By continuing to take office space, SMEs (small and medium-sized enterprises) are ensuring a stable office market in Eindhoven, according to the research report ‘City Special Eindhoven’ by real estate advisor Savills. However, similar to 2020 and 2021, demand for office space from business service providers and campus occupiers will fluctuate more strongly due to the pandemic and a lack of suitable (sustainable) supply.
SMEs’ annual take-up has been stable at around 25,000 sq m since 2017, and even increased in 2021. The relatively quick return to the office of SME employees is one explanation. However, the vacancy rate in the areas where SMEs are dominant is relatively high, above 10%.
There is a greater fluctuation in demand among business service providers and campus users. Both in 2017 (127,000 sq m) and in 2019 take-up volume (110,000 sq m) was well above the long-term average (77,000 sq m). After a dip in the first year of the pandemic, in 2022, the volume recovered to the long-term average.
Due to the mix of users, the supply-demand ratios in Eindhoven have improved in recent years. In contrast, back in 2014, the vacancy rate still fluctuated at around 15%. Refurbishments and the increased intrinsic demand for offices has caused this sharp drop in the vacancy rate.
Lotte de Jong, Head of Tenant Representation at Savills in the Netherlands, says: “Business service providers were less active last year, but not all companies in this segment have been at a standstill. AKD and Deloitte have leased office space (at the Edge Eindhoven) during the pandemic. As high-quality buildings in easily accessible locations are rare in the city and high in demand, it is no surprise that rents paid for this new stock are competitive, at €200 per sq m. High-quality offices in easily accessible locations continue to be in demand, as has also been shown by Savills Office FiT (2021).”
There has been relatively little traction among campus occupiers over the past two years. ASML, which largely uses its real estate for its own use, is an exception. ASML announced last year that it wanted to invest 1 billion euros in the expansion of its campus in the coming years. This expansion is necessary to accommodate its approximately 15,000 employees in a more central Eindhoven location. Other campuses were less dynamic than usual, largely due to a lack of suitable supply and the pandemic.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands: “Vacancy is low on the various campuses: there is a shortage. The vacancy rate is also lower than the average in Eindhoven (8% versus 10.9%) in the areas where business service providers are mainly located (the Centre, the Station area and Dorgelolaan). The reduction in demand due to the pandemic is slightly visible in these areas. Before the pandemic, the vacancy rate was even lower, at around 6%.”
Despite the improved supply-demand ratio, Eindhoven still faces a significant sustainability challenge. This is apparent from an analysis of the energy labels of the office stock. Offices in Eindhoven appear to be economically and technically “less sustainable” than offices in the other G5 cities, the largest five Dutch cities.
Scato de Smit, Consultant at Savills in the Netherlands, says: “In Eindhoven 15% of office stock does not meet the label C requirement, which is a higher percentage of outdated office stock than in any of the other G5 cities. Although TUe Science Park and the Station Area fully comply with the label C requirement, Villa Park (27%), Kronehoefestraat (36%) and the Center (20%) in particular face a significant sustainability challenge.”
Read the entire report here.