Real estate advisor Savills’ new market intelligence report ‘Wins & Losses in the Tech Sector’ concludes that the recent moderation of the Dutch tech sector’s growth will not lead to office market disruption. The report explores current trends in the Dutch technology sector, including the declining availability of Venture Capital (VC) and the ramifications for the office market of the country’s largest five cities (G5).

The recent decline in companies’ patent registrations, declining foreign VC investment and increasing redundancies might suggest future challenges for the Dutch tech sector. Although these metrics indicate that the innovative character of the Dutch economy is under strain, unemployment in the tech sector is at a record low with more than 35,000 job vacancies unfilled.

Savills, therefore, expects an adjustment in employment patterns over the next 12 months as the tech sector returns to ‘normal’ growth. Consequently, we expect clear ‘Winners’ that have managed to show a sustainable business model over time and ‘Losers’ that have had excessive capital injections and rapid and unsustainable growth projections.

Wouter van ‘t Grunewold, Market Intelligence analist at Savills in the Netherlands, says: “Despite the current downturn in investment activity, the Dutch technology sector is robust. The inflation and interest rate shocks of the past 12 months have restored activity to long-term trend levels, after a period of tremendous growth.

The rapid expansion and contraction of the technology sector is reflected in 2018 – 2022 office take-up in the G5. Take-up increased from 13% in 2018 to a peak of 19% in 2021 before declining to 17% in 2022. Amsterdam and Eindhoven are regarded as the ‘Tech Cities’ of the Netherlands. Amsterdam mainly due to its sheer size, accounted for approximately 80% of all office take-up by the tech sector in 2018 – 2022. In contrast, Eindhoven enjoys stable take-up by a select number of tech firms, with around 50% of all tech sector take-up by ASML, Philips and Itility in 2018 – 2022.

Savills expects clear ‘Winners’ and ‘Losers’ in the tech sector, but limited impact on demand  for prime real estate. Tech firms tend to lease sought after prime, Grade A, accessible, sustainable office buildings which are also in high demand by non-tech firms because tech firms typically had more funds at their disposal. Thirty one per cent of offices leased by tech firms in 2022 had a BREEAM ‘Very Good’ or better certification compared to only 14% of offices leased by non-tech firms in 2022. Furthermore, 62% of tech firms’ take-up between 2018 and 2022 was in the prime Rotterdam Central District and Kop van Zuid. In Amsterdam, 43% of tech take-up was in the prime locations of Amsterdam Centre and Zuidas. On average, tech firms paid 22% more for office space than non-tech firms in 2022, because of the prime nature of the buildings leased.

Ellen Waals, Head of Agency at Savills in the Netherlands, says: “Savills does not foresee any immediate problems for property owners due to declining take-up by tech firms. A large proportion of tech companies is leasing prime, grade A, properties in the core office districts where supply and demand ratios are extremely tight. (Non-tech) companies are also trying to relocate to these properties because of the way they support new ways of working. If there is a decline in take-up by tech firms, other sectors are expected to quickly fill any vacant space .”

Real the full report here.