Office Market Report 2015 The Netherlands. 1 Office Market Report 2015 The Netherlands

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1 Office Market Report 2015 The Netherlands 1 Office Market Report 2015 The Netherlands

2 The Netherlands For the first time in several years, 2015 saw a recovery in the office market. Takeup volumes increased by over 10% compared to 2014, while market dynamics actually increased by 15%. The forecast for 2016 is that this recovery will continue. The economy will continue to grow in 2016, companies will produce more, household consumption will grow and unemployment will fall. All these trends mean that businesses will need to expand and, where this cannot be accommodated within their existing premises, they will need to rent more office space. Combined with the fact that many leases will expire over the next few years, many companies will be reevaluating their current situation. Takeup in the period Takeup H1 Takeup H2 The business services sector, representing over one quarter of total takeup, remains the largest market for office space in the Netherlands. However, because many companies are downscaling, it remains possible that they may choose to lease fewer square metres than they currently have available. Even so, there are clear signs of a shift. During the crisis, many companies decided to reduce the number of square metres of office space that they were leasing and to introduce new forms of working. Over the coming years, cost savings will become a less dominant driver for downscaling. The decision to hire fewer square metres per FTE will depend largely on the company s own vision. Takeup by sector in % 4%2% 10% 14% 17% 26% 22% Financial services Wholesale & retail trade, hotels & catering Transport & Tourism While downscaling continues to occur in most sectors, the majority of the companies that are expanding their rented office space are within the sector. Many creative technology companies are growing fast and struggling to attract wellqualified staff. A high proportion of highly qualified, technically skilled workers live in and around Amsterdam. This is one of the reasons why more than 40% of the takeup in 2015 was in Amsterdam. Amsterdam is expected to continue to attract more growth and the sector will mainly concentrate here. Supply Supply fell slightly at the end of 2015 in comparison with mid2015. There is limited new construction and a large number of conversions have taken place. The fall in supply would have been larger were it not for the fact that there is still a great deal of spare capacity in the market. Many companies are continuing to choose to downscale when they come to renew their lease. The expectation is that the rate of hidden excess capacity will also decline over the next year. This means that there will continue to be new office space available on the market. However, the pace has decreased and supply will fall further in 2016 due to conversion projects and in some cases due to business expansion. 2 Office Market Report 2015 The Netherlands

3 THE NETHERLANDS AVERAGE RENTS AMSTERDAM Average 180 THE HAGUE Average 140 UTRECHT Average 145 ROTTERDAM Average 135 EINDHOVEN Average 115 Top 10 office transactions, 2015 Municipality Name of building Address Floor space (m²) User Rotterdam Marten Meesweg 35 16,400 m² National Police Amsterdam Crystal Tower Orlyplein 10 15,000 m² Chipsoft Amsterdam Red and White Building Piet Heinkade 61 13,500 m² Booking.com The Hague O2 Building Oostduinlaan 2 10,500 m² Shell international Leeuwarden Lange Marktstraat 26 10, m² Aegon Zwolle Koggelaan 3 9,600 m² National Police Zoetermeer Afrikaweg 2 7,700 m² Technip Capelle a/d IJssel Tribes Tower Rivium Quadrant 141 7, m² Tribes Rotterdam Hofpoort Hofplein 20 7,000 m² Spaces Haarlemmermeer Evert van de Beekstraat 310 6,800 m² Samsung Electronics Benelux 3 Office Market Report 2015 The Netherlands

4 Amsterdam > For the second year in a row, there has been an increase in the takeup volume in the Amsterdam region. Twenty percent more office space was let and market dynamism was actually over 30% higher than in A further increase in activity is expected in > This increase is expected on the one hand due to sustained economic growth and on the other hand because Amsterdam continues to attract many businesses. There is a shortage of qualified personnel in the region. Amsterdam is an attractive location, especially for growing companies. > This is particularly evident in the sector, which is attracting many companies to Amsterdam. Amsterdam accounted for over 40% of the total takeup for the sector in the Netherlands. It is also the most dynamic sector of Amsterdam's office market and is continuing to expand. The recovery in the Sloterdijk area over the course of 2015 was remarkable; over four times as much office space was let there as in This increase was partly due to the creative technology sector, which accounted for more than half of the rise in takeup. > Supply had fallen significantly by the end of For the first time, the overall figures reflected the fact that many offices have been converted for other uses and that limited new construction is taking place. Supply is expected to fall further in Even though the properties that are most suitable for conversion have already been converted, conversions will also contribute to this fall. Takeup in the period Takeup H1 Takeup H2 Supply Takeup by sector in 2015 Rents by geographical area 9% 5% 4% 2% 5% 37% 13% Sloterdijk area High 195 Average 145 Low 85 Centre High 300 Average 235 Low % Zuidas High 360 Average 325 Low 270 Financial services Wholesale & retail trade, hotels & catering Transport & Tourism Schiphol area High 325 Average 150 Low Zuidoost High 195 Average 140 Low 80 4 Office Market Report 2015 The Netherlands

5 The Hague > While the national trend in 2015 was upwards, in The Hague there was actually a fall in the takeup volume in This was the second successive year in which there has been a decline. This is due to The Hague s heavy reliance on the public sector. The public sector has seen a contraction in recent years and this is reflected in the figures for takeup. > Whereas previously the public sector had always been the main driver of the takeup of office space, the emphasis in 2015 will be on manufacturing and business services. > The most important sectors in The Hague, however, are all undergoing downscaling. It is therefore expected that the office market in The Hague will continue to face difficulty over the coming years. Companies in these sectors are continuing to work on reorganizing the way that they work and seeking to use fewer m² per FTE employee. > Supply has fallen almost continuously over recent years. However, there was a rise at the end of This was partly because the Central Government Real Estate Company offered an office building of almost 20,000 m² for sale at Steenvoordelaan 370 in Rijswijk, and partly because significantly more properties were on the market compared to mid2015. Over the coming year, a further increase is expected because the public sector and in particular central government will continue to make a great deal of real estate available on the market. Takeup in the period Takeup H1 Supply Takeup H2 Takeup by sector in 2015 Rents by geographical area 12% 10% 7%1% 30% Statenkwartier High 165 Average 145 Low 125 Beatrixkwartier High 215 Average 170 Low % 28% CS / Voorhout High 225 Average 165 Low 125 Financial services Wholesale & retail trade, hotels & catering Rijswijk High 150 Average 105 Low 70 5 Office Market Report 2015 The Netherlands

6 Eindhoven > Takeup volume in the Eindhoven region in 2015 was almost 40% higher than in For the second successive year there was an increase in volume. Both market dynamics and the average size clocked up an increase. > One of the main reasons for this is that the Eindhoven region is doing relatively well economically and there is a significant sector clustered in and around Eindhoven. This sector continues to grow and many companies continue to need to expand. > This is also reflected in the figures: the sector accounted for 30% of the takeup volume. This was a decrease compared to 2014 (44%), but still well above the national average for this sector in terms of takeup volume. A further increase in the takeup volume is expected in The sector (as well as other sectors) and improving economic conditions will contribute to this positive trend. > The supply of office space has been declining since late On the one hand, this is caused by increasing demand and on the other by the active market for conversions in Eindhoven. All this means that the Eindhoven market is recovering. In the centre of the city there is even a shortage of high quality office space. The downward trend in supply will continue into Takeup in the period Takeup H1 Takeup H2 Supply Takeup by sector in 2015 Rents by geographical area 12% 4% 3% 2% 31% North High 135 Average Low 60 18% 30% Financial services Wholesale & retail trade, hotels & catering West / Airport High 140 Average 110 Low 70 Veldhoven High 125 Average 120 Low 85 Centre High 185 Average 135 Low 85 6 Office Market Report 2015 The Netherlands

7 Rotterdam > Takeup rose significantly in the Rotterdam region compared to previous years. This was mainly because many leases expired during this period, and because of the favourable pricing of office space in Rotterdam. Takeup rates had not been this high been since 8. > It is clear that companies which were previously located in more affordable locations are moving to more attractive locations because rents there have now fallen far enough to allow this. This trend was clearest in Rotterdam Alexander, where the demand for office space has shown a clear increase. > Despite the rise in takeup, the market in Rotterdam is still dominated by internal relocations. Few companies are moving to Rotterdam from outside the city. Nevertheless, high takeup rates are expected in 2016 too. Many leases will expire, which means that companies will be able to relocate. > The fall in supply that was evident last year was caused mainly by the conversion of buildings and to a lesser extent by increased activity on the Rotterdam office market. The vacancy rate remains relatively high, even in the city s central district. Because many companies are likely to consider relocating, supply is not expected to fall much further and may even increase slightly, depending on the number of conversions. Takeup in the period Takeup H1 Supply Takeup H2 Takeup by sector in 2015 Rents by geographical area 9% 6% 3%2% 7% 43% Oost High 180 Average 135 Low 90 11% 19% Centre High 235 Average 145 Low 90 Capelle aan den IJssel High 145 Average 105 Low 65 Wholesale & retail trade, hotels & catering Transport & Tourism Financial services Zuid High 225 Average 135 Low 90 7 Office Market Report 2015 The Netherlands

8 Utrecht > Takeup rates in the Utrecht region have long been steady at around the same level. This makes the city one of the most stable in the Netherlands when it comes to the office market. > However, the market dynamics within the city are changing. Activity in Kanaleneiland and Rijnsweerd/ De Uithof has declined in recent years, while the station area and Papendorp have become the focus of more activity. It is no coincidence that these are areas where most companies are locating. The other office districts are mainly occupied by traditional office users such as the public sector and business services. > The takeup of office space will continue to increase in 2016; indeed, increased dynamism was already evident in This will continue into 2016 due to continuing improvements in the economic situation. Growth will again mainly be concentrated in the station area and Papendorp. > The supply of office space in the Utrecht region as a whole has remained relatively stable in recent years, with a few exceptions. This is because on the one hand supply has fallen in Nieuwegein, and on the other hand there is an active market for conversions. In Utrecht, while the supply has increased precisely because a number of large companies have vacated offices in the city and because the municipality has moved to a central location in Utrecht Central, leaving many other buildings empty. The forecast for 2016 is that supply will remain relatively stable. Some conversion projects will take place, but at the same time many companies will continue to downscale. Takeup in the period Opname H1 Opname H2 Supply Takeup by sector in 2015 Rents by geographical area 7% 6% 1%1% 7% 36% 16% 25% Centre / station area High 210 Average 180 Low 150 Rijnsweerd / De Uithof High 190 Average 155 Low 125 Papendorp High 180 Average 155 Low 130 Kanaleneiland High 185 Average 140 Low 90 Transport & tourism Wholesale & retail trade, hotels & catering Transport & Tourism Nieuwegein High 140 Average 115 Low 90 8 Office Market Report 2015 The Netherlands

9 Trends Although the office market is now recording higher takeup volumes and has been experiencing greater dynamism in comparison with 2014, this is certainly not the case everywhere in the Netherlands. Both the demand for and the supply of office space varies considerably between different cities. This is partly due to which sectors have predominated, historically, and how quickly these sectors are able to respond to a changing market. However, the Dutch office market is also displaying certain trends that are generally evident across the whole country. Specifically, these are: centralization, the hotelization of the office market and location vs. community. We will now outline these three general trends. Centralization In many cases, office relocations involve moving away from the smaller towns and villages into the larger cities, including the provincial cities. There is also some evidence of centralization in the bigger cities. Outside these large cities it remains difficult to find suitable staff, particularly within the sector. This is because many technically skilled workers are located in the major university cities. Consequently, when companies decide to expand or when their current lease ends, they often move to one of these larger cities. This enables them to find more suitable staff and to develop business links with other creative companies. Additionally, the stagnant market of the past few years means that office space has become more affordable, even in the larger cities. Companies can now often move to a more attractive location and pay the same rent. Cities with a clear identity and a clear target group are the most successful. Often, university cities are able to position themselves strongly in a particular field. For example, Eindhoven focuses on the technology sector, Wageningen on food and health, and Utrecht on life sciences. These profiles are often based on the strengths of the local university. The link with science is also reinforced by practice. The same trend can be observed within cities. Areas with their own clear identity and that offer a variety of services and facilities for their target group are more attractive than areas with no clear profile. Homogeneous office parks with high vacancy rates need an active approach that addresses both the quality and the image of the area. Hotelization offices operate in a similar way to hotels. Occupancy rates are the new vacancy rates. Furthermore, the preferred locations of businesses are now increasingly sought after by the hotel sector. Entertainment facilities in the immediate vicinity of the office are important, as is a distinctive property with its own character. The working environment should convey what the company stands for. Increasingly, the hospitality sector (hotels, bars and restaurants) is occupying the same ground as the office sector. Location vs community Despite the trend towards centralization, location is actually becoming less important for some office users. When deciding where to locate an office building, the concern is often primarily the existing community in the area. This can be seen particularly with creative startups and flex offices. For startups and small businesses, it is important to be located near to complementary companies, so that the synergies can be fully exploited. This makes it more important that the right kind of companies are established in a particular location, and the traditional location preferences are playing a less important role. In the years to come, this trend will increase. Different brands of flex offices will emerge to capitalize on the different types of communities. This trend is particularly visible among smaller companies and startups. However, this also has an impact on larger companies. For example, we can already see that some companies are opting to locate some of their departments at creative districts. This is because these departments can then benefit from shorter lines of communication with the community that they work with. Companies are moving away from the model of the closed fortresses and increasingly they are working with the outside world. Conclusion These trends will continue to affect the office market in the years to come. Increasingly, companies are centralizing in attractive cities and regions, where offices are gaining in popularity; meanwhile less attractive office areas and cities will experience a less dynamic market. Additionally, the office market is becoming more flexible and hospitality is an important priority. Companies are increasingly seeking to cooperate with one another. This phenomenon is being further driven by the dynamic environment of creative incubators and flex offices. Even larger companies are trying to profit from this by locating certain departments at this kind location. This will reduce their need to locate the entire company in one place. There are now increasing similarities between the office market and the hotel market. The boundary between these two areas is becoming increasingly blurred. When you enter the lobby of many hotels, it becomes increasingly difficult to say whether you are in a hotel or a creative hotspot. Hotels provide workstations, free WiFi and meeting spaces. At the same time, flex offices are booming. These concepts have many similarities to the hotel world. Flexibility is key, and hospitality is prioritized much more than it is in the traditional office concept. Flex 9 Office Market Report 2015 The Netherlands

10 Acknowledgements This report has been prepared with the utmost care by the research team of Colliers International consisting of Werner van Sprundel, Maud van Vlerken and Thijs Guinee. If you have any questions or remarks please contact us through Regions The regions in this report are composed as follows: The Amsterdam region consists out of the municipalities of Amsterdam, Amstelveen, Diemen and Haarlemmermeer; The Hague region consists out of the municipalities of The Hague, Rijswijk and LeidschendamVoorburg; The Eindhoven region consists out of the municipalities of Eindhoven, Veldhoven, Best and Son emn Breugel; The Rotterdam region consists out of the municipalities of Rotterdam and Capelle aan den Ijssel The Utrecht region consists out of the municipalities of Utrecht and Nieuwegein. Supply Office space >500 m² that is offered in the free market. Available space exclusively includes existing and completed properties or properties under construction or renovation which have not already been taken off the market. Takeup Office space >500 m² that is rented or sold in the free marketand will be occupied by the user, with the exception of sale and lease back transactions. Rental price The bandwidth of the asking price is based on the prices of the supply of office space. 10 Office Market Report 2015 The Netherlands

11 554 offices in 66 countries on 6 continents AUTHOR Thijs Guinée Research thijs.guinee@colliers.com United States: 153 Canada: 34 Latin America: 24 Asia Pacific: 231 EMEA: 112 $2.5 billion in annual revenue 2 billion square feet under management 16,000 professionals and staff About Colliers International Group Inc. Colliers International Group Inc. is a global leader in commercial real estate services with more than 16,000 professionals operating out of 554 offices in 66 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include agency, asset & property management, consultancy, corporate real estate solutions, facility management, hotels, investments, project management, retail, research, valuation & advisory and workplace innovation. Colliers International has been recognized and ranked in the International Association of Outsourcing Professionals global outsourcing top for 10 consecutive years, more than any other real estate services firm. Colliers International is the fastest growing commercial real estate company in the Netherlands with over 330 professionals and offices in Amsterdam (headoffice), Nieuwegein, Barendrecht, shertogenbosch, Rotterdam and Eindhoven. Defined by our spirit of enterprise Colliers International makes a difference. With our culture of service excellence and our shared sense of initiative we create opportunities to accelerate the success of our clients. Our expertise is underlined by registration in the VastgoedCert (Register for Valuers) and our membership of the NVM and the RICS. For more information about Colliers the Netherlands and the latest news please visit our website Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the w material contained in this report. 6 Office Market Report 2015 THE NETHERLANDS