Evidence of occupier market recovery

The recovery of the Dutch economy is also apparent when we look at the occupier market.

For example, take-up volume in 2021H1 increased by 5% compared to 2020H1, and by 5% compared to 2019H1. The differences between the various real estate sectors are marked, with some showing growth while others are contracting.

The logistics sector is mainly responsible for the overall growth in take-up during 2021H1. The take-up volume in logistics increased by a staggering 44% in 2021H1 compared to 2020H1. There are two aspects to this impressive expansion. First, the volume of international trade in the Netherlands has already surpassed pre-pandemic levels. Second, Covid-19 has accelerated the growth of e-commerce.

In contrast to the logistics market, the take-up of retail space was down in 2021H1 compared to 2020H1 (4%). A drop in household consumption and the closure of hospitality and non-essential stores meant that many retailers generated lower sales during lockdown. The absence of foreign tourists and the increase in online purchases are the primary reasons for this decline.

The take-up volume for office space was 31% lower in 2021H1 than in 2020H1. Despite this substantial decline, demand recovered during last quarter: up 19% on 2021Q1. Low unemployment and a record number of job vacancies, combined with the easing of social distancing restrictions have helped this demand to recover. With Covid-19 restrictions being phased out altogether and contracts coming to an end, our attitudes to future office use are becoming clearer. One striking observation is that current renegotiations of expired contracts have not revealed a tendency towards downscaling. In other words, at present companies do not seem interested in shedding substantial amounts of office space. Although almost all companies seem to be re-examining how they use their offices, recent surveys among both lessors and occupiers reveal a continued commitment to physical office space. Indeed, 87% of employees in the EMEA region still see the physical office as a necessary part of their operations.

Meanwhile, 71% of employees would like to see more balanced office occupancy, taking into account peak and off-peak hours to avoid a large flow of employees and maintain a balance throughout the working day. Employees do want greater flexibility to work at different locations, but that does not necessarily entail reducing office floor space. Based on the number of search requests by companies and the aforementioned effect, the office market is expected to continue its recovery in 2021.

A broad recovery in the overall occupier market is apparent in 2021, although the degree of recovery varies greatly per sector. Normally, the investment market is responsive to trends in the occupier market. So are developments in investment hinting at the first signs of recovery compared to previous quarters?

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2021H1 shows limited recovery compared to occupier market and the wider economy

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