Choosing key cities

Amsterdam the front runner

January 2014
Denitely.
DTZ Zadelhoff www.dtz.nl
Choosing key cities 2
Property Vision 3
Property investment market: The Netherlands in a European perspective 9
Quality of property is critical 10
Conclusion: contours are becoming clearer 11
Housing investments: Now foreign interest too in Dutch residential property 12
Retail 15
The Netherlands is a European logistics hub 16
Glossary of terms 18
Contents
Choosing key cities
Amsterdam the front runner
The market for Dutch commercial property
January 2014
Utrecht: DTZ Zadelhoff v.o.f.
ISBN 978-90-78197-40-9
Design: Matt Art Concept & Design, Haarlem.
Despite the fact that the contents of this report have been
meticulously checked, DTZ Zadelhoff v.o.f. cannot provide any
guarantee against any loss or damage suffered as a result of
any incorrect information presented in this report. Nothing from
this publication may be copied and/or reproduced without
indication of the source.
DTZ Zadelhoff 2014
Cover photography
Kalverstraat, Amsterdam (photo: Frank van der Pol)
3 Choosing key cities
Property Vision
It is often argued that the economic crisis caused the oversupply of
ofce space, but the gures show that the origin of these problems
goes back even further, to 2001. Since 2001 supply and demand
have become more and more out of balance, causing a gradual
widening of the supply/take-up ratio (see gure 1). The cause is
straightforward: too much has been built compared to demand. The
conclusion is that part of the supply will never be used as ofce
space, which means that for some of the supply the only option will
be demolition.
For some promising buildings in the key cities, there are
opportunities to reduce the surplus of ofce buildings by
transforming them to full a different function. These are functions,
though, which still require the same urban amenities. No-one wants
to live on an industrial estate, for example.
Two years ago DTZ Zadelhoff developed a system of categorizing
supply into high potential, promising and low potential. This
categorization allows for a more subtle interpretation of the
increasingly prevalent idea that each square metre that lies vacant
actually poses a problem. In this report we will examine the
problems and opportunities by dividing the market into key cities
and their regions. Each key city has a periphery, each on its own
scale, where vacancy levels are rising faster compared to the key
city itself. We are seeing that the trend already started, where key
cities become progressively more important for ofce take-up, is
gathering pace. This makes the challenge of solving the oversupply
in the periphery even greater than in the key city itself.
Property involves the emotions. It is more than simply a pile of bricks to be exploited. These emotions
are evident when we analyse the gures and typify the problems and opportunities. At the end of the last
century, sentiment in the various segments of the property market was extremely positive. Since 2008,
prevailing thinking has perhaps been too black and white. Although the consequences are also expressed
in the retail, housing and logistics market, developments have been strongest in the ofce market.
9,000
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Ofce market and economy
take-up and availibility in sqm lfa (x 1.000)
1985 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 2013
Take-up (l.) Availability (l.) GDP (r. %) Availability-take-up ratio (r.)
Archimedeslaan, Utrecht
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Figure 1
Choosing key cities 4
Traditionally, for a healthy market a ratio of 1.5 times the available
supply compared to annual demand is ideal. We have built too much
ofce property in the Netherlands. The current supply/take-up ratio
is the result of overdevelopment during the boom years. However,
the problem does manifest itself in different ways in the various key
cities of the Netherlands. Take-up continues to hover around 1.1
million square metres this year, and we expect similar take-up levels
in 2014. What has changed, though, is that market parties (owners
and developers) are responding to the current dynamism in the
market, as studies such as the one by NEPROM show. Of the space
delivered in 2012, 37% has been redevelopment. During the period
from 2008 to 2010 this percentage was between 10-15%, rising to
23% in 2011. Incidentally, this concerns only redevelopments where
the ofce function has been retained. Ofce buildings which have
been given a different function are not included in this study. The
rising percentage is due on the one hand to a decline in the amount
of space in new developments and on the other hand to an absolute
growth in the number of redevelopments. In 90% of cases, the
redevelopments surveyed in the study are ofces delivered in the
ve largest municipalities.
The study gives a clear signal: in the major key cities, quality is been
added to existing ofces and the number of square metres added to
the market in new builds is falling.
As well as providing a quality boost to property within this ofce
function, during the past year we have seen examples of ofces
which have been transformed into other functions. The most
striking examples can once again be found in the large cities, which
is entirely logical. An urban environment also offers opportunities
for different functions, such as hotels or student accommodation.
Space is being withdrawn from the market as well, but these
examples are fewer than those of redevelopment.
Property Vision
500,000 sqm 1,800,000 sqm 1,000,000 sqm 700,000 sqm 800,000 sqm 100,000 sqm
1985-1996 1997-2000 2001-2006 2007 2008-2011 2012-2013
Additions to the ofce stock and supply/take-up ratio
Availability Take-up Average annual additions to the stock
Source: BAG, Bak and DTZ Zadelhoff
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5 Choosing key cities
Key cities
Research carried out by Utrecht University indicates that
the migration to the cities can be attributed to the
emergence of the knowledge economy. This shift follows
the principle of work follows work. Highly educated
people seek work, and the chance of nding work is
greatest in those places where the population has
traditionally concentrated. It is here where economic
activity began, producing sufcient critical mass for
amenities to be protable. The extensive amenities and
employment opportunities act as a magnet for the
population and economic activity in the region, as a result
of which the key city grows in size and importance. In this
report, a key city is one which has a magnetic effect in a
regional perspective. The Netherlands has several key
cities, each with its own sphere of inuence. Some
examples of these key cities are Amsterdam, The Hague,
Rotterdam, Utrecht, Eindhoven, Groningen, Arnhem, Den
Bosch, Maastricht and Zwolle.
Choosing key cities 6
User market national
London
Paris
Frankfurt
Top locations
others key cities
and secondary locations
Amsterdam Amsterdam
Brussels
Stockholm
South axis
Centre
Centre Southeast area
De Omval
Southern IJ-banks
Amstel Business Park
North
Southeast
Paasheuvelweg area
Teleport-Sloterdijk
Buitenveldert
West axis
User market Amsterdam Investment market Europe/The Netherlands
Top locations
key cities
Secondary
locations
key cities
Secondary
locations
others cities
South axis
Centre
Centre Southeast area
De Omval
Amsterdam the front runner
A number of key cities can be found in the Netherlands which have
not only a national but also an international sphere of inuence. As
the largest port in Europe, Rotterdam plays a role in world trade.
The Hague is the Netherlands political capital and in this role makes
a vital contribution to international politics. Eindhoven, as the
smartest city of 2011, is particularly attractive to innovative,
high-tech businesses. Utrecht is the city in the heart of the country
with the largest public transport hub. However, the Dutch city with
the most inuence within and outside the Netherlands is the capital
Amsterdam. It is our national key city, which acts on the playing
eld of European capital cities, as it has done ever since the Golden
Age.
Whether it concerns population development, growth in
employment, the presence of businesses in the nancial services
sector, highly educated people, an international allure or tourism,
this combination ensures that Amsterdam scores highly, also in
terms of the dynamism on the user and investor markets. Within the
Netherlands the position of Amsterdam is not unlike that of the
front runner in a cycling team. If the leader performs well, other
members of the team will benet too. That means that these
members must do everything they can to ensure that the leader
performs at the peak of his ability, both nationally and
internationally. A strong Amsterdam benets all of the Netherlands,
and it is important to acknowledge this position.
Amsterdam the centre of relocations
If organizations wish to relocate, there must be high-quality ofce
space available at locations that are attractive to employees.
Logically such ofces are scarce in the popular locations in the
key cities. They form the start of what DTZ Zadelhoff refers to as
the dynamic chain. In economically tougher times space is still
available in these locations, but not usually for very long. Once the
high-quality ofce space at prime locations in the key cities is fully
occupied again, demand shifts in a dynamic process to secondary
locations in the same city or to prime locations in other cities. On the
Dutch ofce market Amsterdam is the key city above all others. In
2012 some 22% of take-up nationally was in Amsterdam, and in 2013
this was 20%.
Dynamic chain
It is clear that Amsterdams share of national ofce take-up is
considerably greater than the share of The Hague, Rotterdam or
Utrecht. The four largest cities together account for 41% of take-up
in the country as a whole.
Key cities and their regions
For the ve largest cities in the Netherlands and for ve peripheral
municipalities around these ve largest cities, the average supply/
take-up ratio in the period before the economic crisis has been
compared to the period from 2009 (Figure 3). Although there is
more supply in the key cities as well, supply in the ofce market in
the peripheral municipalities is rising relatively faster.
As demand for property declines, so the importance of the key cities
increases.
Figure 2
Property Vision
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Amsterdam The Hague Rotterdam Utrecht
Take-up ofces four biggest cities as a share
of the total take-up 1993 - 2013 (in %)
2013 2003 2005 2007 2009 2011 2001 1999 1997 1995 1993
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Availability-take-up ratio key cities vs. periphery
2004 - 2008 and 2009 - 2013
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Figure 3
7 Choosing key cities
User market national
London
Paris
Frankfurt
Top locations
others key cities
and secondary locations
Amsterdam Amsterdam
Brussels
Stockholm
South axis
Centre
Centre Southeast area
De Omval
Southern IJ-banks
Amstel Business Park
North
Southeast
Paasheuvelweg area
Teleport-Sloterdijk
Buitenveldert
West axis
User market Amsterdam Investment market Europe/The Netherlands
Top locations
key cities
Secondary
locations
key cities
Secondary
locations
others cities
South axis
Centre
Centre Southeast area
De Omval
International labour pool in Amsterdam
The current ofce market is largely a regional relocation market
with a concentration in the key cities. This is also the case at a
national level. Demand for ofce space is largely generated by
relocating organizations that are already based in the Netherlands.
Nationally or internationally operating organizations established in
the Netherlands relocate mainly to the largest key cities, with
Amsterdam being particularly popular. It is seldom that a large
company relocates from Amsterdam to another city, but the reverse
is certainly true. As far back as 1998 Philips relocated its head ofce
from Eindhoven to Amsterdam. By taking this step, Philips wanted to
become more attractive particularly to international managers and
high potentials. Akzo Nobel relocated from Arnhem to the Zuidas in
Amsterdam because the company decided it would be easier to
attract top personnel at that location, and Douwe Egberts Master
Blenders moved from Utrecht to the Oosterdokseiland in
Amsterdam because according to the organization this location is
easy to reach by public transport and the international allure of
Amsterdam city centre is attractive for DE.
A recent example of a relocation from the region to the city centre
is that of the research institute TNO, which has moved its head
ofce from the outskirts of Delft to New Babylon, immediately
adjacent to the central station in The Hague (9,750 sqm). The
opportunities afforded by the New Way of Working and better
accessibility have been the main reasons for this relocation.
The presence of highly educated personnel is becoming an
increasingly important criterion for organizations seeking to locate in
the Netherlands. Companies with national or international operations
often choose Amsterdam for this reason. Businesses with regional
operations also often choose to locate in the key city of their region.
During the coming years we expect that some organizations still
based in the regions will decide to relocate to the city.
Hubs within the key cities
Within the key cities themselves, however, there can be considerable
differences between individual districts. Locations that are easy to
reach by public transport, have a good parking ratio, with a good
range of functions available and where there is activity at street
level are particularly popular. Amsterdam too displays distinct
differences between the attractiveness of particular districts. Figure
4 compares certain locations in Amsterdam with each other. This
comparison shows that the historic centre and the Zuidas currently
have the most severe market shortages, followed by the central
area of Zuidoost and the banks of the IJ. In the Paasheuvelweg
district in Zuidoost, at Teleport-Sloterdijk, Buitenveldert and the
Westas, the ratio between supply and take-up is much greater. These
districts have a largely monofunctional character.
Dynamic chain
In much the same way that Amsterdam is the front runner for the
Netherlands, within the city itself a distinction can be made in the
attractiveness of different locations. As the economy picks up,
dynamism increases rst at the prime locations and any available
space is quickly taken up. Then take-up spreads out to the
secondary locations in the city and occupiers attention is redirected
towards the best locations in other hubs. The same dynamic chain
can be seen in other key cities.
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Availability take-up ratio in Amsterdam per subarea
2013
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Figure 4
UN-studio, Amsterdam
Choosing key cities 8
9 Choosing key cities
User market national
London
Paris
Frankfurt
Top locations
others key cities
and secondary locations
Amsterdam Amsterdam
Brussels
Stockholm
South axis
Centre
Centre Southeast area
De Omval
Southern IJ-banks
Amstel Business Park
North
Southeast
Paasheuvelweg area
Teleport-Sloterdijk
Buitenveldert
West axis
User market Amsterdam Investment market Europe/The Netherlands
Top locations
key cities
Secondary
locations
key cities
Secondary
locations
others cities
South axis
Centre
Centre Southeast area
De Omval
Property investment market:
The Netherlands in a European perspective
Highest percentage of foreign investors in the
Netherlands since 2007
This upturn is largely thanks to increased activity among foreign
investors. They have accounted for around 40% of investment, the
highest percentage since 2007.
Particularly striking is that until recently German investors
accounted for the largest share of foreign investment in Dutch
property. Now, however, there is much greater diversity. British
investors in particular are taking advantage of the Dutch ofce
market, focusing above all on ofces and often complete portfolios
at good locations in key cities. Even so, a number of German
investors continue to be interested in Dutch ofce property, virtually
exclusively in property in Amsterdam (Figure 5). After all, as far as
return is concerned the high-quality ofces at the Zuidas are an
excellent alternative to ofce space in the West End of London and
the CBD of Paris. This brought the share of Amsterdam in the total
level of investment to 21% in 2012 and as high as 32% in 2013.
The increased interest in Amsterdam is expected ultimately to
benet other key cities and regions in the Netherlands. As in the
user market, they form the next link in the dynamic chain. At
present, competition for high-quality property on offer at the
popular locations in Amsterdam is growing, leading investors who
require higher returns to focus on areas with less competition and
where property is more competitively priced. This is good news for
areas such as the banks of the IJ in Amsterdam, the station district
in Utrecht, the Rotterdam Central District, Eindhoven city centre and
the Paleiskwartier in Den Bosch.
Unlike the user market, there is considerable dynamism in the investment market. Following a number of years
of declining investment, we are now seeing investment growing once again. Levels of investment in commercial
property in the Netherlands have risen to EUR 5.5 billion, a rise of 28% compared to 2012.
The market is still dened by just a few larger transactions. While
the transactions during the past few years seemed to be only
incidental, it now appears that a ow of transactions is gaining
momentum. With the arrival of venture investors in particular who
are buying up large portfolios, a trend has started that will
continue during the coming year. A particularly striking aspect
here is cross-border dynamism. Where the level of investment
during the past year was dominated by Dutch investors, we are
now seeing a wide diversity of foreign investors. In the investment
market the dynamic chain is comparable to the Dutch user market;
a chain that starts at a global or continental level. During the crisis
the focus in Europe was on property in Germany, France and the
United Kingdom. Although the banks are still providing relatively
little credit, we are seeing a substantial increase in the volume of
capital being put into property.
Dynamic chain
As the competition intensies, a number of investors are seeking
refuge in areas other than the traditional hotspots of London,
Paris and Frankfurt. As a result, activity in neighbouring countries
is growing as well. Property in these countries is relatively
competitively priced and investors seeking higher returns are
willing to accept property at locations with a higher risk prole.
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Share of the total Dutch investment volume in Amsterdam
2000 - 2013 (in %)
2013 05 06 07 08 09 10 11 12 04 03 02 01 2000
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Figure 5
Choosing key cities 10
Quality of property is critical
In the United Kingdom, since the nancial crisis broke out there has
been a growing difference between prime locations and secondary
locations in both the user and the investment markets. In the
Netherlands too this gap is widening. It would seem that the
transitory nature of the life cycle of property is being factored in.
German investors continue to pay a competitive return for
high-potential ofces that retain their function for the long term. In
a few cases the gross initial yield is even at the same level as the
market peak in 2007. Since prime buildings at prime locations are
scarce after all, there is little new development competition is
intense and prices are forced upwards. At the same time, certainly
compared to previous years, much more capital is available for
investment in property in the Netherlands and elsewhere. British
venture investors are more interested in promising ofce property
that can be transformed into high-potential property if given a
quality boost. These buildings are however also often sold in
portfolios, which puts the prices of these buildings under pressure.
Low-potential property would seem to be in an ongoing downward
spiral. Return is not important here, but the price is determined per
square metre which may sometimes not be more than a few tens of
euros. These differences in price and the choice of property are also
evident from the interest shown by investors for different market
segments. Within the ofce market the differences are now clearly
expressed. But we also see differences between the various sectors.
There is much less investment in retail. While this had been caused
in the past by a lack of property in which to invest, it would seem
now that the current uncertainty in the retail market is acting as a
brake on investment. Logistics property, on the other hand, is more
popular than ever, remarkably often driven by capital from countries
rich in natural resources (Canada, Norway, Russia). The user market
is fairly stable and the good locations can be readily identied. This
applies to Europe, but to the Netherlands as well. The leading
position of the Netherlands in the logistics chain is indisputable (see
page 16).
Quality boost for valuations
The Platform for Valuers and Accountants (platform
taxateurs en accountants (PTA)) has put forward 28
recommendations to give a new quality boost to property
valuations in the Netherlands. Ensuring quality in the
process improves the chance of arriving at a high-quality
valuation, and that is good for condence. In order to make
a good appraisal of the market value, references are
required. In the current market fewer transactions are being
concluded than in the past. The reasons why a transaction
did not take place have now become just as important as a
reference framework. Transactions are brought about in the
Netherlands where the price level is in fact lower than the
land price. Examples are ofce buildings in Emmen and
Schoonebeek which have been sold for only a few tens of
euros per square metre. These examples would seem to
illustrate that an absolute low has been reached in the
Netherlands. The ultimate value of property is its future
usefulness, as has always been the case. Todays market,
however, views the future usefulness of a property
differently compared to the past.
Stricter requirements
on valuing property
Regulatory bodies demand a greater insight into the risks
of property nancing, and with it an insight into the market
value of the property compared to the amount of
outstanding nance. The Dutch Central Bank (DNB), under
pressure from the European Central Bank, has begun
imposing stricter requirements on risk analyses of property
nancing provided by Dutch banks. As a result, banks are
required to make more frequent and better quality
valuations using external valuers.
Housing also remains popular among investors.
Once again investment in housing complexes is high. Within this
segment the price differences are widening, with prices under
pressure outside the key cities and growth districts.
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Dutch property investment market
Investment volume by year by property type (in mln euros)
Ofce Industrial Retail Residential Others
2013 2009 2010 2011 2012 2008 2007 2006 2005 2004
Figure 6
11 Choosing key cities
Conclusion: contours are becoming clearer
The positive sentiment, perhaps too positive, that dominated the
turn of the century, followed by a perhaps too negative picture of
the Dutch property market, seems to have given way to a more
measured sentiment. The contours of the property market have
been blurred during the past few years. Now it is increasingly clear
how these contours will take shape during the coming years.
During the past few years take-up levels in the ofce market have
uctuated around one million square metres, and this will not rise
during the coming year. Analyses show that as demand for property
declines, the importance of key cities increases. Almost half of
take-up is found in the four largest municipalities. The best locations
in these key cities form the start of a dynamic chain. Even if take-up
is low a certain level of dynamism is always evident. As total take-up
grows, the dynamism spreads out to the secondary locations in
these key cities or the best locations in other key areas. Amsterdam
is the front runner of all the key cities in the Netherlands.
A comparable dynamic chain can also be seen in the property
investment market. In a European perspective Amsterdam is not a
key city such as Paris, London and Frankfurt. As a willingness to
invest increases in these key cities, cities such as Amsterdam then
enter the frame. This was evident in 2013 in the level of investment
nationally, which at EUR 5.5 billion was much higher than in 2012
(EUR 4.3 billion) and in the share of that total that had been
invested in Amsterdam. This dynamism will also be evident during
the coming year.
Compared to a few years ago, there is a growing awareness that the
ratio between supply and demand is too wide in various segments of
the property market. At the same time, the awareness is also taking
hold that there are different opportunities for high-potential,
promising and low-potential ofces.
During the past year a number of trends have emerged indicating
that an appropriate response is being given to the market situation.
Through redevelopments and transformations, ofce buildings have
been given a different and valuable function. A similar trend is the
rmer interest from foreign venture investors who wish to give a
quality boost to promising ofce property in the Netherlands. The
focus of these developments has been on the key cities, particularly
the promising ofces at prime locations and high-potential ofces at
secondary locations. As the dynamic chain gains momentum, they
form the next link in this chain. The urban area provides these
opportunities, while secondary locations in the key areas outside
the key cities have few or none of these opportunities.
The transitory nature of the life cycle of property is being factored
in. Property is also being withdrawn from the stock, as yet not on a
large scale. There are also examples of low-potential ofces which
are sold off for only a few tens of euros per square metre. At the
other end of the spectrum, very good returns are still being paid for
high-potential property at the best locations in the largest key cities.
We have entered a phase in which the market anticipates changes:
the market is doing its work.
Waldorf Astoria, Amsterdam
11 Choosing key cities
Choosing key cities 12
Housing investments: Now foreign interest
too in Dutch residential property
Just as last year, sales and purchases of housing complexes has made the residential segment the
second-largest segment in the Dutch investment market, with a share of 27% compared to 35% in the
ofce market. Some EUR 1.5 billion has been invested in residential property.
Dutch private and institutional investors are especially active in this
segment. Institutional investors are selling older housing complexes
from the 1970s, 80s and 90s and buying new complexes from
property developers. Property developers are making this less
lucrative choice due to the sharp decline in sales of private
owner-occupied homes. Dutch institutions are making clear choices
for quality, and above all location. Here too we see clearly the
difference between key cities and growth areas and the locations
that fall outside these areas. The expectation was that many
investors would be able to buy from housing associations, which are
now able to sell more thanks to the amended Ministerial regulations.
In practice, however, we see these associations mainly selling to
each other or choosing to sell off property as individual units. In
addition, the demand from investors often does not match the
property being offered by the housing associations.
In 2013 we observed growing interest among private equity parties,
both from the Netherlands and abroad. Interest from abroad is
being generated by the larger volumes, often entire portfolios, being
offered in the market. A few large German investors have actually
made some purchases at price levels comparable for Dutch
investors.
British investors are also expressing rm interest but are chiey
opportunistic in nature, with similar price expectations. The rst
transactions with these investors are expected to become reality in
the very near future. The arrival of these relatively new players will
change the dynamics of the housing market.
Housing in the key cities also popular
Interest in housing shows clear geographical preferences.
In 2013 we observed a growing attraction of the following areas:
1. Large cities in the north of the Randstad conurbation
(Amsterdam, Utrecht, Haarlem, Hilversum).
2. Medium-sized cities (> 25,000 inhabitants) with historic centres
(Groningen, Zwolle, Enschede and Maastricht).
3. Large cities in the south of the Randstad conurbation
(Rotterdam, The Hague)
4. Other medium-sized cities (> 25,000 inhabitants).
In the housing investment market too, the central urban locations
have become more attractive than residential property on the
outskirts of cities. As an investment product the preference is for
ground-level housing rather than apartments.
Overige
Woning
Winkel
Bedrijf
Kantoor
35%
13%
11%
27%
14%
Ofce
Industrial
Retail
Residential
Others
The Netherlands
Investment volume per property type
2013 (in %)
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Figure 7
13 Choosing key cities 13 Choosing key cities
Choosing key cities 14
15 Choosing key cities
Retail
Kalverstraat
Its all happening in Amsterdam, also in the retail segment. More
than ever it is the trendsetting character of the city that is crucial
for the strategy retailers pursue when opening stores. This is
particularly the case for international retail chains. If a retail chain
decides to enter the Dutch market, the rst store will be opened in
Amsterdam, after which attention will turn to other cities. For
example, in 2001 the Spanish group Inditex opened its rst ZARA
store on Kalverstraat in Amsterdam. Since then the chain has
opened 25 shops in 22 Dutch cities.
Important hubs for retailers
Retailers now only select cities with a large potential reach (with a
growing catchment area). In addition, visitors must be able to enjoy
an extended visit to a shopping city. The aim is to nd the ideal
combination of a pleasant living and working environment with a
varied shopping experience. Joel Kotkin (professor of urban
development at Chapman University in Orange, California) uses the
term Boutique City to describe this combination. The residential
function of a city together with good retail premises in shopping
streets with high footfall are essential for retailers.
Less footfall
Just as in the ofce market, demand has fallen in the retail market,
as a result of which the best locations are more important than ever.
According to gures published by Locatus, footfall declined by an
average of 10 per cent between 2005 and 2012. The recession has
hit consumer spending and increased sales via the internet have
also contributed to a structural reduction in footfall. Retailers are
anticipating this fall by wanting to occupy only premises in the very
best shopping streets in a city, intensifying pressure on prime
locations in Boutique Cities. This rising demand for the best retail
space has meant stable or even rising retail rents at these locations.
Fast Fashion
As retailers have to respond ever faster to the trends of the moment
in sectors such as clothing, they focus on new production concepts
such as Fast Fashion where a product gets from the drawing board
to the stores ever faster. This shorter turnaround time for
collections means that retailers must have a presence at the best
prime locations to ensure sufcient footfall. As a result, they are
willing to pay a higher rent.
Leading position for Amsterdam
The Amsterdam core retail area (A1 plus surrounding area) is the
most important retail concentration in the Netherlands. Of all cities
in the Netherlands, the catchment area here is the largest, and
moreover Amsterdam has a huge magnetic attraction for people
throughout the Netherlands and parts of Germany and Belgium who
want to enjoy a days shopping in the Dutch capital. The battle to
secure the best locations is most obvious in Amsterdam; a battle
also fought by the large international retailers.
The trend for concentration will mean that in the four major cities in
particular (Amsterdam, The Hague, Utrecht and Rotterdam)
together with Maastricht, shopping will form part of a day out in the
city. Visitors will travel from further aeld and will spend more on
higher-end products. The combination of the experience and a
varied range of shops will be at the expense of existing shopping
towns in the provinces. The closure of De Bijenkorf branches is the
rst concrete indication of this trend.
This year the department store De Bijenkorf shocked both friend and foe by announcing the closure of ve
of its twelve stores, despite them all being protable. In an interview, CEO Giovanni Colauto explained that
he wished to copy the success story of Amsterdam throughout the Netherlands. The ve branches to be
closed do not adequately meet the conditions of premium excellence. The focus will therefore be on seven
agship stores and a web shop of international top quality.
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Bijenkorf, Amsterdam
The Netherlands is a European logistics hub
The outsourcing of production to Asia and Eastern Europe,
the Netherlands geographical location, the presence
of two mainports (Schiphol Airport and the Port of
Rotterdam) and the excellent logistics infra-
structure: these are factors that have enabled
the Netherlands to develop as a logistic
hub for the distribution of goods
throughout Europe.
Logistic Hotspot
Cargo airport
Seaport
Major routes
Choosing key cities 16
The Netherlands as a magnet
This unique position of the Netherlands acts as a magnet for
shippers and logistic service providers. They set up their European
distribution centres (EDCs) at the most favourable locations in the
Netherlands to enable them to serve the European market: the
logistics hubs (see map). A dense distribution network at a national
level is exchanged for a European network of European distribution
centres on a vast scale.
These European distribution centres are not merely places for
transferring goods, but are versatile links in the distribution chain
where value is added to products. This places ever higher demands
on the building and the location, usually in the vicinity of urban
centres where sufcient labour potential is available.
The B2B character of the goods ows from distribution centres is in
decline due to the growth in internet sales. E-fullment is the trend.
Goods ows are delivered direct to the consumer. Around the
Sinterklaas period Bol.com sent around 200,000 ready-wrapped
items every day.
Shortage of high-potential and surplus of
low-potential logistics property
The proportion of high-potential, promising and low-potential
property in the logistics sector differs to that of the ofce market.
The amount of promising property in particular is much smaller.
Logistics property is consequently generally high-potential or
low-potential.
The ip side of the changing requirements of logistics property is
that there is a surplus of distribution centres of poorer quality.
These are suitable mainly for storing bulk or low-value goods, but
compared to some other countries the running costs for these
premises in the Netherlands are too high for this function. As these
buildings do not meet the changing requirements of the user,
despite the shortage of rst-class buildings they will be difcult or
impossible to let. This will produce a greater difference in rents and
the appeal of top-quality premises compared to other available
property on the investment market.
Choosing key cities 17
Distribution centre Bol.com, Waalwijk / Photo: Koen Verheijden
Choosing key cities 18
Supply
Premises which, at the end of each
calendar year, have a lettable oor area
of at least 500 sqm of ofce space
available for sale or letting. Available
space relates solely to complexes that
have already been completed and those
under construction, and specically exclu-
des developments still at the planning
stage.
Supply/take-up ratio
The ratio between the total oor area of
ofce buildings in which a lettable oor area
of at least 500 sqm is available for sale or
letting at the end of each calendar year, and
the ofce space that is let or sold on the
open market with a lettable oor area of at
least 500 sqm per annum. The ratio
between the two indicates whether there is
a shortage or oversupply on the market.
B2B
An international indication for Business-to-
Business. This usually concerns businesses
that do business specically with other
businesses.
Distribution centre / logistics property
Large-scale business space in which a range
of logistic activities are carried out, such as
storage, transfer, groupage, etc. A
distribution centre covers an area of at least
5,000 sqm lfa, has a minimum clear height
of 8 metres, a minimum work oor load of
3,000 kg/sqm and has loading docks in
the ratio of one dock to every 750 sqm to
1,000 sqm. This does not include buildings
designed for bulk transshipment, liquid
storage, auction complexes and suchlike.
Dynamic chain
Ranking of geographical preference of
demand for property.
E-fullment
The distribution of online orders to the
consumer, including any return ows.
Fast Fashion
The process whereby clothing is designed,
produced and sold in stores within a very
short space of time.
The New Way of Working
Working in a way that is independent of the
constraints of time and place, thanks to new
mobile technology. Ofces become meeting
places.
Key city
A city which has a magnetic attraction in a
regional perspective.
Vacancy
Space on offer in completed buildings which
is not or no longer in use at the time of the
survey.
Take-up
Ofce space which is let and sold on the
open market with a lettable oor area of
least 500 sqm, but excluding premises
covered by sale-and-leaseback transactions,
lease extensions and new premises built for
owner-occupiers.
Take-up gures are recorded as of the date
on which agreement is reached between the
parties.
Private equity investor
Investor who invests with private capital. In
order to be able to invest, a private equity
investor accrues capital through pension
funds, insurers, banks and suchlike.
(Gross initial) yield
The gross rental income, before
depreciation and owners charges, as a
percentage of the total purchase price, no
additional costs payable by the purchaser.
Lettable oor area (lfa)
The oor area, measured at oor level,
between the upright divisions that surround
the relevant area, allowing for the
correction factor for glazed surfaces.
In determining the lettable oor area, the
following elements are excluded: plant
rooms, stairs, lifts and shafts and
loadbearing internal walls (NEN 2580).
Catchment area
The area around a key city that looks to that
key city for all urban facilities and
amenities.
Ofce stock
Existing ofce property or property under
construction with a lettable oor area of
500 sqm or more. Data supplied by Bak.
Glossary of terms
18
19 Choosing key cities
www.dtz.nl
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For more than 45 years DTZ Zadelhoff has been a leading commercial property
adviser and has developed integrated property solutions for owners, occupants,
investors and nanciers. Besides property management, valuations and advice on
transactions, DTZ Zadelhoff offers a wide range of specialist services. Whether it
concerns ofces, retail, business or logistics space or healthcare-related property,
investment in residential complexes or hotels, the professionals at DTZ Zadelhoff
are dedicated to achieving the best result.
With its in-house research team and more than 200 estate agents and advisers
continually following and clarifying market movements, DTZ Zadelhoff always knows
what issues play a role in your area and what the best solution would be in your
situation. If you want only the best, the choice is clear. Denitely. DTZ Zadelhoff
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with nationwide coverage. In addition, the organization forms part of the DTZ and
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DTZ Zadelhoff is a general partnership, in which its partners participate through
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