THE NETHERLANDS Office Market Snapshot Third Quarter | 2019

MARKET INDICATORS Overview Market Outlook The Dutch economy remains heathy, showing a stable and Prime Rents: Prime rents keep increasing especially in the top positive GDP growth. Unemployment is at a record-low level, office locations, while incentives further dry up. while exports and private consumption keep performing well. Prime Yields: Prime yields will stabilize in Amsterdam, while other B5 cities further compress. Availability: Availability of office space in prime locations is limited, Occupier focus resulting in a growing interest in secondary locations. In the first three quarters of 2019, a total of 874,000 square Demand: Demand from both occupiers and investors for high- meters of office space was occupied. The indicated area also quality offices at multimodal locations continues to remain strong. reflects the market dynamics generated by relocations and Prime Office rents – September 2019 start-ups of organizations with office space. Compared to the LOCATION € US$ GROWTH % same period in 2018, the take-up volume of office space SQ.M SQ.FT 1YR 5YR registered a decline of 16%. The rental growth in Utrecht is one YR YR CAGR of the highest of all European cities. Due to rental growth, Amsterdam (South Axis) 475 49.8 5.6 3.5 occupiers in general are inclined to focus on flexibility and to Amsterdam (Central) 500 52.4 17.6 7.4 rent extra space at a co-working concept. Furthermore, in order Amsterdam (South-East) 245 25.7 0.0 4.7 to limit possible rental increases, contracts are often extended Rotterdam 235 24.6 0.0 1.8 automatically instead of renegotiating. The lowest vacancy rate The Hague 210 22.0 0.0 0.0 was recorded in Utrecht with 4.3%, followed by Amsterdam with Utrecht 285 29.9 0.0 7.9 5.4%. Eindhoven 210 22.0 13.5 4.3 Prime Office yields – September 2019 Investment focus LOCATION CURRENT LAST LAST 10 YEAR During the first three quarters of 2019, approximately EUR 15.3 (FIGURES ARE GROSS, %) Q Q Y HIGH LOW billion has been invested in Dutch property. This is an increase Amsterdam (South Axis) 3.25 3.50 4.00 6.50 3.25 of 10% compared to same period in 2018. Of the total investment Amsterdam (Central) 3.25 3.25 3.50 7.00 3.25 volume in the first three quarters of 2019, 28% has been invested Amsterdam (South-East) 4.75 4.75 5.75 8.25 4.75 in office space. In an absolute sense, this is the equivalent of EUR Rotterdam 4.75 4.75 4.75 7.00 4.75 4.3 billion, which means that the investment volume is only 2% The Hague 5.25 5.25 5.75 6.80 5.25 lower than the same period in 2018. The share of foreign investors Utrecht 5.00 5.25 5.50 7.25 5.00 in the Dutch office market has increased from 60% in 2018 to 69% Eindhoven 6.00 6.00 6.25 7.75 6.00 in 2019. Especially, investors from the Middle East and South With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and Korea are active in the Dutch office market. The interest of foreign direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property. investors is still focused on the Randstad, due to the low risk profile Recent performance and the "big tickets". Due to the focus on the Randstad, the prime Yield - Country Average Yield - Prime yield shows further compression, thereby reducing the difference Rental Growth - Prime Rental Growth - Country Average between Amsterdam and the other B4 cities.

8,00% 10,0% Rental growth ( growthRental 8,0% 7,00% 6,0% Outlook 6,00% 4,0% 2,0% The Dutch office market is expected to further tighten up, as

Yields 5,00% 0,0% available space is limited in the best locations of the country

-2,0% y /

4,00% y while demand remains high. Prime yields will stabilize in -4,0% ) 3,00% -6,0% Amsterdam, whereas the other B5 cities are expected to further sep-09 sep-11 sep-13 sep-15 sep-17 sep-19 compress. Prime rental levels will keep increasing, while incentives dry up.

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