Q1 2018 Hoofddorp A city on the brink of a trend reversal City Special | Hoofddorp Offices Savills World Research savills.nl/research City Special | Hoofddorp Offices Savills World Research | Q1 2018 HOOFDDORP BEUKENHORST WEST BEUKENHORST STATION DE HOEK GRAAN VOOR OOST VISCH ZUID DE PRESIDENT BEUKENHORST ZUID Introduction Office Market the Netherlands: Amsterdam, Rotterdam, The become limited and expensive. However, Hoofddorp is part of Hague and Utrecht. In addition to Schiphol demand for offices decreased sharply as a The office market is ‘De Hoek’, which is located closest to business park to be developed, and as the Airport, the Port of Rotterdam is also an result of the financial crisis. Because of its Schiphol, comprises mostly of logistics most attractive area of ‘Beukenhorst’. Haarlemmermeer, important economic driver. dependency on larger surrounding cities, relatively dominant in properties with very few offices. Many of Hoofddorp consequently fell into decay. the established companies here have a South is home to several multinationals such a municipality that The growth of Hoofddorp has primarily been Vacancy levels increased rapidly and the the local economy of close connection with the airport because Asics, Danone, Walt Disney and Sony, and driven by Schiphol. As the airport developed quality of the buildings and public spaces transportation is a major part of their still offers space for new developments. This includes 21 towns to become the second largest airport in deteriorated. That was the general situation in Hoofddorp. business. part of the ‘Beukenhorst’ also contains Park Europe, Hoofddorp also benefitted. This is most of Hoofddorp until approximately 2015. 20/20. and villages and reflected in the fact that around 10% of the Currently, Hoofddorp has 670,000 sq m of ‘Graan voor Visch’ and ‘De President’, jobs at the airport are held by residents of Since then, the tide has turned as rents have office space which is mainly concentrated on located on the west side of Hoofddorp, are The last area is ‘Beukenhorst East’, which is Schiphol Airport. Hoofddorp. The growth of Amsterdam has been rising, vacancy levels have dropped the business parks of ‘Beukenhorst’ and ‘De mixed office and industrial areas. characterised by large-scale office buildings also had an impact on Hoofddorp. and interest from investors has risen. Now it President’ as well as the industrial estates of which were mostly constructed between 1990 Haarlemmermeer is located close to seems that Hoofddorp is on a brink of a trend ‘De Hoek’ and ‘Graan voor Visch’. All of these The ‘Beukenhorst’ business park is divided and 2000, and it boasts excellent connections Amsterdam and is part of the Randstad, As popularity and demand rose significantly reversal and is becoming an attractive area areas are close to the Hoofddorp’s central into three areas: West, South and East. with the A4 motorway and Hoofddorp’s a metropolitan region in the west of the in Amsterdam during the 1990s, Hoofddorp for occupiers and investors. train station, which is only one train stop ‘Beukenhorst West’ mostly consists of central train station. ‘Beukenhorst’ is a Netherlands. This region is home to more became a major overspill town where large away from Amsterdam South (approximately vacant office buildings, some of which have maturing office location with high potential than 7.1 million people and is therefore one (inter)national companies such as L’Oréal and So, what are the drivers behind this revival 15 minutes) which includes the trainstation of already been converted into residential units. due to the planned redevelopments in of the largest conurbations in Europe. The Walt Disney established themselves because and what can we expect from this area in the Amsterdam’s CBD - the South Axis. ‘Beukenhorst South’ was the last part of the ‘Beukenhorst West’. Randstad includes the four largest cities in the supply of office space in Amsterdam had coming years? The municipality of Haarlemmermeer is years to drain the lake, after which land was The history of the located in the reclaimed area of what earmarked for several new villages including “What are the drivers behind was previously the largest lake in the ‘Kruisdorp’, the former name of Hoofddorp. Haarlemmermeer Netherlands: the ‘Grote Haarlemmermeer’. In 1970, Hoofddorp only had 9,000 residents this turnaround and what can but over the last 40 years this number has This lake formed a threat because the grown substantially to its 2017 level of we expect from the Hoofdorp and Hoofddorp water eroded the land which protected the 74,300. Hoofddorp has quickly developed surrounding areas against flooding and so into the most important main town within area in the coming years?” work started to drain it in 1840. It took 12 the municipality, and beyond. 1 2 City Special | Hoofddorp Offices Savills World Research | Q1 2018 Park 20|20 GRAPH: STOCK MOVEMENTS OVER THE YEARS Pork cycle is detected STOCK NEW DEVELOPMENTS WITHDRAWALS VACANCY Park 20|20 is the world’s first business park built entirely based on the Cradle- to-Cradle principles, which is highly sustainable. 740.000 30% The park combines innovative building designs with the focus on the well- 720.000 being of its occupiers. The BREAAM 25% certificate plays an important role as it 700.000 forms the basis for how the buildings are being developed. It also enables 680.000 developers to measure their level of 20% sustainability. Park 20|20 is a mixed- 660.000 use park, which is home to offices, a hotel and food & beverage outlets. The 640.000 15% public space offers lots of greenery and water. Park 20|20 is very attractive and 620.000 generates substantial spin-off for the other office locations in the vicinity. 10% 600.000 580.000 5% 560.000 540.000 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Stock & vacancy Take up occupiers retreat as soon as they can. The graph the graph on the next High ratio of Distribution & Retail oriented take up in 2017 As demand increases, so does supply. page illustrates this phenomenon, new developments continued to be After years of standstill brought to the market in Hoofddorp while the vacancy levels continued In response to the growth of Amsterdam and Schiphol, Hoofddorp to rise. on the occupiers’ market continuously expanded its office stock due to its role as an overspill town however stagnating demand has caused the vacancy level to rise After years of very high vacancy levels, a decrease in these levels 83% - BUSINESS SERVICES above 25% since 2010. has been noted in recent years. One of the reasons for this is the in Hoofddorp, the city is large-scale transformations of office stock which is planned for the 6% - DISTRIBUTION & RETAIL The development of the stock is typical for an overspill town and coming years, such as the ‘Hyde Park Project’ by Snippe. This project gaining popularity amongst relates to the cyclical nature of the “pork cycle”. As demand increases, aims to withdraw approximately 100,000 sq m of office stock from 4% - INSURANCE & FINANCIAL so does supply. However, the expansion of supply is a slow process ‘Beukenhorst West’ (around 15% of the current total office stock in occupiers. because the development of real estate takes several years. As Hoofddorp) and redevelop it to approximately 3,000 to 4,000 residential 5% - PUBLIC SERVICES, demand changes during the development process, real estate is not units. This results in a current vacancy level of around 12%. We expect Consequently, take up has shown stable growth to just below EDUCATION & HEALTH absorbed as fast, especially in overspill towns where investors and the office stock will decrease even further as withdrawals continue. 50,000 sq m in 2017, compared to 3,600 sq m in 2010. The 2% - TMT (TECHNOLOGY, office market has shown exponential growth, with a peak in MEDIA & TELECOMMUNICATION) 2012 when Fluor absorbed 21,100 sq m - the second largest new lease transaction in the whole of the Dutch office market in 2012. The stable growth was confirmed once again in 2017, with significant leases for the likes of Asics, leasing 11,100 sq m for its EMEA head office, and Danone leasing 8,350 sq GRAPH: INCREASE IN OFFICE TAKE UP OVER THE LAST FEW YEARS m for its head office, both at Taurusavenue. These types of innovative companies would probably not have established 60,000 themselves here a few years ago because they would have preferred cities such as Amsterdam however Hoofddorp’s 50,000 increasingly attractive international business climate and its vicinity to Amsterdam have attracted these companies, 40,000 “The transformation of offices to especially to Beukenhorst South. 30,000 residential gives both the office and It is worth noting that the majority of take up in 2017 AVERAGE consisted of businesses related to the distribution and residential market a qualitative and retail sectors. This is due to the strategic location close to 20,000 Schiphol Airport, which forms a hub with easy international quantitative impulse” access and good distribution connections. 10,000 0 Jordy Kleemans 2010 2011 2012 2013 2014 2015 2016 2017 2018 3 4 City Special | Hoofddorp Offices Savills World Research | Q1 2018 including Hoofddorp, Teleport/Sloterdijk and Amsterdam-Zuidoost. Office locations Best practices to of this type shared certain characteristics “If Hoofddorp continues which left them vulnerable: they lacked a counter market mix of functions, had less attractive public this upward trend, it will spaces and their occupants consisted fluctuations mainly of large traditional companies. become a part of the These characteristics, in combination with Amsterdam agglomeration” a worsening economic climate, left these The real estate market is particularly locations empty and abandoned.This gives susceptible to cyclical economic rise to a crucial question: are all secondary fluctuations (often referred to as the ‘pork office locations destined to suffer this fate Mans Vroom cycle’), with demand from occupiers and in times of recession? investors plummeting when recession hits.