Amsterdam ICT Saves The
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The Netherlands – Autumn 2020 CITY SPECIAL Amsterdam Savills Research ICT saves the day City Special Amsterdam City Special Amsterdam Question What is the state of the Amsterdam office market after years of limited vacancies and less restrictive municipal policy with regard to new-builds? Table Population growth in Amsterdam ECONOMIC CONTRACTION IN The Amsterdam economy has City Population growth until 2040 Number of residents by 2040 2020, REORGANISATIONS ON THE Amsterdam HORIZON DESPITE NOW SCHEME +17.5% 1,030,900 grown strongly in recent years. For the first time since 2014, the Netherlands The Hague +13.1% 619,500 is facing an economic downturn. The Bureau for Economic Policy Analysis (CPB) believes a Rotterdam In Amsterdam the strong economic growth Overview Amsterdam’s economic growth is above national average +14.4% 746,100 contraction of more than 5% by the end of 2020 has resulted in, among other things, an and European metropolitan regions can reasonably be expected. In the event of a Utrecht increase in the demand for office space, +20.8% 433,200 second wave, the economy may even continue to mainly between 2014 and 2017. The average contract in 2021 (-2.8%) and the unemployment Eindhoven take-up of 565,481 sq m between 2014 and Annual economic growth (2013-2018) +16.1% 271,600 rate may reach 8.5%. 2017 signified an increase of 57% percent The Netherlands compared to 2013, while this was 20% in +6% 18,421,400 the other largest cities in the Netherlands. Table Source Statistics Netherlands The take-up showed a slight decline in the Economic contraction is on the horizon, following years as a result of a strong increase unemployment peak expected in 2021 in the shortage of qualitative office space. Amsterdam to reach 1 million residents by 2040 Due to growing demand the vacancy rate The number of residents in Amsterdam is living in a city like Amsterdam. This group 2020 2021 dropped from 14.9% in 2014 to 6.2% in 2020. expected to exceed the 1 million mark in will grow by 33.5% until 2040. It is striking In a number of Amsterdam office areas, the 2040. However, as a result of COVID-19, the that the number of residents in the under-20 vacancy rates have even dropped to far below city’s population has shown a decline for the category will continue to rise in the coming Unemployment in the friction level as a result of the ever- first time since 1985, due to the departure of years, a trend that is partly the result of a the Netherlands 4.3% 5.9% growing economy, limited new-builds and a knowwledge workers. This is only expected to growing number of students flocking to decrease in the stock due to conversions of 5.1% be a short term disruption of the growth. The the capital, thanks to the appeal of the two Gross Domestic offices to homes. As a result, the Amsterdam Amsterdam stable Amsterdam economy and the city’s universities and the attractiveness of the Product -5% +3.7% Netherlands market was highly overstrained, making it appeal to international knowledge workers city itself. Attracting these young target difficult for businesses to find suitable office offers a positive outlook for the long term. groups creates a more dynamic city and will Source Baseline scenario Bureau for Economic Policy Analysis space in the best locations. Figure: Household development Amsterdam ultimately lead to an appealing labour market One-person households looking to move to for the various types of companies with A relatively large number of differences can be This period of increased growth appears to an urban environment are very interested in offices in Amsterdam. observed between business sectors. The sectors be coming to a temporary end now, due to taking the biggest hits are the hospitality industry, the economic uncertainty resulting from culture, sports and recreation, transport, industry COVID-19. The question of how the demand 2.2% Graph Household development Amsterdam and trade. In the hospitality industry for example, for office space will actually develop in the The Netherlands the number of bankruptcies doubled in June coming period is difficult to answer at this Key One-person households Single-parent households Couples 2020 compared to January 2020. The problems time, as this strongly depends on how the for office-related employment are not yet visible economy will develop and on companies’ in the number of bankruptcies, partially due to 600 future strategies for working from home the extensive support measures (NOW) from the without losing synergy in their businesses. government. Despite these support measures, several large businesses have announced 500 Although it is uncertain how this will 2.8% reorganisations, such as KLM, Uber, TATA Steel, turn out exactly, the demand for office Booking.com, BAM, Shell and ID&T. Average European space is expected to decline in the coming Due to COVID-19, the concerns about the economy metropolitan regions 400 years. Examining the current state of and, as a result, the office market have increased. the Amsterdam office market reveals the After all, reorganisations and rising unemployment market’s level of resilience to a potential drop generally lead to a drop in demand. Amsterdam 300 in demand as a result of the pandemic. What Thousands is no exception. For the short term the outlook is is the state of the Amsterdam office market less optimistic, while several bright spots can be after years of limited vacancies and less 200 observed for the longer term. restrictive municipal policy with regard to new-builds? 100 The problems for office-related The Amsterdam market was employment are not yet visible highly overstrained, making 0 in the number of bankruptcies, it difficult for businesses to 2020 2025 2030 2035 2040 partially due to the extensive find suitable office space in support measures (NOW) from the best locations. Source Eurostat, MRA Source Statistics Netherlands the government. savills.nl/research 2 3 City Special Amsterdam City Special Amsterdam Thanks to the mix of capital, availability of ICT talent and a great sales market, the city provides the ideal mix for the growth of ICT companies. Graph Economy in Amsterdam grew faster than other European Metropolitan Regions Figure Pyramid of the tech ecosystem in Amsterdam OUTLOOK FOR In the short term office- bound employment in THE ICT SECTOR Amsterdam is expected Key Metropolitan European Regions EU28 The Netherlands Amsterdam to stabilise in 2020 and Despite COVID-19, the 140 to increase slightly in long-term outlook for the 2021, despite growing Amsterdam ICT sector 135 unemployment and is positive thanks to a economic downturn. growing workforce, the 130 1 Compared to other ability to attract talent European cities, TECH and plenty of capital. 125 Amsterdam, Berlin and INCUBENTS This means there are Madrid are positive prospects for future 120 exceptions, due to the demand for office space. relatively economic The expectations for 115 resilience of office Base year 2008 the other dominant 2 occupiers in these cities TECH COMPANIES sectors are moderately 110 (Oxford-Economics). optimistic, with the However, the changing legal services sector, 105 role of the office and accountancy sector and the influence of remote external consultancy 100 working may negatively services sector mainly impact the relationship expected to do well due 95 3 between office-bound SCALE-UPS to demand. The prognosis 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 employment and the for the financial services demand for office space. sector is less optimistic as Several scenarios are Source MRA, Euorstat technological innovations possible. However, this could in time replace impact is not yet visible employees (Rabobank, in the current take-up MRA). figures as shown in the 4 START-UPS ICT is one of the most important following analysis. drivers of the Amsterdam economy Table Amsterdam has the highest The Amsterdam economy has grown significantly in the recent decade. density of start-ups in Europe Amsterdam has not only grown considerably which constitutes a growth of approximately Amsterdam also boasts plenty of start-ups Growth of Number Venture Prime compared to the Dutch average, but also 12% per year with a major share for tech and scale-ups. The visualised pyramid clearly workforce of Capital office rent compared to other urban regions in the businesses. The fastest growing businesses in shows how the tech ecosystem is built up in 1 Companies like 2 Companies like 3 Companies like 4 Companies like (2020- start-ups per capita per European Union. The Amsterdam economy terms of employment are Picnic, Adyen, the city of Amsterdam. Thanks to the mix of Booking.com Adyen, mollie PicNic, WeTransfer, Norihealth, Atium, 2035) per 1,000 square grew by three times as much compared to Takeaway, Swapfiets and MessageBird. The capital, availability of ICT talent and a great Bunq Maxwell residents metre (2020Q2) other European cities in the period between largest tech employers in Amsterdam are sales market, the city provides the ideal mix 2008-2018. Booking.com, TomTom, Picnic and Adyen. In for the growth of ICT companies. Source Dealroom.com Amsterdam addition to these major employers, 11.1% 1.10 €291 €450 The economic growth was predominantly Key Financial Services driven by the activities in financial services, Graph Amsterdam is the most important city in the The value of the tech ecosystem grew from other European cities. Despite COVID-19, the London specialist business services, and ICT Netherlands when it comes to IT Services (2020) Information and Communication €10 billion in 2015 to €73 billion in 2020. long-term outlook for the Amsterdam ICT (information and communication) in Specialist Business Services Adyen (€42.5 billion) and Takeaway.com sector is positive thanks to a growing 12.5% 1.07 €626 €1076 particular.