, 15, 20 and 30 minutes drive times around the centre of The Hague compared to the base (The Netherlands, Amsterdam, Rotterdam or Utrecht). The Hague outperforms all cities with the exception of Amsterdam in terms of a 10 and 30 minute drive time. In a 15 minute drive time radius from The Hague´s inner-city the purchasing power difference compared to the national average, Amsterdam, Rotterdam and Utrecht is the most significant; 6.75 percent higher than the average of these comparable areas. The Hague scores best when the purchasing power is compared to Rotterdam. The purchasing power is at least 9 percent higher and on top 14 percent higher. The Hague scores the least good when the city is compared to Amsterdam, although the overall comparison with the capital city is still in advantage of The Hague.

Table 2: Purchasing power in The Hague compared to major cities and national average6 10 min 15 min 20 min 30 min Netherlands 103 107 106 104 Amsterdam 99 102 101 99 Rotterdam 109 114 111 110 Utrecht 101 104 103 101

Overall 103 106,75 105,25 103,5 Source: Cushman & Wakefield, based on CACI

In a 15 minute drive time Image: 15 minute drive time radius from The Hague´s inner-city circle aroud the city y centre of The Hague, its Oostdorp Zoeterwoude-Rijndijk Wassenaar purchasing power is the Haze

Voorschoten strongest compared to Zoeterwoude

Weipoort the national average, Zuidbuurt

Amsterdam, Rotterdam H Scheveningen Gelderswoude and Utrecht. Especially Stompwijk the gap with Rotterdam Benthuizen Leidschendam is significant in this radius; The HagueX Voorburg 14 percent. The gap with Zoetermeer Kijkduin the national average,

Nootdorp Loosduinen Utrecht and Amsterdam Rijswijk is less significant, but still Strijp Pijnacker in the advantage of The Wateringen Bleiswijk Poeldijk Delft Delfgauw Hague. The city Kwintsheul

Honselersdijk Berkel en Rodenrijs outperforms these three Den Hoorn respectively with 7 Source: Cushman & Wakefield based on CACI percent, 4 percent and 2 percent.

6 When the purchasing power of a “base” is equal to the purchasing power in The Hague´s drive time circle (10, 15, 20 or 30 minutes), the score is 100. If The Hague´s purchasing power is higher than the “base” (for example in a 10 minute drive time from The Hague, compared to the national average), the score is 103. This indicates that the purchasing power in a 10 minute drive time circle from the city centre is 3 percent higher than the national average. If the score of The Hague compared to the “base” is less than 100, The Hague´s purchasing power is lower than the compared area.

RETAIL IN THE HAGUE International city with an authentic flavor

The Hague: Trends on the retail market

The retail market has been impacted by several external factors over the last few years, such as the global economic crisis, which dented both consumer confidence and spending. Furthermore, market trends such as the increasing turnover of internet sales seen globally and the trend of both domestic and international retailers looking for large-scale retail units in Dutch inner-cities have held a prominent sway in The Hague and The Netherlands as a whole.

While the economic crisis of 2008 and the continued financial uncertainty have influenced consumer confidence and slowed consumer spending in The Netherlands, the turnover of internet sales is still increasing. Despite the pace of growth is slowing, internet sales do affect the retail structure of inner-cities, although this is primarily seen in secondary locations with limited impact on the main streets of the four major cities. Furthermore, the increasing demand from retailers for large-scale retail units is affecting the retail market and as such Amsterdam and Utrecht are experiencing difficulties in meeting retailers’ expectations. Rotterdam and The Hague however, both offer opportunities for large-scale retail units in the city centre but there is a careful balance to be struck as consumers tend to want a good mix of local and international retailers on offer. A questionnaire that was conducted under 1,800 consumers for the in 2009 published Cushman & Wakefield and the Dutch Association of Shopping Centres survey “The Value is in the Mix” underlines the importance of a mixture of self-employed and international retail chains in inner-cities. An overall conclusion that can be drawn when looking at the historic inner-cities in The Netherlands is that self- employed retailers (specialty shops) are mostly located in small-scale historic units and the international retail chains in the often newly developed large-scale retail units. The combination of both large-scale units and a historic inner-city however is very scarce in The Netherlands, and this gives The Hague a unique postition.

The Hague: Prime Street Grote Marktstraat

Over the next four years between 30,000 – 50,000 sq.m of retail floor space will be completed in the city-centre of The Hague. The addition of this space consists mainly of large-scale units looking to satisfy retailer demand which has been lacking historically. With this addition, The Hague will strengthen its market position in the country and will be more able to compete with Rotterdam and Amsterdam. The bulk of the development of the large-scale retail units is in and around the Grote Marktstraat, which is already one of the main streets in the city centre and will remain so as a result of this investment. The current and future developments focus on the Grote Marktstraat and it has already resulted in the addition of shopping centre Spuimarkt.

The Grote Marktstraat is one of the main shopping streets in the city-centre of The Hague and is expected to become even more important due to the development of several schemes due for completion over the next few years. These developments will improve the availability of large-scale retail units in the inner-city of The Hague and therefore meet retailer demand. With retailers such as Inter Sport, Media Markt and Zara and department

RETAIL IN THE HAGUE International city with an authentic flavor stores such, as de Bijenkorf and V&D Image: Footfall in The Hague´s city centre present the street already houses some well-known brands and department stores.

On an average Saturday 29,000 pedestrians (Locatus) pass the busiest point on the Grote Marktstraat, with other points recording a slightly lower footfall that varies between 15,000 – 28,800 consumers. The majority of the street is defined as an A- location although the area close to the Spui and the area west of the Wagenstraat are defined as B-location (Source: Locatus).

Source: Cushman & Wakefield based on Locatus

Inner-city development The Spuimarkt is a part of the “Spuikwartier” project, which contains the residential and catering services project “Rabbijn Maarsenplein” (completed in 2007), the Gedempte Gracht area and the “Nieuwe Haagse Passage”, which is currently under construction and is expected to be completed in 2014. The Nieuwe Haagse Passage development is located on the ground floor of the former Marks & Spencer building on the Grote Marktstraat. The Map: Main shopping streets, shopping centres and retail developments in the inner-city project will be developed by Ontwikkelingsmaatschappij Spuimarkt C.V.; a cooperation of Multi Vastgoed and AM, and involvement from the municipality of The Hague. The project comprises 10,500 sq.m of retail floor space and catering services, of which 6,500 sq.m will be new space and a new, 118 suite hotel. The Nieuwe Haagse Passage will become the gateway from the Spuistraat towards the Grote Marktstraat, and is also a good connection to 1: Haagsche Bluf; 2: Haagsche Passage; 3: Spuimarkt; 4: Nieuwe Haagse Passage the existing Haagsche (under construction); 5: La Cigüeña (planned); 6: Sijthoff (planned); 7: Kalvermarkt (planned) Passage. This development will most likely increase the quality of the available pedestrian flows to and from the Grote Marktstraat. Opposite of the Spuimarkt, the Kalvermarkt project will be developed and is expected to be completed in 2014. For this project, international retailer Primark has recently been confirmed as occupier of 8,000 sq.m for this 8,500 sq.m retail development on the corner of the Kalvermarkt – Spui.

RETAIL IN THE HAGUE International city with an authentic flavor

In addition to the Nieuwe Haagse Passage there are other development projects planned in the Grote Marktstraat. First there is the “Sijthoff” project which currently consists mostly of office space but is expected to be to accommodate more retail space on the first two floors. Secondly the “La Cigüeña” project, located on the Wagenstraat and partially on the Grote Marktstraat. The future redevelopment of this large site will most likely consist of two or three large-scale retail units and is expected to further contribute to the attractiveness of the Grote Marktstraat and the Wagenstraat. Lastly there are some other sites located on, or in the direct area of the Grote Marktstraat, that have a potential for retail development activities in the future. These sites are mainly located on the outer bounds of the Grote Markstraat, closely to the Grote Markt in the west or closely to the Spui in the east.

Conclusion Worldwide economic uncertainties, declining retail expenditures, low consumer confidence, increasing internet sales, strong competition and increasing vacancy. All of these factors are clearly having their effects on the retail market and consequently winners and losers are becoming evident on the Dutch retail market. With a clear strategy which focuses on identifying the factors impacting the retail market the Municipality of The Hague has managed to become a winner in these difficult times and has left the secondary and less dominant cities behind.

When retailers are looking to enter a country they would typically focus on the capital city, while further expansion plans are often enrolled in the second tier cities with competition between these cities being strong. Especially the competition between The Hague and Rotterdam; where Rotterdam is seen as an attractive location for its available larger floorplates stores and a largely young and big catchment area, its relatively low retail purchasing power and unattractive inner-city are seen as disadvantages. The Hague has a higher retail spending and purchasing power whilst the lower footfall is unfavourable for The Hague´s position. The “Benelux Retail Monitor” shows that The Hague could possibly increase footfall by focussing on its specialty areas. Additionally the authenticity of The Hague´s inner-city with its historic structure and high percentage of independent retailers in combination with large-scale retail developments that offer space for international retailers has proven to be a strong combination. Resulting in several retailers over the past years have decided to first enrol their expansion plans in The Hague before moving to Amsterdam or Rotterdam.

In the coming years The Hague is anticipating on the growing demand for large-scale units by international retailers. Over the next four years 30,000 – 50,000 sq.m of retail floor space (mainly large-scale units) is expected to be completed in the city-centre of The Hague. The Grote Marktstraat where most of the development activity is taking place is therefore in the race to become the prime high street of The Hague. With the completion of the several projects the routing will become better and there will be more space for international retailers, strengthening the position of The Hague as a second tier city. The Hague has proven to be a strong retail city that keeps attracting new retailers and has shown both steady footfall and prime rents. With all the planned developments The Hague might tempt its stable position but with the right focus The Hague has the potential to be an even stronger retail destination.