Utrecht - Where to Savills Research Invest (Next)? Utrecht - Where to Invest (Next)? City Special 2019
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The Netherlands – 2019 REPORT Utrecht - Where to Savills Research invest (next)? Utrecht - where to invest (next)? City Special 2019 Questions that will be answered in this report: 1 Is municipal office policy 2 What is causing the growth 3 What are the consequences 4 Where to invest? helping or hindering Utrecht to in Utrecht’s office market? for the investor and occupier fulfil its growth potential? markets? UTRECHT LEADING IN INTERNATIONAL Utrecht’s PERSPECTIVE Competitive Regional Competitiveness Index 2016 2 of 275. attractiveness Innovative Regional Innovation Scorecard 2017 top 25 (23) of 220. Sustainable Sustainable causes ripple City Index 2016 8 van 100. Centrality and accessibility Catchment population over 1 million, within 30 minutes and effect Schiphol and other G4 Office developments 2018-2024 primarily focussed on CBD cities within 30km range. Well-Educated Over 50% CBD Leidsche Rijn Lage Weide SciencePark of the workforce have a higher or advanced education. Good living environment Good all-rounder. The 3,800 sq m only G4 city with a ‘good’ Zuidgebouw Het score overall; 4th (50) regarding culture, 2nd Platform by 10,000 sq m Leidsche Werf by Being ABC-planontwikkeling (50) regarding residential Development Attractive office spaces required attractiveness and 4th 60,000 sq m office + 20,000 sq m laboratoryRIVM/CBG (50) regarding socio- by Strukton/Hurks/Heijmans Utrecht’s cityscape is changing rapidly, and if the city hopes to live economics. up to the expectations of its residents, these changes are welcome. 28,000 sq m WTC by 12,000 sq m 40,000 sq m Jaarbeurspleingebouw International Over 900 CBRE GI Higgs (Atoomweg 100) international companies, The residents of Utrecht are classic millennials: dynamic, by Merin Quality pays off Vacancy rate development approximately 36,000 young and highly educated, and as a place to live, work and international residents. 9,000 sq m City Gate in Utrecht Officesby Klepierre shop Utrecht needs a profile to match. 10,000 sq m Helix by AM It needs to be perceived as an attractive location not just in terms of its regional and national position, but also from an Vacancy rate Grade A Vacancy rate Other 9,000 sq m Creative international perspective. The launch of the city centre and 16,0% Valley by Dura Vermeer station renovation programme, ‘CU2030’, in 2013 marked the 12,200 sq m Wonderwoods by G&S Vastgoed and Vorm Ontwikkeling 25,000 sq m Gildenkwartier by Klepierre start of the city’s municipal renaissance. 14,0% and ASR Projects like Nieuw Hoog Catharijne, the World Trade Centre and Creative Valley speak for themselves. By 2022, the 28,000 sq m Central Park by APF/Angelo Gordon and Bouwinvest 40,000 sq m De Generaal by NS/RVB 12,0% majority of the newly rejuvenated central area will have been delivered, meaning that another 200,000 sq. m of office space 10,0% will have been added to the city’s stock. 30% 2022 8,0% 2018 2019 2020 2021 2023 2024 CU2030 is expected to cause a ripple effect throughout the city, so it is interesting to think about which secondary 6,0% CBDs prime rents areas are likely to benefit first. It appears that demand for rose by 30% in just development in the CBD far outstrips the current supply 4,0% one year (2018) pipeline, leading to significant increases in prime and secondary rents. Prime rents rose by 30% in just one year 2,0% CU2030 is expected to cause a ripple effect throughout the city, so it is (2018), while vacancy rates have fallen to well below friction interesting to think about which secondary areas are likely to benefit level (2.3%). So is Utrecht’s CBD in a league of its own, or 0,0% does Utrecht also have other attractive alternative locations 2016 2017 2018 2019 YTD to offer? Source Savills Research savills.com/research 2 3 Utrecht - where to invest (next)? City Special 2019 The excellent profile of shopping centre Hoog Catherijne should serve as a 1.5% Utrechts population benchmark for the ambitions of other mixed-use retail developments in the grew by 1.5% in 2018, Netherlands. Transit Oriented Development projects combining retail, f&b well above the national and leisure in a naturally high footfall environment Population growth rate of 0.6% Economy Utrecht structurally outpacing Dutch economic growth NEW HOOG CATHERIJNE: Utrecht is still attractive as a INVESTMENT IN PRIME Utrecht GDP Utrecht Unemployment rate NL GDP NL Unemployment rate RETAIL PAYS OFF. Standing right at the centre of the residential destination 6.00% CU2030 redevelopment project, the Hoog Catherijne shopping centre occupies a particularly prominent position. The rejuvenation of the 5.00% shopping centre was a vital ingredient in enhancing the allure of the station area, in combination with the renovated train station and events 4.00% centre (Jaarbeurs). The redevelopment of the Klepierre shopping centre is nearing completion against a backdrop 3.00% of challenging developments in a polarising Dutch retail landscape. But this ambitious redevelopment has been much lauded, proving that investment 2.00% in retail is not only a bare necessity but can also pay off. There has been international recognition (at Mapic 2017 it won the prize for ‘Best Urban Retail 1.00% Project’), and the new Hoog Catherijne has bucked national retail trends to achieve growth on several indicators. The shopping centre area has higher 0.00% footfall, higher retail sales and rising 2017 2018 2019 2020 prime retail rents, which reached €1,500 sq m (+14.5%) compared to last year. Hoog Catherijne’s annual footfall was 27.5 million last year, and Utrecht’s economy is operating at near full are sole proprietors, and over half of all workers is expected to rise to 30 million once capacity Utrecht’s central location and economic are based in an office environment according the whole project has been completed. dynamism also help to provide its well-educated to the Utrecht office policy update (see chapter: After its completion in 2020, the residents with good career prospects. This results kantoorbrief 2019). Utrecht also stands out due project will include 35,000 sq m of new in an attractive, and above-average, economic to its balanced economic profile. No single sector retail space, on top of the 50,000 sq m profile. The below-average household income is dominates, unlike in other large cities. The largest of redeveloped retail space. By the end explained by the large number of students that sectors in terms of employment are IT, care, of 2018, 52,500 sq m had already been Utrecht is the fourth most populous city in the city centre and dynamic business sector. The city popularity is also evident from house prices in reside in the city. In 2019, economic growth is education and business services. delivered. Netherlands, housing over 350,000 inhabitants in also stands out in terms of its highly educated the city. In 2018, the national average price rise expected to be 2.4%, compared to 1.8% for the 178,000 households. Its population grew by 1.5% residents. It is home to the Netherlands’ best and was 9%, compared to 19% in Utrecht. With the Netherlands as a whole. Utrecht is following In 2018, the unemployment rate fell further to in 2018, well above the national growth rate of second largest university (Utrecht University), and exception of Amsterdam, Utrecht is Netherlands’ the national trend as growth rates slip back 3.3% of the workforce, compared to 3.6% in the 0.6%. By 2040, the city is expected to grow by 26% over 50% of its workforce have completed higher most popular residential destination. In 2018, somewhat, but the city continues to outperform Netherlands as a whole. This is the lowest level of 85,000 to almost 450,000 inhabitants. Utrecht’s pulling or advanced education (ISCED levels 5 and 6), 21,870 people relocated to Utrecht and almost the country as a whole due to its growing internal all the G4 cities, but it also means that companies power is based on its central location, its historic compared to the national average of 29%. Utrecht’s 30,000 relocated within the city. market. may struggle to fill vacancies, potentially holding After its completion in Utrecht is home to almost 40,000 companies, of back their growth potential. Due to its good 2020, Hoog Catherijne which almost 1,000 are international companies. location and transport connections, companies will include 85,000 sq m Utrecht’s socio-economic profile stands out from the national average, with its young and fast-growing workforce These companies provide employment for over in Utrecht are not confined to the city itself when 260,000 employees (FTE). The number of new searching for candidates, however. Utrecht has of retail space. Household Inhabitants Age Groups Companies Jobs registered companies grew by 5,100 which is the the highest labour market participation rate (73%) income second highest number of 2018 after Amsterdam. of any large Dutch municipality. Another solution is hiring expats. In 2019, the number of jobs taken Growth Growth Growth Area 2019 2040 <20 20-65 65+ €/yr 2018 2018 In line with the trend towards flexible working, by expats was 7%. But how does Utrecht intend to in % ‘13-’18 ‘13-’18 almost 90% of these new registered companies sustain its economic prosperity? Utrecht 352,795 447,455 26.8% 22% 67% 10% 36,300 39,940 28.8% 261,420 11.7% Over the past 5 years, Utrecht has become the Netherlands 17.3 mio 18.2 mio 6.0% 22% 59% 19% 37,904 1.63 mio 20.9% 8.65 mio 5.7% Netherlands number two destination for companies to locate savills.com/research 4 5 Utrecht - where to invest (next)? City Special 2019 A large enough workforce in the catchment 200,000 area is essential.