Search This Blog

Friday 27 June 2014

Vacancy of office buildings and shopping space increases further in The Netherlands, as normalization of the market has a long, long way to go!

So it would seem we've still got a long long way to go, I know
I've heard all I wanna hear today

PBL Netherlands Environmental Assessment Agency is the Dutch national institute for strategic policy analysis in the fields of environment, nature and spatial planning, and as such a part of the Dutch government.

On Monday, 23 June 2014, this institute presented the latest vacancy rates among shops and office buildings in The Netherlands. The following snippets come from PBL’s press release:

The vacancy rate of shops and offices has yet again increased in 2013. For both categories, the increase amounted to one percent: 
  • Of the available office space in square meters at the beginning of 2014, is 17% vacant, against 16% in the previous year;
  • Of the available shopping space, 9% of the square meters is vacant, against 8% in 2013. 

There are more causes for the increase of vacancy, then just the economic crisis. A share of these causes has a structural character. 

The increasing usage of ICT solutions is an important structural cause for the declining demand for office space and brick-and-mortar stores. 
These ICT-solutions enabled new kinds of shopping and working, like webshops and home working. 

Besides that, the diminishing population growth (or even decline in some areas), as well as the diminishing professional population, caused a declining demand for working and shopping space. This, in combination with the excess supply  especially in the years before the crisis – led to the current vacancy rates.
Surface and vacancy of office buildings
in square meters in The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of  www.PBL.nl
Click to enlarge


Surface and vacancy of shops in
square meters in The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of  www.PBL.nl
Click to enlarge

By itself, vacancy is not per se a societal problem; it becomes such, however, when vacancy becomes more structural in nature and especially when it is negatively influencing the direct neighbourhood of the vacant objects. Think for instance about the pauperization and depravation of areas with many vacant buildings.

When one is looking at the average duration of the vacancy, it stands out that the structural vacancy (vacancy of more than three years) has soared among shops and office buildings. At the beginning of 2014, more than 50% of the office vacancy had a structural nature; in the retail business, it was over one third.
Duration of vacancy at office 
buildings in The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of  www.PBL.nl
Click to enlarge

Duration of vacancy at shops in The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of  www.PBL.nl
Click to enlarge
Further, it is remarkable that the initial and frictional vacancy of shops (vacancy of less than a year ) is increasing. Many new stores are delivered vacant, at this moment: 20%. This means that no tenant has been found yet. 

Nowadays, this phenomena is hardly visible anymore among office buildings, where apparently lessons have been learned: only less than 3% of office buildings is delivered without a tenant or owner.


Vacancy of office buildings and shops per 2014,
 projected on the map of 
The Netherlands
Chart by: Ernst's Economy for You
Data courtesy of  www.PBL.nl
Click to enlarge

The whole press release and the additional information and data are very interesting. Unfortunately, this article has not been printed (yet) in English on the website of PBL, but you can use translation.google.com for a (rough) translation from Dutch to English.

It is good to read that the developers of office buildings – project developers, construction companies, investment corporations and cities & municipalities, as well as the central Dutch government – have finally learned their lessons from the massive building frenzy, which took The Netherlands by storm during the first decade of this century. 

Finally, they started to build office buildings for which they had an actual tenant or buyer, and stopped building offices as an expensive kind of stock base, while hoping for a future tenant.

However, these same people and (government) organizations, responsible for the excess office space in The Netherlands, still developed one shopping centre after another shopping mall during the last few years. 

These were times, in which it was already clear – beyond any reasonable doubt – that the demand for additional shopping space was virtually non-existent in The Netherlands. Even diehard retail companies with soaring numbers of shops, like HEMA complained about the dilution of the existing shopping space, due to an excess supply of new shops and new shopping locations. 

This is the reason that I urge the Dutch central government to take a few drastic measures. What should happen, in my humble opinion, is that new shopping space and office buildings may only be developed, when:
  • Either the same square meterage is taken out of the market, either by demolishment or refurbishment for other purposes;
  • Or a tenant or owner has been found with a long-term contract for the newly built office building or shop, who finds a (structural) solution for his abandoned, former building or shop, in order to not leave it behind as a fresh, new scar in the landscape.

Unfortunately, however, these measures will probably be one bridge too far for the Dutch government.

4 comments:

  1. Great information shared here. If you are looking for office on rent in wardha then your search is over now because we wardha it park provides best commercial office properties at affordable rates. Thanks for sharing.

    ReplyDelete
  2. Thanks for sharing wonderful post. Builders in Nagpur have come up with huge projects to put forward the commercial office for lease. Wardha IT Park is one of major commercial company in wardha.

    ReplyDelete
  3. Great sharing!You positively know the best way to convey an issue to mild and make it important. Extra individuals have to read this and perceiv…Apart from size, price will also depend on location, but also things like distance to the metro station or 商店街/shotengai/shopping street, age of the building, and the wishes of the owner.Vestvox is a crowd sourced commercial real estate marketplace that helps brokers, investors and tenants discover, market, purchase and lease on a value driven platform. Office Building For Sale

    ReplyDelete

Blogoria.de

Blogarchief