JLL 2014 Q1 Amsterdam Office Market Profile
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* % Change for Prime Rent and Capital Values calculated using local currency Office Market Overview Demand was rather muted in Q1 2014, as tenants continue to downsize. A total of 25,740 sq m was taken-up in Q1, which was well below the levels achieved in the previous quarter and the year before. Tenants from the TMT sector, such as Booking.com and Amazon were the principal demand drivers in Q1. The reduction in office space per employee (from 25sq m/person to 12 – 15sq m/person) as an outcome of changing work place strategies continued to reduce corporate space requirement particularly from the banking and finance and insurance sectors. This ongoing trend is likely to impact take-up volumes going forward. Larger tenants are now upgrading to intelligent buildings that enable innovative workplace solutions, with growing demand from businesses to ‘increase productivity’ and ‘retain talent’. Overall office vacancy increased once again q-o-q, reaching 15.7%.This was due to second hand space released back on the market, a trend expected to continue in the near term. On the contrary, availability of prime space particularly in the sought-after Zuidas, continued to erode. New completions in Q1 totalled 32,890 sq m, none of which was speculative. The development pipeline for the remainder of the year totals 72,000 sq m, of which c. 10% is available. Prime rents held stable at € 335 / sq m pa, whilst rents in secondary office locations were €188 /sq m pa and remain supported by incentives. Incentives decreased in Zuidas owing to the shortage of prime space. Low availability of prime space thus creates for potential rental increase towards the end of the 2014 or early 2015. Incentives moved in slightly and include 6-12 months’ rent free on a 5+5 year lease contract in prime locations and 9-22 months’ rent free for the same lease length across the market as a whole. Commercial property worth €220 million changed hands in Q1 2014 of which €121 million was invested in offices. Prime yields compressed once again and now stand at 5.45%. Figure 1: Take-up Figure 2: Supply and Vacancy Rates Figure 3: Prime Rents and Rental Growth Figure 4: Prime Yields Source all Charts: JLL 0 100 200 300 400 500 600 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'14 000s sqm Take Up 10yr Average 0 5 10 15 20 0 200 400 600 800 1,000 1,200 1,400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'14 000s sqm Vacancy Total Vacancy Rate Vacancy Rate % 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 300 320 340 360 380 400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'14 Rental Growth Prime Rent Prime Rent (psm pa) Annual Rental Growth* 4.50 5.00 5.50 6.00 6.50 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q1 14 Prime Yield 10 Yr Ave 20 Yr Ave Prime Yield (%) Amsterdam Office Market Profile - Q1 2014 EMEA Office Research 12 Month Summary Statistics Q1 14 Q-o-Q Y-o-Y Outlook Take-up (000s sqm) 26 -73.6 % -52.9 % Vacancy Rate (% ) 15.7 80 bps 60 bps Prime Rent (psm) €335 0 % 0 % 12 Month Q1 14 Q-o-Q Y-o-Y Outlook Capital Value (psm) €6147 0.9 % 2.8 % Prime Yield % 5.45 -5 bps -15 bps Change* Change*
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VDMARA2014Q2
Transcript of JLL 2014 Q1 Amsterdam Office Market Profile
* % Change for Prime Rent and Capital Values calculated using local currency
Office Market Overview
Demand was rather muted in Q1 2014, as tenants continue to downsize. A total of 25,740 sq m was taken-up in Q1, which was well below the levels achieved in the previous quarter and the year before. Tenants from the TMT sector, such as Booking.com and Amazon were the principal demand drivers in Q1. The reduction in office space per employee (from 25sq m/person to 12 – 15sq m/person) as an outcome of changing work place strategies continued to reduce corporate space requirement particularly from the banking and finance and insurance sectors. This ongoing trend is likely to impact take-up volumes going forward. Larger tenants are now upgrading to intelligent buildings that enable innovative workplace solutions, with growing demand from businesses to ‘increase productivity’ and ‘retain talent’. Overall office vacancy increased once again q-o-q, reaching 15.7%.This was due to second hand space released back on the market, a trend expected to continue in the near term. On the contrary, availability of prime space particularly in the sought-after Zuidas, continued to erode. New completions in Q1 totalled 32,890 sq m, none of which was speculative. The development pipeline for the remainder of the year totals 72,000 sq m, of which c. 10% is available. Prime rents held stable at € 335 / sq m pa, whilst rents in secondary office locations were €188 /sq m pa and remain supported by incentives. Incentives decreased in Zuidas owing to the shortage of prime space. Low availability of prime space thus creates for potential rental increase towards the end of the 2014 or early 2015. Incentives moved in slightly and include 6-12 months’ rent free on a 5+5 year lease contract in prime locations and 9-22 months’ rent free for the same lease length across the market as a whole. Commercial property worth €220 million changed hands in Q1 2014 of which €121 million was invested in offices. Prime yields compressed once again and now stand at 5.45%.
Figure 1: Take-up
Figure 2: Supply and Vacancy Rates
Figure 3: Prime Rents and Rental Growth
Figure 4: Prime Yields
Source all Charts: JLL
0100200300400500600
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
000s sqm
Take Up 10yr Average
0
5
10
15
20
0200400600800
1,0001,2001,400
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
000s sqm
Vacancy Total Vacancy Rate
Vacancy Rate %
00.20.40.60.811.21.41.61.8
300320340360380400
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
Rental Growth Prime Rent
Prime Rent (psm pa) Annual Rental Growth*
4.50
5.00
5.50
6.00
6.50
Q4 98
Q4 99
Q4 00
Q4 01
Q4 02
Q4 03
Q4 04
Q4 05
Q4 06
Q4 07
Q4 08
Q4 09
Q4 10
Q4 11
Q4 12
Q1 14
Prime Yield 10 Yr Ave 20 Yr Ave
Prime Yield (%)
Amsterdam Office Market Profile - Q1 2014 EMEA Office Research
12 MonthSummary Statistics Q1 14 Q-o-Q Y-o-Y Outlook
Take-up (000s sqm) 26 -73.6 % -52.9 %
Vacancy Rate (% ) 15.7 80 bps 60 bps
Prime Rent (psm) €335 0 % 0 %
12 MonthQ1 14 Q-o-Q Y-o-Y Outlook
Capital Value (psm) €6147 0.9 % 2.8 %
Prime Yield % 5.45 -5 bps -15 bps
Change*
Change*
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JLL Contacts Martijn Smits Head of Office Agency Amsterdam +31 20 540 7898 [email protected]
Dré van Leeuwen Head of Capital Markets Amsterdam +31 20 540 7912 [email protected]
Sven Bertens Head of Research Amsterdam +31 20 540 7926 [email protected]
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