THE NETHERLANDS:

THE YEAR AHEAD

2015 - 2016
A Cushman & Wakefield report

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BIBLIOGRAPHY

CBS
Consensus Economics
CPB
DNB
Oxford Economics

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or
developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee
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TABLE OF CONTENTS

PREFACE

VISION FOR THE YEAR AHEAD:

THE ECONOMY
THE INVESTMENT MARKET
THE LOGISTICS MARKET
THE OFFICE MARKET
THE RETAIL MARKET

CONCLUSION

CONTACTS

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PREFACE

Cushman & Wakefield is pleased to present The Netherlands: the year ahead. In this research
paper we look forward to the coming twelve months: we give our view on what is about to come
to the market and how the market will evolve in 2015 and 2016.
With over 40 years of experience in the Dutch real estate market, Cushman & Wakefield has a
proven track record in the Netherlands, successfully adding value for our clients in the advisory
projects we have been involved in over the past decades.
Recent successes we achieved, have helped clients entering the Dutch real estate market
through investments, the opening of a new office, the opening of new logistics spaces and the
opening of their first Dutch (flagship) store. Furthermore, we have advised various investors to
dispose of properties, even given the difficult market circumstances of the past years. We have
also been successful in acquiring real estate against the most favourable prices in the market.
However, despite the past successes we cooperatively achieved with our clients, we are keen
on investing in our relationships with key and new clients. Therefore, we are pleased to present
this research paper outlining our vision for the year ahead. This way, you will get a better
understanding of what drivers will impact the market during 2015 and 2016.
We surely hope you will find this paper useful and are more than happy to discuss any of the
outcomes with you.

On behalf of Cushman & Wakefield,

Drs. Jeroen Lokerse MSRE MRICS

Michiel Boonen MRICS

Managing Partner Cushman & Wakefield

Senior Consultant - Research

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THE ECONOMY

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THE ECONOMY
International perspective for 2015

Finally, the past year has been mildly

positive after years of rebounds of the
world economy. Global growth picked
up only slightly to 2.6% in 2014, from
2.5% in 2013. For the coming months,
cautious optimism remains the key
word.

FRAGILE RECOVERY
On the positive side, growth should
continue its climbing route in 2015 with
global growth expected to reach 3%
according to the World Bank. The US
recovery will likely lead higher global
growth this year, while Southeast Asian
countries will remain the best
performing nations. Europe should also
slowly come out of its long-lasted
sluggishness. Below are some of the
key factors underlying the growth rate
of the global and European economy in
2015 and 2016.

DIVERGING
MONETARY POLICY
Accommodative monetary policies
have been a key stabiliser of the main
developed economies since the
financial crisis broke out in 2008. It is
likely to remain an instrumental factor
during the coming twelve months.
There is, however, an increasing
divergence between the central banks
policy in the United States and in the
United Kingdom on the one hand, and
the policy of the European Central
Bank (ECB) on the other. The Federal
Reserve and the Bank of England have
already stopped their quantitative
easing programmes. Many analysts
expect them to start raising interest
rates this year, even though recent
low-inflation figures indicate their
tightening attitude to be limited in the
short term.

The Netherlands is
one of the countries to
invest in the years to
come due to the very
high potential of
consumer demand.

The ECB has conversely loosened its

stand. After imposing negative deposit
rates on banks last year, the central
bank has started its own quantitative
easing programme to fight the
frighteningly low inflation in the euro
area. Disagreements on monetary
policies between some Northern
European countries, especially
between Germany and the rest of the
Eurozone, have not prevented the
institution from taking a bolder stance.
The ever declining inflation
expectations obviously removed the
last hesitations.
The rising divergence in monetary
policy explains the recent fall of the
euro against the dollar and the pound.
One can hence expect the common
currency to remain weak throughout
2015, as well as volatility and
continuous tensions on foreign
exchange markets. Meanwhile, funding
costs should remain exceptionally
favourable for euro area borrowers (at
least for the ones getting access to
financing).

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THE ECONOMY
International perspective for 2015

FALLING OIL PRICES

EXPECTED

THE EURO CRISIS

(PERMANENT?)

The dramatic fall in oil prices has been

the main and most unexpected news of
the last few months. Barrels price has
lost over half its value since last June,
to less than fifty-five dollars in the first
months of this year. This is overall
good news for the world economy as it
provides extra purchasing power for
oil-importing countries. These tend to
spend more as a share of GDP than
oil-exporting countries, which save a
large share of their export revenues.
As a result, this will boost global
demand.

Even though European policy-makers

pretend they have fixed the euro, most
analysts reckon that many structural
flows remain unsolved in the euro
zone. Most peripheral economies have
reduced their imbalances dramatically
during the last four years and some
euro-wide safety nets are now in place.
Still, the continent remains
inadequately equipped to respond to a
full-blown banking and/or sovereign
crisis occurring in one or several euro
member states.

Nonetheless, this raises fears of

collapsing inflation figures, leaving
some economies on the brink of
deflation. Such concerns are
particularly acute for the euro area,
where inflation has fallen to very low
levels over the past few months. Some
peripheral countries are already
experiencing an evolution in negative
pricing. If deflation expectations
anchor, it can be very difficult to
recover from a falling prices spiral,
which will be devastating for debtors
entitled to repay capital in nominal
terms. The ECB has therefore started
to fight this evolution among others
with its QE programme.
On the international capital markets,
one might observe reducing activities
from sovereign wealth funds of oilexporting countries as less money gets
into their coffers. If low oil prices persist
in the medium term, one may expect
changing investment strategies by
many of these actors. They will divest
from long-term high-value assets, and
replace them by recurrent yielding
assets able to provide complementary
revenues for government budgets.

Fears concerning the Greek situation

are now reappearing as the hard-left
party Syriza has won the recent
election. It has promised voters they
will renegotiate the Troikas economic
reforms package for the country and
ask for a restructuring of the countrys
debt. Even though financial markets
have limited their negative reactions on
Greek assets so far, further contagions
remain a possibility should a Greek
debt default or a departure from the
euro (Grexit) occur.
We stand in a relatively supportive
global context in which international
trade could pick up, thereby helping
the Dutch open and trade-based
economy. Internal demand in Europe is
nonetheless likely to remain modestly
positive at best. Given the already
substantial positive level of the Dutch
current-account balance, at 10% of
GDP, a significant economic boost
originating from external factors is
unlikely.

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THE ECONOMY
Domestic perspective for 2015

The Netherlands left the recession

behind in 2014. With the year-end GDP
growth rate estimated at 0.8%, the
country finally saw its economy grow
for the first time since 2011. However,
driven by external demand, growth was
slack in 2014.

EMPLOYMENT IS
RISING
Over the past years, the Dutch market
was characterized by rapidly
increasing unemployment across the
country. The turning point for
employment seems to come in 2015,
with an anticipated decrease of the
unemployment rate by 30 bps over the
year. The decrease of the
unemployment rate, although at a
relatively slow pace, is mostly a result
of an increase in the number of
available jobs, which will increase by
0.6% in 2015. In the end,
unemployment will end at some 6.6%
for 2015. However, it will remain on par
in 2016 as a result of an increasing
productivity of employees, limiting the
demand for personnel.

MODEST GROWTH
2015 will be a turning point for the
Dutch economy. GDP growth is
expected to come to 1.2% overall,
although still mostly driven by a strong
performance of the Dutch export
sector. Nevertheless, domestic
expenditure will slowly but steadily
become a more important driver of
Dutch economic growth. It is even
anticipated to be the key contributing
factor to GDP growth by 2016. This all
points in the direction of a continuous
growth of the domestic economy, with
solid outlooks across various subsectors for 2015 and the years ahead.

Real wages are anticipated to grow in

both 2015 and 2016, which will impact
purchasing power positively. However,
the growth in real wages is mostly a
result of the low inflation rate more
than a significant nominal wage
growth. Indeed, with inflation standing
at a low rate between 0% and 1%, real
wages are anticipated to increase by
some 1.5% per annum in both 2015
and 2016.

Apart from the GDP growth, the

governmental balance will recover
further as well, although at a modest
pace. While the budget deficit in 2014
will most likely have come to 2.4%, it is
anticipated that this will improve to
1.8% of the countrys GDP by 2016.
Furthermore, 2016 will also be the year
the countrys debt will decrease for the
first time since the start of the
economic crisis.

Chart: Development of GDP, unemployment rate and real wage growth in the Netherlands
8,00%
6,00%
4,00%
2,00%
0,00%
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-2,00%
-4,00%

GDP Growth

Unemployment rate

Real wage growth

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THE ECONOMY

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Domestic perspective for 2015

GROWTH DRIVERS
Growth in 2014 was nearly entirely
driven by the strong performance of the
Dutch export sector. However, 2015
will see private consumption and
business investments contributing to a
vast share of growth as well.
Nevertheless, 2015s growth rate is
slowed down by a foreseen slump in
governmental expenditure. The Dutch
government will still be focused on cost
cutting and decreasing its budget
deficit.
With the export sector being the main
driver behind economic growth in
2014, economic recovery has been
slack. Exports were under pressure
due to the geopolitical uncertainties in,
among others, the Middle-East and
Ukraine. As a result, domestically
produced goods have had a difficult
year in 2014, which holds back the
growth rate of exports.
Nevertheless, with the Netherlands
focus on throughput, mostly a result of
the strong European and global
position of the Port of Rotterdam,
export grew in 2014. It is anticipated to
remain at a comparable growth rate
both in 2015 and 2016. Growth in 2014
will amount to 4.1%, whereas the
anticipated growth for 2015 stands just
below 4%. For 2016, the growth rate is
expected to come to 4% again, still
mostly driven by throughput of goods.
With the growth rate remaining at par,
the Dutch export sector only marginally
benefits from the foreseen growth in
relevant trade across the globe.
However, this is mostly caused by an
increasing market share of emerging
markets taking over some of the
Netherlands share.

While the consumer sentiment in

recent years was subdued, consumer
confidence started to increase mid2013, slowly moving up to pre-crisis
levels. Indeed, consumer confidence
reached its highest level since 2008 in
2014, although still being negative.
With a strong positive correlation (0.79
between 1978 and 2014) between
consumer confidence and spending, it
was foreseen that consumer spending
would gain momentum quickly after the
recovery of consumer confidence as
well. Although recovering a bit bumpy,
all indicators point in the direction of a
solid recovery of consumer spending.
Indeed, 2014s figure will most likely
equal last years consumer spending.
This will make 2014 the first year
without a decrease in consumer
spending after a falling rate in five
consecutive years. Real wages are
likely to grow modestly over the next
two years. Therefore, consumer
spending is foreseen to follow a similar
pace at 1.8% growth per annum, both
in 2015 and 2016.
Next to increasing consumer spending,
business investments will grow in 2015
by some 3%, with a continuous growth
expected for 2016 at 4%. This growth
will follow a volatile period in which
business investments strongly
increased in 2013, but showed a
comparable decrease in the beginning
of 2014. However, the registered
decrease in 2014 was mostly a result
of changed regulations, more than
structural decisions of businesses.
Overall, domestic expenditure is
expected to outperform the export
sector as main economic driver by
2016. Both consumer spending and
business investments are driving
domestic expenditure.

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THE INVESTMENT MARKET

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THE INVESTMENT MARKET

In 2015

The year 2014 has been a historically

good year for the Dutch investment
market, outperforming the investment
volume of the previous five years.
However, with international capital
flowing heavily across various markets,
we predict there is more to come in
2015.

MORE TO COME
It will be difficult to outperform the total
market volume of 2014 in 2015, but
some sectors are foreseen to grow in
the year ahead. We expect investors to
be less risk averse in markets with
extremely scarce prime opportunities.
Indeed, for the office market for
example, we foresee an increasing
demand for secondary opportunities in
the major economic regions of the
Netherlands. International investors
generally perceive Amsterdam as the
only prime office market of the country.
However, the top ten cities of the
country will now be on their radar, as
well as more secondary locations in
the conurbation of major cities and the
Randstad as a whole.
International investors will focus on
large-scale investment opportunities,
while domestic investors are generally
in the market for smaller (< 20
million) investment opportunities.
Although secondary product was still
favourably priced in 2014, we
anticipate an increasing diversification
in pricing for various levels of
secondary product in the office market.
Some areas will see upward pressure
on pricing, whereas in other parts of
the country certain asset classes will
still be devaluated in 2015.

AVAILABILITY OF
FINANCING
Banks were hesitant with real estate
financing in previous years, but an
increasing volume of real estate
financing slowly became available in
2014. We foresee this trend to continue
and even to accelerate. The financial
market is increasingly becoming an
international market, with the
Netherlands being of interest as a
result of the relatively high spread on
real estate loans. With an increasing
liquidity in 2015 and the historically low
interest rates that are currently
registered, availability of debt will be
high in 2015. As a result, investors
have sufficient capital available for real
estate investments, although banks are
not expected to loosen their LTV
covenants of 6575%.
Despite increasing liquidity, banks
remain cautious in financing assets
considered more risky. Long lease
contracts are important, while location
has been increasingly important for
banks as well. Lastly, if one is to invest
in a relatively illiquid market, banks will
remain cautious providing finance for
such projects in 2015 as well.
The availability of finance will be
widened in 2015, but financing levels
are not expected to reach pre-crisis
levels. This is mostly a result of the
regulations that became in effect, such
as Basel III, which force banks to have
a larger amount of capital in-house to
resist possible stress periods.
Furthermore, we expect some banks
may dispose of their non-performing
loan portfolios in 2015. This will widen
the availability of available capital for
new financing projects.

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THE INVESTMENT MARKET

In 2015

LOGISTICS
INVESTMENT MARKET
Logistics assets have been highly
sought after in 2014, driven by the
scarcity of prime investment product
and the scarcity in the occupier market.
Especially the main logistics regions of
the Netherlands were highly favoured,
although portfolios with some assets
outside of these areas still traded in
2014 as well.
In 2015, price levels for prime logistics
space in the best locations are
expected to come under further
pressure, with yield levels expected to
equal those of the best years pre-crisis.
Indeed, demand is high for prime
logistics assets and risk is perceived to
be limited. Occupiers are hardly able to
move anywhere as a result of the
limited supply of modern logistics
space in the best spots of the country.
Demand will again be driven by
international investors, while various
funds, both domestic and international,
have now found their way to the
logistics investment market as well.
The latter investor group perceive the
logistics market as interesting. The
achievable returns are relatively
healthy compared to the risk level
coming with an investment in some
other markets. Indeed, with the target
returns of various funds, pricing in
some other markets will hardly meet
the investor criteria and as a result, this
group will increasingly be active in the
logistics market.

Furthermore, 2015 may be the year in

which more secondary assets will be
targeted too. However, this is mostly a
result of the limited availability in both
the occupier and investment markets of
prime product. Indeed, investors may
start to focus on somewhat more
secondary product and locations as a
result of the positive expectations for
the occupier market, in which they
want to act pro-actively.
We expect a greater deal of relatively
small transactions in 2015. This is a
result of the limited availability of
domestic logistics and industrial
portfolios. Besides single-asset
transactions, cross-border portfolio
transactions in which Dutch logistics
assets are included will be seen more
often in 2015 as well. Assets of crossborder investments are expected to be
of slightly less quality in the
Netherlands, whereas single-asset
transactions will firstly be concentrated
in the countrys logistics hot spots.
Regions such as Noord-Limburg or
Central Brabant will be geographically
interesting for investors seeking assets
for international distribution. The centre
of the country remains interesting to
investors focusing on domestic
occupiers.

Price levels of prime

logistics assets will
move towards precrisis levels in 2015.

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THE INVESTMENT MARKET

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In 2015

OFFICE INVESTMENT
MARKET
The total investment volume in office
space reached over 2 billion in 2014.
It is difficult to imagine that 2015 will be
the fourth consecutive year office
investment volumes rose compared to
the previous year. Nevertheless, with
office investments in 2006, 2007, and
2008 varying between 4.2 billion and
7.8 billion, it is certainly not
impossible to outperform the 2014
volume.
Previously, the majority of the office
market could be divided into two main
areas: investors either focused on
prime or secondary assets. In 2015,
the office investment market will see
more diversification. Especially the
market area widely considered
secondary will increasingly be divided
in multiple areas. For these, market
performance varies widely.
We foresee the prime (or core) area of
the market to remain tight with hardly
any availability, resulting in limited
investment activity. In 2015, we expect
the upper tier (or core+) area of the
market to widen and to be highly in
demand. Among others, back-office
locations in Amsterdam, areas in
Rotterdam, The Hague, and Utrecht,
as well as high-quality buildings in
various locations of the Randstad with
long lease contracts, will increasingly
be targeted this year. As a result of the
high demand, price levels for this
product are expected to become under
increasing pressure, with investors
favouring long lease contracts with
prime tenants above the location of the
building.

Other areas of the secondary market

may also experience a rise in demand,
especially with pressure on price levels
becoming obvious in the 2015 market.
However, with the risk averse mentality
loosening, we also see an increasing
number of property developers seeking
development opportunities in the
market. This may be one of the
greatest challenges for the Dutch office
market, since there are hardly any
development opportunities in prime
locations. As a result, the office stock
considered to be secondary will then
be enriched. The current vacancy rate
is already relatively high for this stock.
And although slightly older, it is of
major importance that local authorities,
or eventually regional or national
authorities, will remain strict with the
issuance of development permits for
office developments. These should
only be issued in strategic locations in
markets with a lack of high-quality
product. It would be best if developers
were somehow required to demolish
obsolete stock prior to starting
development. Otherwise, the
fundamentals of the market will be
affected negatively since the occupier
market for office space is not looking
for quantitative additions of office
space, but only in need of qualitative
additions.
Lastly, the area of the office market for
which investor demand will most likely
remain low are the solitary office
buildings and office buildings in small
cities / large towns. Since these towns
and cities hardly have an office market,
the occupier market is generally
relatively quiet. As a result, there is too
little liquidity for the majority of
investors to be interested in this
product.

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THE INVESTMENT MARKET

In 2015

RESIDENTIAL
INVESTMENT MARKET
Recently, the residential market has
increasingly been targeted by both
domestic and international investors.
This trend will continue for at least two
more years. For 2015, some large
portfolio deals are expected to be
completed by both international
investors and domestic investment
funds. The latter investor class are
expected to show significant
investment activity for the first time
after various years of consolidation and
disposition. Especially portfolios with at
least thirty premises seem interesting
to the active buyers. Contrary to their
focus of two years ago, they will now
focus on optimizing the exploitation of
the residential portfolio rather than
selling off units individually.
With investment activity expected to
remain high in 2015, the market will
continue last years trend of high
investment volumes. The investors
seem to have found their way to the
Dutch residential sector, for which the
outlook is perceived positive.

While returns may be slightly lower

than for traditional investment classes,
the risk in the Dutch residential market
is much lower than, for example, in the
office or secondary retail market.
Indeed, the occupier market
fundamentals of Dutch residential
premises are still strong, with a steady
outlook for population growth as well.
The outlook for demographic growth is
generally positive, but there are
substantial regional differences. As a
result, investors will increasingly
compete for qualitative investment
product in regions for which
demographic growth is foreseen until
2040. In line with trends in other
commercial real estate markets, the
so-called Randstad will remain the
most attractive region to focus on for
investors. However, there are various
other regions in which opportunities
last in the domestic investment market.
Based on the upcoming scarcity due to
lack of good residential investment
product in the Randstad area, it is
expected that investors will also find
their way to the other Dutch regions in
the coming years.

Image: Forecasted growth of inhabitants per municipality in the Netherlands

2015 - 2020

2015 - 2030

2015 - 2040

Source: CBS and PBL

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THE INVESTMENT MARKET

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In 2015

RETAIL INVESTMENT
MARKET
Both the retail occupier and investment
markets have experienced
fundamental changes to their
standards in previous years. However,
both tenants and landlords increasingly
embrace these changes. The retail
investment market seems to be gaining
momentum again with various
opportunities in the market.
Traditionally, it was dominated by
domestic investors, but in 2015
international investors increasingly
target the Dutch retail investment
market. Especially the sector
considered more secondary is
interesting for international investors.
They see opportunities in optimizing
the real estate and tenant mix,
decreasing occupancy costs, and
refurbishing the generally relatively old
shopping centres.
With the retail landscape changing
drastically, retail is becoming more of a
leisure activity that can be combined
with other leisure facilities. Most
international investors are experienced
in combining retail with food &
beverage, and leisure. As a result, they
believe in the opportunities the Dutch
market has to offer. Investing in retail
real estate used to be about the
acquisition of the estate. However,
international investors are focusing
increasingly on the operational side as
well, with local asset management
companies on the ground to develop
the shopping centre function. Certainly
positive is that the investor focuses on
a qualitative impulse for the shopping
centre itself as well as for the domestic
retail market as a whole.

Products to look out for are, among

others, relatively small shopping
centres anchored by at least two
supermarkets. It is common to have
one full-service supermarket and one
discounter in such shopping centres,
although the differences between
these supermarket types are
diminishing quickly.
Retail warehousing is probably the
sector that has struggled most over the
past years, and as a result may be the
sector in which pricing is most
favourable for investors. However, with
domestic consumers still hesitant to
shop at retail warehousing locations,
investing in retail warehousing more
often will be a matter of cherry picking.
Concluding, the market for retail
investments is filled with opportunities
in 2015 and 2016. Given the focus of
investors on the office market, there
are various opportunities to act on.
Although it varies widely per sector,
especially the shopping centre
investment market will show
opportunities that may be attractive to
investors.
Both domestic (private) and
international investors may target
domestic high streets, especially those
in the prime cities of the country. In this
manner, it is still possible to achieve
interesting direct returns in these
estates. This is mostly a result of the
upward rental potential in the largest
cities. Which will be driven by growing
footfall from the second half of 2015,
with tourism being an important driver
of this growth in the major retail
markets.

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TRANSF
THE WAY T

WORKS, SH
LIV

ORMING
THE WORLD

HOPS AND
VES

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THE LOGISTICS MARKET

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THE LOGISTICS MARKET

In 2015

EXPORT GROWTH
DRIVER
Historically, the Netherlands has been
one of Europes main countries for
logistics. With its main ports Schiphol
Airport and Seaport Port of Rotterdam,
the country holds two hubs that are
amongst the most important logistics
conurbations of the continent. With
global trade still slowly increasing, the
Dutch logistics sector has shown
growth over the previous years as well.
It is foreseen to retain its position as
main driver of the Dutch economy,
although by 2016, it may come in
second place, being overtaken by
domestic expenditure. Still, also for
2016, growth is foreseen for the export
sector, which will naturally affect the
logistics market positively.
Indeed, the logistics market performed
extremely well in 2014, with high levels
of demand for modern logistics space
across all logistics hot spots of the
country. As a result of the high demand
and limited availability, landlords have
seen an increasing competition for the
best logistics space. However, some
have agreed shorter lease terms to
meet occupiers demand.

Occupier activity will

focus on modern
logistics space in
LOGISTICS
logistics hot spots.
INVESTMENTS

However, although built-to-suit

solutions in general seem to be the
most suitable for occupiers seeking
new space, the rising commodity prices
especially those of steel may put
pressure on the built-to-suit market.
With prices of steel expected to rise
over the next years, starting by 2016,
built-to-suit solutions may become too
expensive for both developers and
occupiers to start on-risk
developments. By then, occupiers may
start thinking about occupying
somewhat older logistics estates,
although these still have to be in the
best locations for logistics activities of
the country.

Contrary to modern logistics space,

slightly older logistics space that is not
so much in demand by occupiers,
hardly has been targeted by major
occupiers in 2014. With the increased
pressure on the market this product
may be in demand in 2015 and
subsequent years, although occupiers
are generally hesitant to move into
such assets. As a result, it is more
logical that occupiers will search for socalled built-to-suit solutions, which
already have been in favour in 2014,
and continue to be in 2015.

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THE LOGISTICS MARKET

In 2015

E-COMMERCE AND
RETAIL LOGISTICS
In general, demand for logistics space
comes from various sectors.
Nevertheless, we expect demand from
e-commerce and retail players in the
market to rise in the immediate future.
Their increasing share in the logistics
market may lead to some changes in
the Dutch logistics landscape.
The present logistics structure for web
shops and retailers is not yet entirely
focused on the rapidly enlarged market
share of e-commerce in the retail
sector. As a result, goods are still
distributed in a relatively traditional
manner. Carriers currently dominate
the market for e-commerce and
logistics players. However, we foresee
that both e-commerce players and
retailers will change their distribution
patterns towards a more local
distribution network. This will also
enable e-commerce players and
retailers to take care of the so-called
reverse logistics: A logistics process
consisting of returning goods or
products from the point of consumption
to the point of origin, for the purpose of
recapturing its value (re-using, repair,
etc.) or proper disposal (waste).

This approach will also enable the

logistics sector to focus more on
sustainability. It has been seen
already, although only small scaled,
that inner-city distribution is carried out
by smaller electric vehicles without
CO2 emission. It is likely, however, this
trend will continue and a significant rise
of electric vehicles carrying out innercity distribution may be expected in the
near future. Particularly since various
municipalities have started processes
to prohibit trucks from their historic
centres to decrease the amount of
pollution.

Changing distribution
by e-commerce
players and retailers
will result in less
polluted historic city
centres.

With e-commerce players and retailers

being less dependent on various
modalities, we believe there will be
distribution points on strategic well
accessible locations in the main
conurbations of the country. From
these locations, both the so-called last
mile distribution process and reverse
logistics can be handled.

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THE OFFICE MARKET

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THE OFFICE MARKET

In 2015

Traditionally, occupier activity in the

Netherlands has been driven by
activity from financial institutions and
business services. However, in past
years, activity slowed down
significantly, falling by 50% between
2008 and 2012. With low but stable
occupier activity registered in both
2013 and 2014, occupier activity in the
market may have been set to a new
standard.
With financial institutions announcing
the redundancy of hundreds of jobs,
activity will hardly come from this
sector in the near future. However, for
example ING has been a key driver of
occupier activity over the past years,
as a result of strategic relocations and
rationalisation of their office portfolio.
More activity from financials will not
likely be visible in 2015 and 2016.
Also business services are not
expected to be a main driver of
occupier activity in the next two years.
Although this sector generally
generates quite some activity annually,
the majority is caused by relocations
more than lease extensions, or even
new entrants to that market. The few
new entrants who find their way to the
market are expected to come from the
US more than from European
countries. However, the latter have
been more in demand in recent years.

TURNING TIDES IN THE

OCCUPIER MARKET
Then who will drive occupier activity
over the next years? In general, activity
is expected to be driven by so-called
early cyclical sectors. Mainly the IT
sector is expected to be a key driver of
occupier activity in 2015 as well as in
2016. While there have been some
active occupiers in this sector in 2014,
demand will be fuelled in 2015 by the
improving economic outlook.

LOGISTICS
INVESTMENTS
IT companies are
expanding rapidly,
evidenced by a
growing amount of
leased office floor
space between 2010
and 2014.

Examples of occupiers driving the

market are Booking.com, Travelbird
and ber. However, there are various
other occupiers in the IT sector that are
expected to increase their office floor
print over the coming years as a result
of strong company growth figures.
Although demand from this sector is
more than welcome, the occupier
criteria for office floors from this sector
differ strongly from the more traditional
office occupiers. Office floors should be
more flexible and open, while the office
itself has to be located in either the
dynamic city centre of the largest
Dutch cities, or in a multimodal office
hot spot that also offers a range of
amenities. As a result of the increasing
focus on location and accessibility of
office buildings, a growing share of
these buildings across the country will
be increasingly in demand.
Nevertheless, new entrants to the
office market have shown to be willing
to move into more secondary office
locations in the major cities as well. As
a result, stock in secondary locations
may witness an increasing demand
from new entrants in 2015 and 2016.
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THE OFFICE MARKET

In 2015

POLARISATION OF
OFFICE LOCATIONS
The distinction between prime and
secondary office locations has been
visible increasingly over the past years.
And 2015 will surely show a further
polarisation between these two
categories. Driven by occupier
demand, prime office locations will turn
more towards landlord-friendly
markets. Occupier demand is focused
on well-accessible (multi-modal)
locations in the major cities of the
country. While the availability of largescale office space is generally limited
here, this will slowly result in rising
effective rents. Although headline rents
will mostly remain flat in 2015, we
foresee a slow decrease of the
incentives in prime markets.
Prime markets are generally
characterised by accessible multimodal locations. However, occupiers
are increasingly demanding more
services as well. A prime office district
should combine good accessibility with
a wide variety of services offered to its
occupiers. While services should at
least include the supply of food and
beverage operators, the availability of
leisure facilities (such as sports/fitness
clubs) and retail facilities is also
perceived favourably by occupiers.
Furthermore, the location in the city is
increasingly important, mostly for
businesses with a vast amount of
international employees who prefer the
city centre both for leisure and
residential purposes. As a result, office
locations with good transportation and
access to the city centre will be
increasingly popular in the next years.

Secondary locations on the other hand,

hardly meet occupier criteria. As a
result, demand for these locations has
decreased significantly over the past
years. Although it would make sense to
assume that demand for secondary
locations will decrease further, the
increasing landlord-friendly prime
markets may result in a slow recovery
of demand for secondary locations.
Especially since these still suffer from
high vacancy rates, landlords tend to
focus on price advantages while
several have also shown the
willingness to improve the internal layout and facilities of office buildings in
secondary locations significantly.
These efforts could result in a modest
increase of occupier interest for
secondary locations in the course of
2015. However, a notable increase
might be witnessed no earlier than
2016. Pricing will remain the main
selling point of secondary locations,
although providing occupiers with an
office concept in which they believe
also attracts their attention.

Chart: landlord vs. Tenant friendliness of

the market
Outer circle:
secondary locations

Inner circle:
prime locations

Landlord

Tenant

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THE RETAIL MARKET

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THE RETAIL MARKET

CUSHMAN &
WAKEFIELD

In 2015

The majority of economic forecasts for

both 2015 and 2016 indicate a positive
momentum for domestic expenditure,
of which consumer spending and
confidence is a vital section. With a
growth rate of 1.8% per annum
expected for the next two years, we
foresee a cautious recovery of the
retail market as well. Although there
are still various retailers mostly
domestic under pressure as a result
of the declined sales of the past years,
the outlook is slowly becoming more
positive than it has been recently.
Consumer spending will increase in
2015 and 2016, but this will not directly
result in an increasing sentiment
across all retail sectors. We believe
that e-commerce is only one factor
driving the market, it is now embedded
in every aspect of retail from value and
quality through to brand and therefore
in our opinion, it is transformational for
the industry. Due to this central role in
changing the retail industry, ecommerce will naturally contribute to
increasing consumer spending too. As
a result, not the entire share of
boosting consumer spending will be
visible in the retail sales in high streets
and shopping centres.
Moreover, we expect that retailers will
increasingly focus on their offline
strategy and as a result will critically
assess their current real estate
portfolio. We foresee that the majority
of retailers both domestic and
international will focus on the Dutch
largest cities in terms of population and
catchment area. This will eventually
lead to shrinking retail area in city
centres of smaller cities and growing
competition for the best locations in
large cities.

Indeed, for the years ahead we foresee

that new entrants and expansion from
international retailers will be focused
on the top 20 or top 25 cities of the
country and other cities will
increasingly struggle to maintain their
current tenant mix. International
retailers will retain their focus on large
stores, preferably spread over at least
two storeys. Domestic retailers will
mostly remain fairly quiet in 2015 and
are not expected to be drivers of
growth in the retail market for at least
two more years.
The majority of activity is driven by
fashion retailers. Approximately 90% of
expansion and new-lease activity is
foreseen to be driven by this retail
sector. Although these retailers have
put pressure on rental levels for
several years, they are now
increasingly interested in creating
flagship stores on multiple-storey
buildings. However, although this
decreases the average rent for
shopping units drastically, it is of vital
importance that the inner-store traffic
as well as the connection to the best
location of the high street is organized
perfectly. Otherwise a store might be
less attractive for international retailers.
We foresee rental levels to remain on
par with 2014 across the top cities of
the country, although growing tourism
and high demand for certain locations
may result in some exceptions to this
rule. For smaller cities and shopping
centres in general, we foresee that
rents may decrease over the next
twelve months. However, active asset
management, re-gearing and
renovating a shopping centre, and
actively managing tenants across
shopping centres may result in stable
rents for shopping centres with a
dominant function in their catchment
area.

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CUSHMAN &
WAKEFIELD

THE RETAIL MARKET

In 2015

THE SHOPPING
CENTRE MARKET
Traditionally, shopping centres have
been important in the Dutch retail
landscape. With the majority of the
Dutch shopping centre stock being
fairly small-sized, they generally had a
neighbourhood or district serving
function.
With consumers increasingly being
able to travel towards shopping
locations, we expect a further
polarization between the larger,
generally anchored by two
supermarkets, and smaller
neighbourhood shopping centres.
Shopping conditions have to be in
good condition free parking,
guaranteed safety, clean and bright
lay-out. However, consumers have
shown to prefer somewhat larger
shopping centres with additional shops
and facilities above smaller
neighbourhood centres only offering
daily goods. Nevertheless, a major
share of the shopping centres with a
neighbourhood serving function is
relatively old. As a result, consumers
are increasingly less attracted to this
somewhat outdated stock. Therefore,
they increasingly move to less
outdated shopping locations.

Other shopping centres, such as

district centres or in-town located
shopping centres are foreseen to show
stable performances, although some
may struggle in 2015. Especially the
latter category in historic city centres
will be less in demand than high
streets. However, this is more a result
of the Dutch culture than of the lay-out
or age of the shopping centres.

Despite the expected difficulties in

performance over the next one to two
years, various international economists
believe the Netherlands is one of the
countries with high potential of
consumer demand. As a result, the
retail occupier market may be affected
positively.

Opportunities in 2015
will mostly be in
distinctive retailers and
brands, their product
offers and promotions.

Concluding, large neighbourhood

shopping centres, anchored by two
supermarkets, have the ability to show
strong performances. This is also
reflected in the investment market, in
which private equity investors and
domestic funds are focusing on the
neighbourhood shopping centres.
Among others, Corio has been one of
the investors to sell product in this
sector, focusing on large shopping
centres in the city centre of the main
cities.

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CUSHMAN &
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CONCLUSION

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CUSHMAN &
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Adding value for our clients has always been our key priority at
Cushman & Wakefield. We are keen to retain our valuable
relationship with all of our clients and continuously look for
opportunities to improve our service level to them.
We look forward to working with you in the future, in a rapidly
changing real estate environment. We believe we have the ability
to inspire you in the way you work, shop and live but first and
foremost use this knowledge to come to the best result in advising
you.

Drs. Jeroen M. Lokerse

Managing Partner Cushman & Wakefield The Netherlands

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CONCLUSION

CUSHMAN &
WAKEFIELD

Cautious optimism

Economic recovery will come over the

Netherlands in 2015 with a faster pace
than in 2014. On the back of the
economic recovery that will gain
ground in the country, the real estate
sector will slowly see a more positive
sentiment as well.
The investment market was boosted by
major investments from international
parties. However, we foresee 2015 will
be a year in which yields will move in
for various sectors. Competition in
pricing will become more fierce than in
2014. Eventually, this will lead to a
consistently high investment volume,
as already registered in 2014.
An important message goes out to all
local authorities responsible for
development permits for commercial
property developments. While the
investment market has recovered
rapidly as a result of the record-low
interest rates and vast interest of
international investors, property
developers are increasingly interested
in acquiring land plots in secondaryconsidered locations for office,
industrial, and retail space. Although it
may financially be attractive to dispose
of the land, this will not contribute to a
sustainable recovery of the local and
regional real estate market. For most
local markets, including those in the
economically dominant regions, the
fundamentals of the occupier markets
are still relatively weak, vacancy is
high, and occupier demand will remain
limited for the next years. As such, new
developments should be assessed
critically and permits should be given if
no harm is done to the existing real
estate market.

The occupier focus varies widely in

each commercial real estate sector.
While demand for prime logistics
premises will remain high in 2015,
demand for retail space will
increasingly be focused on the best
locations in the top 20 cities of the
country. Lastly, demand in the office
sector will remain fairly stable, with a
limited number of new entrants to the
Dutch office market and demand being
driven by the internet and IT sector.

Across all sectors, the role of

foundation cities in the Netherlands is
gaining ground, although the cities to
focus on vary slightly for all sectors.
The Randstad remains the main area
of focus for both office and retail space,
whereas the so-called logistics belt will
remain the main area for logistics
space. However, logistics networks of
domestic e-tailers and retailers might
focus more on the centre of the
country, from which the majority of
national distribution is organised.
Concluding, based on more solid
ground in the economy, the Dutch real
estate market will steadily gain
momentum in 2015 and 2016.
Although differences across sectors
are inevitable, the office market, retail
market, and logistics market are
foreseen to show solid performances in
the year ahead. Domestic foundation
cities will be key in 2015 for all sectors.
Despite the recovering economy and
the recovery of the real estate market
with it, some fundamentals especially
in occupier markets remain fairly
weak. As such, all market parties
should remain extremely careful with
their real estate decisions.

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CONTACTS
CAPITAL MARKETS
JEROEN LOKERSE

MATHIJS FLIERMAN

Managing Partner Retail investments

Partner Head of Capital Markets

+31 (0)6 2242 2564

+31 (0)6 1588 0178

jeroen.lokerse@eur.cushwake.com

mathijs.flierman@eur.cushwake.com

RETAIL AGENCY
ARJEN BOESVELDT

PEPIJN VAN DEN BOSCH

Partner Head of Retail

Partner - Retail

+31 (0)6 1093 0908

+31 (0)6 1172 1234

arjen.boesveldt@eur.cushwake.com

pepijn.vandenbosch@eur.cushwake.com

OFFICE AGENCY
PIETER VAN DER PEET

RIENS VAN DER WAALS

Head of Tenant Rep & Business Development

Associate Office Agency

+31 (0)6

+31 (0)6 5519 6571

pieter.vanderpeet@eur.cushwake.com

riens.vanderwaals@eur.cushwake.com

LOGISTICS AGENCY
HYLCKE OKKINGA

MICHIEL VAN DEN BOUT

Partner Head of Logistics

Associate - Logistics

+31 (0)6 2157 7253

+31 (0)6 1396 6974

hylcke.okkinga@eur.cushwake.com

michiel.vandenbout@eur.cushwake.com

RESEARCH
MICHIEL BOONEN
Senior Consultant - Research
T: +31 (0)20 800 2000
michiel.boonen@eur.cushwake.com

JUSTIN DE GIER

BORIS ZIERMANS

Partner Capital Markets

Partner Capital Markets

+31 (0)6 2157 7251

+31 (0)6 5042 0820

justin.degier@eur.cushwake.com

boris.ziermans@eur.cushwake.com

GIJS VAN DEDEM

ARTHUR MOERMAN

Associate - Retail

Associate - Retail

+31 (0)6 1078 6954

+31 (0)6 1396 7111

gijs.vandedem@eur.cushwake.com

arthur.moerman@eur.cushwake.com

CHRISTIAN VAN CADSAND

Associate Tenant Rep
+31 (0)6 2157 7250
christian.vancadsand@eur.cushwake.com

www.cushmanwakefield.nl
Cushman & Wakefield The Netherlands
(Amsterdam Office)
Atrium 3rd floor
Strawinskylaan 3125
1077 ZX Amsterdam The Netherlands
+31 (0)20 800 2000

Cushman & Wakefield The Netherlands

(Rotterdam Office)
Bahialaan 400
3065 WC Rotterdam The Netherlands
+31 (0)10 2666 888