JLL 2014 Q1 Utrecht Office Market Profile
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* % Change for Prime Rents and Capital Values calculated using local currency Office Market Overview Demand fell significantly over the quarter, with just 19,555 sq. m taken-up in Q1 2014. This was however, substantially higher than a year ago. The top two transactions, both by Hogeschool Utrecht, together accounted for 66% of the Q1 take-volume. Other than these deals, activity was rather muted. Prospects for the City Centre appear to be bright with the redevelopment of the central station and renovation projects around the City Centre. Obsolete space is being modernised, in the wake of shifting tenant demand towards well- connected locations – such as the City Centre, actively promoted by the municipality. There was only one completion in Q1 totalling 6,000 sq. m, developed on a pre-let basis. Construction is underway for the municipal office (66,750 sq. m) in the City Centre. Speculative starts are unlikely over the next 12 months, as the municipality aims to bring the vacancy rates down by adopting a more restrictive new- build policy. Overall vacancy rate edged up 10 bps q-o-q to 14.4% driven by consolidations and is expected to continue increasing in the short term, as public sector organisations are still consolidating and reduce their real estate footprint. The long lease length for public offices inhibits quicker space reduction and is likely to slow down vacancy reduction. Prime rents remained stable at € 215 / sq m pa. The level of incentives were unchanged at 10-15 month rent free on a 5+5 year contract in the prime segment and increased to 14-24 months for the same lease length at the overall market level. Any movement in rents is unlikely over the next 12 months. Office investment activity declined once again from €28 million in Q4 2013 to just €950,000 in Q1 2014. Prime yields remained stable at 6.05%. 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 50 100 150 200 250 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'14 000s sqm Take Up 10yr Average 0 2 4 6 8 10 12 14 16 0 50 100 150 200 250 300 350 400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1'14 000s sqm Vacancy Total Vacancy Rate Vacancy Rate % -10 -5 0 5 10 15 20 0 50 100 150 200 250 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 7.00 7.50 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 (%) Utrecht 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) 20 -67 % 243.2 % Vacancy Rate (% ) 14.4 10 bps 10 bps Prime Rent (psm) €215 0 % 0 % 12 Month Q1 14 Q-o-Q Y-o-Y Outlook Capital Value (psm) €3554 0 % 0 % Prime Yield % 6.05 0 bps 0 bps Change* Change*
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VDMARA2014Q2
Transcript of JLL 2014 Q1 Utrecht Office Market Profile
* % Change for Prime Rents and Capital Values calculated using local currency
Office Market Overview
Demand fell significantly over the quarter, with just 19,555 sq. m taken-up in Q1 2014. This was however, substantially higher than a year ago. The top two transactions, both by Hogeschool Utrecht, together accounted for 66% of the Q1 take-volume. Other than these deals, activity was rather muted. Prospects for the City Centre appear to be bright with the redevelopment of the central station and renovation projects around the City Centre. Obsolete space is being modernised, in the wake of shifting tenant demand towards well-connected locations – such as the City Centre, actively promoted by the municipality. There was only one completion in Q1 totalling 6,000 sq. m, developed on a pre-let basis. Construction is underway for the municipal office (66,750 sq. m) in the City Centre. Speculative starts are unlikely over the next 12 months, as the municipality aims to bring the vacancy rates down by adopting a more restrictive new-build policy. Overall vacancy rate edged up 10 bps q-o-q to 14.4% driven by consolidations and is expected to continue increasing in the short term, as public sector organisations are still consolidating and reduce their real estate footprint. The long lease length for public offices inhibits quicker space reduction and is likely to slow down vacancy reduction. Prime rents remained stable at € 215 / sq m pa. The level of incentives were unchanged at 10-15 month rent free on a 5+5 year contract in the prime segment and increased to 14-24 months for the same lease length at the overall market level. Any movement in rents is unlikely over the next 12 months. Office investment activity declined once again from €28 million in Q4 2013 to just €950,000 in Q1 2014. Prime yields remained stable at 6.05%.
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
050
100150200250
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
000s sqm
Take Up 10yr Average
0246810121416
050
100150200250300350400
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
000s sqm
Vacancy Total Vacancy Rate
Vacancy Rate %
-10-505101520
050
100150200250
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1'14
Rental Growth Prime Rent
Prime Rent (psm pa) Annual Rental Growth*
4.505.005.506.006.507.007.50
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 (%)
Utrecht Office Market Profile - Q1 2014 EMEA Office Research
12 MonthSummary Statistics Q1 14 Q-o-Q Y-o-Y Outlook
Take-up (000s sqm) 20 -67 % 243.2 %
Vacancy Rate (% ) 14.4 10 bps 10 bps
Prime Rent (psm) €215 0 % 0 %
12 MonthQ1 14 Q-o-Q Y-o-Y Outlook
Capital Value (psm) €3554 0 % 0 %
Prime Yield % 6.05 0 bps 0 bps
Change*
Change*
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JLL Contacts
Olaf Vogelaar Head of Office Agency – Utrecht Utrecht +31 30 284 3064 [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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