The total vacancy of the Dutch office market has slightly increased in 2016 with 157,000 sqm to 12.3 million sqm Lettable Floor Area. Hidden vacancy however has slightly decreased, which shows that more end users of office space have returned their vacant square metres to the market.
Hidden vacancy has been defined as the vacant rented square metres which are not actively offered to the market. The hidden vacancy is a good market indicator for the future development of the office market. The demand for offices will only recover when the hidden vacancy is back on a healthy level. Only when the hidden vacancy will structurally reduce to 5% to 8%, a percentage that can be regarded as friction vacancy, a structural recovery of the office market will be possible.
The hidden vacancy figures of this year show great differences between the big cities Amsterdam, Rotterdam, The Hague and Utrecht. Amsterdam and Utrecht have a hidden vacancy of respectively 5% and 9%. For Rotterdam and The Hague this percentage is as high as 25%. This means that in Amsterdam the hidden vacancy meanwhile lies below the friction vacancy. As a result of this low hidden vacancy, the demand for office space will continue to increase in the Amsterdam region. Something that already became clear in the higher take up levels of 2015. To a lesser extent this also applies to Utrecht. Amsterdam is on the turning point from a renters to a lessors market. The recovery of the office market in the Amsterdam region is initially taking place in those areas that have good access to public transportation. Previously problematic office areas such as Sloterdijk, Amstelveen and Hoofddorp will in the course of 2017 also recover to more healthy office markets.
For end users in Amsterdam the availability of good quality space will again become just as important as the offered package of contracted conditions.
With the introduction of the concept hidden vacancy in 2013 Colliers has made the ‘blind spot’ of the Dutch office market visible. This information requires knowledge of the end users which is not visible from a supply perspective of the office market. Colliers has clarified the hidden vacancy by comparing the average size of sqm LFA per fte from the NFC Index (Netherlands Facility Cost Index) to the actual occupancy rates of the offices. This actual occupancy rate comes from end users benchmark data in the Colliers BenchBase® (the largest real estate and facilities database of the Benelux with more than 48.5 million sqm LFA of which 12.8 million sqm LFA of the Dutch office market).
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