The – Autumn 2020

CITY SPECIAL 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 (, 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. These sectors are the largest when (€13.8 billion) belong to one of the most workforce, the ability to attract talent and 25% compared to the other G5 and account for valuable tech companies in Europe founded plenty of capital. This means there are Berlin 11.4% over 30% of the total employment in after the year 2000. This puts Amsterdam in prospects for future demand for office space. 20% 6.9% 0.73 €688 €493 Amsterdam. The share of ICT is expected to third place after London (€157 billion) and The expectations for the other dominant 7.6% rise even further in the future, at the expense 15% Berlin (€79 billion). From an international sectors are moderately optimistic, with the Paris of the financial sector for example. In the 10.4% 9.3% standpoint, this makes Amsterdam is one of legal services sector, accountancy sector and 8.3% 2.3% 0.56 €232 €932 financial sector a decline in the number of 7.5% the frontrunners in terms of tech companies. external consultancy services sector mainly 10% 6.7% 7.8% available jobs has been caused by the This also clearly shows in the relatively high expected to do well due to demand. The 4.9% Munich emergence of new competitors, such as 5% 3.4% 4.9% density of start-ups and venture capital per prognosis for the financial services sector is 8.4% 2.9% FinTech and further automation. In the last 6.2% resident. Advantages for companies looking less optimistic as technological innovations 5.1% 0.29 €216 €444 3.5% 3.4% 3.5% 4.7% three years approximately 13,000 jobs have 0% to settle in Amsterdam include the relatively could in time replace employees (Rabobank, been added in the capital’s ICT sector, Utrecht Amsterdam The Hague Rotterdam Eindhoven Average G5 affordable office rental prices compared to MRA). Source Dealroom, Savills Research Source Statistics Netherlands

savills.nl/research 4 5 City Special Amsterdam City Special Amsterdam

Figure This shift did not just occur in Amsterdam, as the ICT Table Drop in the demand for office space, ICT is the most share rose by an average of 5% in the most important ICT has a higher share of the take-up in 2020YTD compared to 2019 important sector in European cities. In terms of relative growth of ICT in the despite growth in the ICT sector Amsterdam office share of the take-up, however, Amsterdam takes pride of 2019 2020 YTD take-up (2020YTD) place (26.5%), which compares to the previously indicated growth of the sector in general. FinTech is an important Amsterdam 16.5% 42.9% subsector, whereas the ICT travel sector shows a decline. Key 2020 2019 London 19.4% 20.2% At this time, there is relatively more demand for office Paris space from the ICT sector than before, but less demand 11% 8.6% in a general sense. Despite the fact that office-bound Berlin employment in Amsterdam is not expected to show a sharp 14% 25.5% Graph So far a significant decline of the take-up can hardly be observed 3% 15% decline, future demand for office space will also partly be Munich 14% 19% Real estate services determined by the developments regarding remote working resulting from COVID-19. At the moment the outlook for Average of EU cities* Key Total Average 15.9% 20.8% the changing role of the office is unclear as companies have 700,000 expressed varying views on the matter. Netflix for example *Amsterdam, Madrid, London, Berlin, Paris, Warsaw, Lisbon, Dublin, Prague, Frankfurt (Savills Research) has indicated that they want to make a 100% return to the office, while Blackrock will be striving for a 70% occupancy euro area, only 6% of people used to work from home on a regular basis. Because more people rate post-COVID-19. So some companies do recognise the are currently working from home, it seems likely that less office space will be needed in the long 600,000 16% 24% advantages of working from home right now, which will term. However, as a result of COVID-19, employees are once again viewing the office as a place Other have a clear impact on the occupancy rates of offices. An to get together. advantage for the Dutch office market is that working from Despite this expectation, the actual effects on the office market will not become visible for quite home is not a completely new trend in the Netherlands, some time. This is due to the fact that many leases for office spaces do not end for several years. 500,000 compared to other European cities. As a result, the impact To adequately assess the risk for an increase in vacancy, it is interesting to review the share of is expected to be more limited. dominant tenants. Which part of the market is influenced by a limited number of tenants but with a large volume (6.9 percent of the total office stock)? 9% 12% 400,000 Pre-COVID-19, working from home was already partially Retail and Distribution embedded in Dutch working culture. Approximately It is striking that current tenants are at present also taking a step back, taking stock, and not 26% of workers had already been working from home taking any action yet. This means new office rentals are limited and come with important frequently, and 14% on a regular basis, mainly in the ICT conditions such as flexibility and options for subletting. Companies who have recently agreed 300,000 sector (68.1%). This means the Netherlands is one of the long-term contracts and whose incomes are dwindling will be trying to sublet their office space 1% 6% frontrunners in terms of remote working. In the entire in order to save costs. Lease of movable properties & other business services 200,000 Summary In short, Amsterdam has a varied range of tenants, which Table is an advantage for the stability of the market in the short Overview of dominant tenants in Amsterdam (2020), excluding owner-occupier use 100,000 term. However, the actual effects of COVID-19 will only 17% 12% be visible in the long term. Despite the accelerated growth Name tenant Business sector Rented surface area of remote working due to COVID-19, the function of the Financial Services Booking.com office will remain considerable in the long term. After all, ICT 76,711* - offices play a vital role in the ability to develop a company Uber 2012 2013 2014 2015 2016 2017 2018 2019 2020 ICT 18,000 culture, create team cohesion and, as a result, further YTD business development. In addition, we expect that the EMA Specialist business services 38,812 effects on the demand for offices in the Netherlands will be PwC Source Savills Research 12% 14% far less negative than in the surrounding countries. After Specialist business services 35,000 Specialist Business Services all, remote working was already much more embedded in UWV Dutch office culture than in other countries. Healthcare and welfare services 28,932 Vattenfall Production and distribution of 26,000 In the short term an economic downturn and and trade in electricity This also becomes clear when the take-up there was also a shift in the type of businesses reorganisations may be looming, resulting in a potential Deloitte Specialist business services 22,000 in 2020H1 is compared to 2019H1 (+17%), a active. Businesses in the ICT sector, business drop in demand on the Amsterdam office market. Should De Brauw growth that is mainly the result of the rental services sector and specialist sectors were there be a structural drop in demand in the long term, then Specialist business services 24,000 transactions of Adyen (16,000 sq m) and Uber responsible for the largest share in take-up in it will be important to obtain an overview of the current ING Financial Services (30,000 sq m), together responsible for 26% of 2020YTD, at 71.6% compared to 42.4% in 2019. supply in order to determine the consequences for the 91,010 the take-up in 2020H1. Aside from these deals, ICT had by far the largest share in the take-up at Amsterdam office market. WPP Specialist business services 19,500 take-up definitely fell in 2020Q2. In 2020Q2, 42.9%, and not only thanks to Adyen and Uber. 43% 17% the take-up volume fell by 17.8% compared to Other examples of companies renting office Information and Total 407,365 (this amounts to 2019Q2. Not only did the volume go down, but space in 2020 include Sentia, Hiber and Surfly. Communication 6.9% of the total stock) Source Savills Research *Excluding new office Source Savills Research

savills.nl/research 6 7 City Special Amsterdam City Special Amsterdam

Graph supply-demand ratios have strongly improved in recent years

Key Stock at beginning of year Completions Withdrawls Vacancy

6,400,000 20%

6,300,000 18%

16% 6,200,000

14% 6,100,000

12% 6,000,000

10%

5,900,000 8%

5,800,000 6%

5,700,000 4%

5,600,000 2%

5,500,000 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD

Source Savills Research Slight increase in stock after the end of the building freeze After the economic crisis, Amsterdam had an office vacancy rate of 17.2% (2013).

In total this removed 13.5% from the stock. rate of 6.2% as a result. This drop represents Sloterdijk (8.7%). The fast-declining vacancy in the following a decline of 50% compared to the 2016 level. The relatively low vacancy in almost all years did result in the ending of the building Vacancies in 2020 have seen a slight increase. of Amsterdam’s sub-areas shows that, in freeze in 2017. After all, Amsterdam began This is due to the fact that a large number of the broadest sense of the word, Amsterdam running the risk of losing companies as a office floors have become available that have has continued to benefit from economic result of the lack of available office buildings. not been immediately taken up by the market. prosperity in recent years. Even so, the This issue led to the slow promotion of office The vacancy rates have not only dropped in various sub-areas continue to retain their developments, not only in the city centre and the downtown areas, but also in the former own character and dynamics. South Axis, but also in other office areas with secondary areas such as Southeast (7.3%) and a reputation for being more monotonous such as Southeast, Sloterdijk, , West- Axis and North. Despite the easing of the policy, little use has been made of this until The vacancy rates have not only dropped in the now (557,778 sq m of new-build developments downtown areas, but also in the former secondary areas versus 838,229 sq m of conversions in the such as Southeast (7.3%) and Sloterdijk (8.7%). last 8 years) with a structurally low vacancy

savills.nl/research 8 9 Strawinskylaan 10, Amsterdam City Special Amsterdam City Special Amsterdam

Houthavens

Types of tenants include City Center Fashion, Creative, start-ups (Esprit, PHV, Types of tenants include Hearst) FinTech, Creative, Sloterdijk North start-ups (Booking.com, Vacancy rate Adyen, Deliveroo) Types of tenants include Types of tenants include Figure Back office, non-profit 3.2% Business Services, Vacancy rate (Tax Authority, RELX) Overview of the office sub-areas in Amsterdam Creative (Hema, MTV) Google Walking Score 5.2% Vacancy rate 83 Vacancy rate Google Walking Score 8.7% 10.1% Travel distance Schiphol 95-100 West-Axis Google Walking Score 35 min Google Walking Score Travel distance Schiphol Types of tenants include 71-78 Net Office Developments 85 Business Services, 15 min Travel distance Schiphol non-profit (UWV, ICL - Travel distance Schiphol Net Office Developments Europe) 10 min 30 min 63,500 sq m Vacancy rate Net Office Developments Net Office Developments 11.6% 4,040 sq m 12,756 sq m Prime rent Google Walking Score Prime rent 85 €285 Prime rent Houthavens €200 Travel distance Schiphol €210 North 10 min Sloterdijk

Net Office Developments Prime rent 29,537 sq m €450 Omval/Overamstel Prime rent City centre Types of tenants include €275 Financial & Business West-Axis Services (Philips, NN, Amazon)

Vacancy rate Haarlemmermeer Lijnden South 4.3% Prime rent Prime rent Google Walking Score Riekerpolder €425 €385 78-90 South Axis Omval/Overamstel Travel distance Schiphol South Axis Diemen 25 min

Financial & Business Net Office Developments Services (Google, Accenture, ABN-AMRO) Haarlemmermeer Prime rent 40,076 sq m Schiphol-East Vacancy rate Haarlemmermeer €275 Southeast 2.4% Schiphol-Centre Southeast Amstelveen Mainly Financial Services Google Walking Score (Vattenfall, Deutsche Amstelveen Bank, ING) 95 A9-zone Vacancy rate Travel distance Schiphol 7.3% 6 min Google Walking Score Net Office Developments 69-89 141,146 sq m Travel distance Schiphol 13 min

Low vacancy in almost all of Amsterdam’s sub-areas Net Office Developments A result of economic prosperity in recent years 10,777 sq m

Source Savills Research savills.nl/research 10 11 City Special Amsterdam City Special Amsterdam

The correlation between mixed urban development and the appeal of office areas becomes clear when the number of homes, shops, cafes, bars and restaurants is compared to the vacancy of offices.

Graph Development pipeline of Amsterdam offices EFFECTS ON THE INVESTMENT Mixed-use as a strategy for MARKET SLOWLY VISIBLE DUE TO STRONG FIRST QUARTER IN 2020 120,000 additional foundations The Amsterdam investment market performed less well in 2020H1 compared to 2019H1 (-49.9%). This decline In addition to low vacancy, office buildings have become more is mainly due to 2020Q2. Despite this decline there is still investment activity in the Amsterdam office mixed in regards to functions in recent years. 100,000 market. Partially as a result of the low interest rates, This mix resulted in additional stability, urban development and the appeal of office (+28.2%), whereas areas such as South Axis there is still demand for core product: buildings in as also becomes clear from an additional areas becomes clear when the number of (16.4%) and the city centre (23.3%) showed prime locations with long-term leases. This is shown for analysis into the correlation between homes, shops, cafes, bars and restaurants significant but much smaller increases. example through the sale of Strawinskylaan 10 by Deka 80,000 structural office vacancy and mixing of is compared to the vacancy of offices (see Immobilien to Aviva Investors for €85 million, where the functions. After all, if the vacancy of offices below). The office areas mentioned, which used to tenant in question still had a long-term lease. in a mixed area is on the rise, the appeal be considered secondary, have now matured of an entire area does not immediately and in terms of quality and appeal are much This focus on core product was further strengthened Considerable rental growth 60,000 decrease, because people also live and Partially due to mixed urban development closer to the quality and appeal of areas such in recent months but was already visible from 2019. In spend their free time there. However, in and declining vacancy, the Amsterdam office as the city centre and South Axis. This is 2019 and 2020, the largest investments were in the city the past this has happened in areas such market has been able to show considerable shown through rent levels, for example. The centre and South Axis sub-areas with approximately as Amsterdam Southeast and Sloterdijk. rental growth in recent years. The average areas mentioned have caught up considerably. 40,000 40% of the investment volume. It is expected that Mixed living-working-recreation areas rent in Amsterdam rose by 26.7% between The levelling between primary and secondary this focus on core product will remain a reality in the in urban developments have advantages 2015 and 2020. The largest increases in rents in recent years is a sign that the Amsterdam coming period, considering the fact that investors tend both for occupiers and for the owners of took place in Riekerpolder (55.2%), West-Axis office market has matured across the board to look for stability in uncertain times. real estate. The correlation between mixed (55.2%), Houthavens (42.5%) and Southeast and has become more stable as a result. 20,000

Graph Mixing of functions and structural office vacancy show a negative correlation in South Axis Graph Investment volume declines in 2020 0 Key Mixed-use developments Vacancy Offices (%) 2020 2021 2022 2023 €3,500 7% 3,000 12% Key New-build office development Renovation 2,500 €3,000 6% 10% Renovation (net addition to stock) Source Savills Research

2,000 8% Office developments in the €2,500 5%

1,500 6% pipeline increase the availability €2,000 4% On the supply side, the situation looks stable. However, 1,000 4% Vacancy Offices (%) Offices Vacancy the new-build developments that will be completed in €1,500 3%

the coming years will naturally change this situation. € Million x 500 Number of mixed-use developments mixed-use of Number 2% These plans amount to an additional net corner as a result of an economic contraction 282,172 sq m of office space between now and potential reorganisations of businesses. €1,000 2% and 2023, 48.3% (approximately 135,640 sq Should there be a structural loss of demand, 0 0% m) of which has been pre-leased. What is then the Amsterdam office market will be 2012 2013 2014 2015 2016 2017 2018 2019 2020 left has not been leased yet and chances are able to take a hit, particularly compared to €500 1% YTD that this will contribute to rising vacancy the previous crisis, as demonstrated by the rates, particularly in the case of an expected relatively stable current supply. Source Savills Research economic downturn. Suppose that these €- 0% square metres will not be taken up at all Considering the fact that a drop in demand in

MIXING OF FUNCTIONS AS A STRATEGY OF KEEPING AREAS STRUCTURALLY APPEALING in the coming years, then the vacancy rate the Amsterdam office market may be around 2012 2013 2014 2015 2016 2017 2018 2019 2020 will increase by a mere 2.5%. Even when the corner, investors are becoming more risk Mixing of functions results in the fact that The correlation between mixing of mixing of functions is expected to including planned new-builds, the supply side averse in making acquisitions in the office Key an area as a whole generates more appeal, functions and structural vacancy becomes contribute to the appeal and the stability of Domestic Capital and businesses tend to show a preference visible in South Axis for example. In this South Axis as an office area in the broadest continues to show a relatively stable situation. real estate market. This is why investors are Despite the fact that the office’s right to shifting their focus to the core product, a Foreign Capital for specific location with a mixed function area, mixing of functions has been an sense. In areas where mixing of functions Yield Amsterdam Source Savills Research compared to other locations with a more important aspect from the start of the will continue to be a priority in the coming exist is undisputed, a drop in demand in the trend that is visible across the board in the limited mixing of functions. urban development. This far-reaching years, such as Southeast. Amsterdam office market may be around the market.

savills.nl/research 12 13 City Special Amsterdam City Special Amsterdam

In some locations the overstrained supply- demand rations will become more balanced.

OUTLOOK Despite the fact that the first effects of a drop in demand are not yet visible in the figures, it is expected that the demand for office space in the short term will decrease in Amsterdam. This is mainly due to the expected economic contraction as a result of COVID-19, but also to the accelerated development of the remote working trend that may result in a reduced demand for offices. As a result, in some locations the overstrained supply-demand rations will become more balanced.

Shortage will be making room for more space in the coming year. The degree to which a drop in demand will take place is largely associated with the number of months that COVID-19 will continue to exert a hold on us and with the way companies will respond. At the moment the first views that have been shared show a great variety of opinions. The main current advantage to the real estate market is that businesses are still bound by long-term leases. Only once these leases have ended and Flow Houthavens, Amsterdam the consequences of COVID-19 have become clear will it be possible to take stock of the situation. Although it is Key findings impossible to predict the consequences Sources Brainbay Database, BAK, Pitchbook, Dealroom, City of Amsterdam, Amsterdam Metropolitan Region, Eurostat, Statistics ITO Tower, Amsterdam with any degree of certainty, we believe The Amsterdam office market during the COVID-19 Netherlands, Oxford Economics, Capital Economics, Rabobank, Bureau for Economic Policy Analysis (CPB) that the long-term effects will be better pandemic: more balanced than in 2008 than expected. Offices will continue to be necessary in order to build and retain teams and a company culture, Increasing unemployment effects on the demand for market will be able to take a making it impossible for companies to 1and the possibility of offices in the Netherlands will hit, particularly compared simply divest of large parts of offices in reorganisations increase be far less negative than in to the previous crisis, as the long term. the risk of a drop in demand other European countries. demonstrated by the relatively Savills World Research for offices in the short term. stable current supply. The We provide bespoke services for landowners, developers, occupiers and investors across the An added advantage for the However, at this time no major Due to the fact that the ten current supply-demand ratio lifecycle of residential, commercial or mixed-use projects. We add value by providing our clients Amsterdam office market is that the changes are visible in the 3dominant tenants account is very healthy (6.2%). In with research-backed advice and consultancy through our market-leading global research team supply-demand ratios were very stable Amsterdam occupiers market. for only 6.9% of the total addition to that, the office and even tight in the pre-COVID-19 era. The current demand comes Amsterdam stock, the risk for areas are more mixed in terms Even when there’s a drop in demand, mainly from ICT (42.9% take- the Amsterdam office market of functions and more spread the market is able to take a hit and this up 2020), which is also a trend is spread if one of these parties out in terms of location, which will not immediately impact vacancy on a European level. goes down. is an advantage compared to rates and result in negative rent the previous financial crisis development as we saw for example Remote working was Despite these mildly in 2008. after the financial crisis of 2008/2009. 2already much more 4 optimistic signs, a decline embedded in the Dutch in demand cannot be ruled out The demand for core office office culture than in other in the short term. Should there 5real estate is still high due European countries. We be a structural loss of demand, to the low interest rate and low Clive Pritchard IJsbrand Brunger Jordy Diepeveen Martijn Onderstal Jordy Kleemans therefore expect that the then the Amsterdam office coverage of pension funds. Head of Country Head of Leasing Amsterdam Head of Acquisitions Head of Valuation Head of Research & [email protected] [email protected] [email protected] [email protected] Consultancy +31(0)20 301 2031 +31 (0) 20 301 2056 +31 (0) 20 301 2021 +31 (0) 20 301 20 20 [email protected] +31 (0) 20 301 20 94 The current demand for office space comes mainly Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, the UK, 42.9% from ICT, which is also a trend on a European level. continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. savills.nl/research 14 15 Claude Debussylaan 48 1082 MD Amsterdam +31 (0) 20 301 2000

savills.nl/research 16