Amsterdam South Axis: an insider's view
The Dutch office market is struggling with oversupply, but contains a large diversity in locations and buildings.
To avoid unnecessary generalization, it is important to emphasize the strong qualitative differences that exist in the market and to highlight the success stories. Reason for CBRE to release an in-depth office market analysis of the South Axis district in Amsterdam. The report ‘The South Axis: an insider’s view’, which is available since Expo Real, offers a detailed view of the market dynamics at the South Axis, the Netherlands’ most prominent office district.
The most striking development at the South Axis is the strongly declining supply of office space. Mid 2011, general vacancy stood at some 11%, compared to 19% only two years ago. It is expected that friction vacancy rates of around 5-6% will be reached within two or three years, if market demand remains stable.
The prospects are looking good. With an average annual take-up of 45,000 sqm the South Axis is experiencing a continuously high demand for office space. Even the three difficult years after the 2008 crisis resulted in a total take-up of 125,000 sqm, in a period during which the office market in general experienced a strong consolidation. Moreover, existing office users at the South Axis are loyal to the area. Companies rather ‘upgrade’ to a better suitable office within the South Axis than move away to an entirely different location.
Although most investors at the South Axis are of domestic origin, a particular large share is comprised by German investors. US and French parties also play a prominent role. Surprisingly, British or Irish investors are hardly present in the district. The South Axis owners are mostly the well-known open- and closed-ended funds, but also a number of large investment managers. The share of institutional owners is also relatively large.
It is no surprise, therefore, that the South Axis can be qualified as a typical “core” or “core-plus” type location. It should be noted that most assets concern multi-tenant facilities, which are more complex to manage but simultaneously offer a lower vacancy risk. Moreover, the rapid decline in vacancy might result in prime rental growth in the further future.