According to Savills latest research report ‘The Netherlands Market in Minutes - Q3 2020’, Dutch take-up volumes in the first half of the year declined by only 10% (H1 2020 compared to H1 2019).
This is due to postponed relocations which are inevitable given the current pandemic circumstances. The relatively small ‘other’ category, covering leisure, hotels, cafes, bars and restaurants, declined the most (-56%).
Of the more traditional sectors, offices, retail and industrial space (including logistics), only office take-up declined (-17% compared to H1 2019) having shown an increase of 26%. Despite the decrease in office leasing in Q2 Savills notes that from May onwards, the market appeared to recover to some degree and mainly driven by a growing demand for flexible leases, which showed an increase of 117% in July compared to April.
Notwithstanding the current drop in market activity in the Dutch real estate market, Savills does not expect a structural decline in demand for office space. Before the coronavirus crisis, working from home was already embedded in the Dutch working culture, with approximately 26% of employees working from home ‘frequently’ and 14% on a ‘regular basis’. This has made the Netherlands one of the frontrunners in Europe for remote working. In the entire euro area, only 6% of people work from home on a ‘regular basis’.
IJsbrand Brunger, Head of Leasing Amsterdam at Savills in the Netherlands, says: “A lot has been said about the impact of working from home on the demand for office space. The Dutch office market was already partially designed for working from home, which has made the impact on the demand for real estate less disruptive in the Netherlands. In the short term tenants will require more square metres per person as a result of social distancing and in the long term the role of office buildings will change. The impact of working from home on the demand for office space is expected to be limited in the Netherlands.”
Savills reports that the retail market and the industrial real estate market remained fairly stable compared to last year. During the most restrictive parts of lockdown demand in these sectors dropped entirely. Both sectors had a strong first quarter and a partial recovery in Q2, leading to a take-up volume in H1 2020 at a level similar to 2019. The logistics market performed slightly less well with a 22% decline in take-up volumes. The strong growth of e-commerce could not fully compensate for the drop in demand in sectors such as automotive and fashion.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “All in all, COVID-19 has caused a temporary shift in the market, but we are not seeing a structural loss in demand. Therefore we do not expect market dynamics to change drastically in the long term, for example due to homeworking.”