Amsterdam

Revealing insights in commercial real estate through geospatial analysis.

The impact of the Covid-19 pandemic continued to manifest itself in the first quarter of 2021. The increase of sublease supply would seem to indicate that boardrooms are slowly starting to take decisions on post-corona accommodation policies. Rents remain steady, incentives are stabilising after a period of increase. Amsterdam remains an outlier with activity amongst tech occupiers particularly strong. Logistics and warehousing are still experiencing the benefits of the pandemic although there is a perception that tenant demand is beginning to ease.

The growth of recent years slowed significantly in 2020 due to the Covid-19 pandemic. So far, the impact of the pandemic on real estate markets has been mixed with the number of small office transactions holding up and a significant decline in transactions in larger offices. Logistics and warehousing are booming due to the increase in online commerce. Many tenants are reconsidering their future office use with a large amount of hidden vacancy. Rents remain steady, incentives are creeping upwards.

Vacancy has been declining for the last four years. Especially grade A office spaces in the CBD’s of major cities is in demand. This has led to a landlord’s market with little room for negotiation on terms and conditions. Rents have been increasing for the last four years. Tenants with space requirements of 5,000 m² and above will struggle, with little to no readily available top-quality office space. As a result of the Covid-19 outbreak many organizations are reconsidering their workplace and location strategies – including a more permanent work-from-home policy.

By now, landlord have informed their tenants that last quarter's rent was due April 1st. While various companies have requested an adjustment of the rent payment, other tenants, like AS Watson for example, have informed landlords by letter that they will not be compling with the payment obligation under the lease.

Some entrepreneurs have been hit hard by an acute drop in demand as a result of the Corona measures. For example, where you have to temporarily close your restaurant or shop. And if income falls or even disappears, it can be difficult to pay fixed costs like rent.

With the bullish mood in the real estate market over the past three years and an increasingly positive economic outlook, it's easy to forget that the office market struggled until 2016. Even with current sharply changing stock prices and plummeting oil prices due to the Corona virus, we do not expect the economy to reverse for the time being.

Rising occupier demand and less construction activity in Amsterdam in recent years have sharply reduced vacancy and rising prices. New supply is limited and often pre-let. The demand for high-quality office space at multimodal locations with mixed use remains high. Due to insufficient supply of highly demanded space, organisations are also moving to adjacent locations such as Amstelveen and Hoofddorp or other big city centres such as Utrecht and Rotterdam.