ESG credentials (environmental, social, governance) are becoming increasingly important in real estate. Businesses are purposely reducing their environmental footprint and housing increasingly constitutes a part of this, in terms of location, accessibility and also layout, for instance. This is conveyed, for example, in an increased demand for sustainable offices, says Savills.

Lotte de Jong, Head of Tenant Representation at Savills in the Netherlands, says: “There are substantial differences between types of companies and cities. The Randstad conurbation, for example, has many start-ups, scale-ups, and national and international companies that are more focused on sustainability than the SMEs located in the medium-sized cities outside the Randstad region. It therefore goes without saying that the largest demand for sustainable offices can be seen in the largest cities such as Amsterdam (70%), Rotterdam (60%), and Utrecht (67%).”

In addition, an analysis of more than 12,000 occupier transactions in the Netherlands from 2011 to 2021YTD shows that over the past ten years companies in the Netherlands have been increasingly willing to pay more for a sustainable office (at least energy label A) and less so for a non-sustainable office (energy label B or worse).

Scato de Smit, Research Consultant at Savills in the Netherlands, explains: “The past decade has shown that companies are increasingly less willing to pay for non-sustainable offices. It is expected that this difference will increase at an accelerated pace in the coming years as companies, banks and public authorities impose ever more stringent sustainability criteria. Sustainable offices are therefore no longer a trend but the norm.”

Iris Kampers, ESG Advisor at Savills in the Netherlands, adds: “The rental price that tenants are prepared to pay is an important element of how much an office is worth. After all, it is likely that the value of sustainable offices will increase and that of non-sustainable offices will decrease. There is a logical explanation for this: tenants are generally less willing to pay for offices that are at risk of becoming economically obsolete. It is therefore essential for investors to look ahead and, above all, to take action to make their offices future-proof. Investors may perhaps have the most important role to play in making Dutch offices more sustainable and Paris Proof.”

The demand for sustainable offices is rising, but the availability is failing to keep pace. Currently more than 11% of the office stock in the Netherlands does not meet the legislation criteria that will apply from 1 January 2023, while over 32% has no energy label at all yet. The Hague and Eindhoven are the two cities of the main five that are relatively lagging behind. This not only applies to the demand for sustainable offices, but also to the office stock itself.

Read the full report here.