According to Savills latest ‘Market in Minutes the Netherlands - Spring 2020’, the economic support package of the Dutch government - with a value of 20 billion for a period of only three months - has not been enough to sustain the same level of leasing activity in most Dutch occupier markets as before the COVID-19 outbreak. The residential market is the positive exception, while the mismatch between demand and supply (300,000 dwellings) remains.
Office leasing has seen a sharp drop since the lockdown started (-50%), mainly due to businesses postponing major decisions. Businesses are currently shifting their focus from relocation to reorganisation.
Erik Beekman, Head of Tenant Representation at Savills in the Netherlands, explains: “Despite the falling demand, it is clear that employees will need more office space per employee due to social-distancing measures. This factor will limit the expected fall in demand for office space, for the time being at least. Vacancy rates are therefore expected to remain relatively stable in prime locations in cities such as Amsterdam and Rotterdam. Due to the relatively tight market with historical low vacancy rates, office rents will stabilise in 2020, but increasing incentives are expected as occupiers seek to reduce costs in negotiations regarding new leases and renewals.”
Leasing activity in the logistics occupier market had already begun to slow somewhat, even prior to COVID-19. This slowdown was due to the limited number of new developments as a result of the nitrogen-pollution issue. This was leading to a lack of supply for occupiers. Due to COVID-19 business decisions are also being postponed in the logistics sector, which is causing a further slowdown in leasing activity. Remarkably, there is a sharp difference between types of occupiers. On the one hand, online retailers and supermarkets are flourishing, while third-party logistics are currently seeing falling revenues.
Niek Poppelaars, Co-Head Logistics & Industrial at Savills in the Netherlands, says: “We expect the increasing demand from online retailers to slightly level out the decreasing demand from third-party logistics, leading to a quite stable demand in the near future. Although rental growth will be limited this year, it is expected that the market in logistics hotspots, in particular, will remain tight over the next year due to record low vacancy rates and relatively limited new supply.”
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, concludes: “ In financial terms, the Netherlands is well-placed to provide a longer term stimulus package, since its budget deficit had already been reduced through severe restrictions on public spending over the last five years. At the end of last year, dept stood at 49.3% of GDP.”