In another recent interview at BNR Newsradio, Nils Kok, Associate Professor Finance and Real Estate at Maastricht University, says that it’s quite realistic that one third of the office market will be vacant as soon as the contractual occupancy comes to an end. Lease agreements tend to last about five years in The Netherlands. When this term ends, companies intend not to extend their contracts, especially given the fact that the current physical occupation is only 10-15% of what we normally see. Deloitte already did this for four different venues in the UK. Kok believes this might happen in the Netherlands as well. According to some predictions, there might even be a 40% drop in demand for office space in the future. Kok: “I think this is too pessimistic. The Netherlands is still a very interesting location, especially when you consider the impact of Brexit. 10-15 years ago, we already saw an increase in office building vacancy occurring in the periphery, even in Rotterdam where the vacancy rate was already higher than in Amsterdam. But, not in places that would be occupied anyway, like the area around the Central Station in Utrecht and Amsterdam South”.
Thus, the question arises: what will become vacant and how can it be re-purposed through investment? Empty office buildings could be a solution for the tremendous housing shortage in the Netherlands. Quite a few office buildings have already been transformed into hotels and apartments, especially in the greater Amsterdam area. Buildings like the Edge in Amsterdam, are very sustainable and have an A++ label. There’s quite a lot of demand for that. However, most of the market cannot be compared to the Edge. Here, the energy-label-discussion comes in. “There is a huge part of the market that has energy label D which has older air treatment systems. Here, we see the vacancy rate increasing”, says Kok. No investments have been made in these buildings for a long time. Now is the moment to do so.