No massive office vacancy due to the corona crisis

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The horror scenario of mass vacant offices such as after the financial crisis is not going to repeat itself. The office market is in much better shape at the start of the corona crisis than back then. Even in the darkest CPB scenario, a maximum of one million square meters is released and the office vacancy rate rises to 10.8%.

The Netherlands has learned a lot from the period between 2008 and 2013, when the national vacancy rate rose to almost 17%. Municipalities took control, stimulated office transformations, and cut new-build plans. “Thanks to these government actions, the situation is now completely different,” says Dré van Leeuwen, director of office property at Colliers. “The vacancy rate in the five major cities is 7%, which is considerably less than the 10.5% in 2008. In addition, there is more than a third less new construction works in the pipeline, part of which is even uncertain to be realised. "

Shock damped by social distancing at the office
The impact of the upcoming recession on the number of office jobs varies from +5,500 to -57,000. In the worst case scenario, almost one million square meters less office space is needed. That is almost 2% of the total office space in the Netherlands. In the period between 2008 and 2010 this increase was 3.5% and therefore almost twice as high.

The social distance measures even ensure that vacancy does not rise at all in the short term. Companies need all their space to have a part of their employees work in shifts at the office. Six out of ten workplaces are temporarily unusable, which is 1.2 million desks in total. The number of lost workplaces is therefore considerably greater than any job losses. So companies do not immediately release excess square meters.

Working from home is no threat either
An increase in working from home does not necessarily lead to less need for office space. Most people come to the office on Tuesdays and Thursdays. Without a better spread over the week, the situation remains the same. If employees indeed start working from home more often, the role of the office changes and it becomes even more of a place for meetings and cooperation. These activities require more space than just a desk.

Investors again choose the best office locations
Although the impact on the office sector seems to be not too bad, the uncertainty on the market causes a change in the investment market. Many real estate investors are currently freezing their search for new objects. "It is expected that real estate investors will look for more certainty again," says van Leeuwen. “This means that they mainly want to buy offices in the best locations again, in contrast to the past few years when they increasingly did deals outside of the big cities.”

No massive office vacancy due to the corona crisis

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Related Experts

Dré van Leeuwen

Executive Director Capital Markets & Agency

Amsterdam

Dré is Partner, Executive Director Capital Markets & Agency and member of the board at Colliers. He  is responsible for Capital Markets in the sectors offices, retail, industrial& logistics and residential. Besides his responsibility for Capital Markets, he is also responsible for the Agency Departments offices, retail and industrial & logistics at Colliers.

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Frank Verwoerd

Head of Research & Market Intelligence

Amsterdam

Frank has been head of research at Colliers International since 2018.  His focus is on realizing Colliers’ internal and external strategies and goals, with the mission to deliver fact based insights, innovative solutions and disruptive perspectives.With the research team we focus on the internal support of the various business lines in order to let them function as well as possible. In addition, we focus on external publications. With the pulbications we try to increase our brand awareness in the Netherlands and to be the expert on the future of real estate. 

Before Colliers International I worked at Dynamis one of the largest Dutch real estaste consultants in the Netherlands, where I worked as a research manager in a similar position to my current position. For Dynamis I work at the Economic Institute for the Construction Market where I worked as a researcher in the office and housing market. Here I did research on the effects of policy on the various real estate markets. I mainly reported to the various authorities in the Netherlands.

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