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  • 8/11/2019 DTZ (2014) Choosing key cities

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    Choosing key cities

    Amsterdam the front runner

    January 2014

    Definitely.DTZ Zadelhoffwww.dtz.nl

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    Choosing key cities 2

    Property Vision 3

    Property investment market: The Netherlands in a European perspective 9

    Quality of property is critical 10

    Conclusion: contours are becoming clearer 11

    Housing investments: Now foreign interest too in Dutch residential property 12

    Retail 15

    The Netherlands is a European logistics hub 16

    Glossary of terms 18

    Contents

    Choosing key cities

    Amsterdam the front runner

    The market for Dutch commercial property

    January 2014

    Utrecht: DTZ Zadelhoff v.o.f.

    ISBN978-90-78197-40-9

    Design:Matt Art Concept & Design, Haarlem.

    Despite the fact that the contents of this report have been

    meticulously checked, DTZ Zadelhoff v.o.f. cannot provide any

    guarantee against any loss or damage suffered as a result of

    any incorrect information presented in this report. Nothing from

    this publication may be copied and/or reproduced without

    indication of the source.

    DTZ Zadelhoff 2014

    Cover photography

    Kalverstraat, Amsterdam (photo: Frank van der Pol)

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    Choosing key cities 4

    Traditionally, for a healthy market a ratio of 1.5 times the available

    supply compared to annual demand is ideal. We have built too much

    office property in the Netherlands. The current supply/take-up ratio

    is the result of overdevelopment during the boom years. However,

    the problem does manifest itself in different ways in the various key

    cities of the Netherlands. Take-up continues to hover around 1.1

    million square metres this year, and we expect similar take-up levelsin 2014. What has changed, though, is that market parties (owners

    and developers) are responding to the current dynamism in the

    market, as studies such as the one by NEPROM show. Of the space

    delivered in 2012, 37% has been redevelopment. During the period

    from 2008 to 2010 this percentage was between 10-15%, rising to

    23% in 2011. Incidentally, this concerns only redevelopments where

    the office function has been retained. Office buildings which have

    been given a different function are not included in this study. The

    rising percentage is due on the one hand to a decline in the amount

    of space in new developments and on the other hand to an absolute

    growth in the number of redevelopments. In 90% of cases, the

    redevelopments surveyed in the study are offices delivered in the

    five largest municipalities.

    The study gives a clear signal: in the major key cities, quality is been

    added to existing offices and the number of square metres added to

    the market in new builds is falling.

    As well as providing a quality boost to property within this office

    function, during the past year we have seen examples of offices

    which have been transformed into other functions. The moststriking examples can once again be found in the large cities, which

    is entirely logical. An urban environment also offers opportunities

    for different functions, such as hotels or student accommodation.

    Space is being withdrawn from the market as well, but these

    examples are fewer than those of redevelopment.

    Property Vision

    500,000 sqm 1,800,000 sqm 1,000,000 sqm 700,000 sqm 800,000 sqm 100,000 sqm

    1985-1996 1997-2000 2001-2006 2007 2008-2011 2012-2013

    Additions to the office stock and supply/take-up ratio

    Availabil ity Take-up Average annual additions to the stock

    Source: BAG, Bak and DTZ Zadelhoff

    Strijp-S,

    Eindhoven

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    5 Choosing key cities

    Key citiesResearch carried out by Utrecht University indicates that

    the migration to the cities can be attributed to the

    emergence of the knowledge economy. This shift follows

    the principle of work follows work. Highly educated

    people seek work, and the chance of finding work is

    greatest in those places where the population has

    traditionally concentrated. It is here where economic

    activity began, producing sufficient critical mass for

    amenities to be profitable. The extensive amenities andemployment opportunities act as a magnet for the

    population and economic activity in the region, as a result

    of which the key city grows in size and importance. In this

    report, a key city is one which has a magnetic effect in a

    regional perspective. The Netherlands has several key

    cities, each with its own sphere of influence. Some

    examples of these key cities are Amsterdam, The Hague,

    Rotterdam, Utrecht, Eindhoven, Groningen, Arnhem, Den

    Bosch, Maastricht and Zwolle.

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    Choosing key cities 6

    User market national

    Top locationskey cities

    Secondarylocationskey cities

    Secondarylocationsothers cities

    Amsterdam the front runner

    A number of key cities can be found in the Netherlands which have

    not only a national but also an international sphere of influence. As

    the largest port in Europe, Rotterdam plays a role in world trade.

    The Hague is the Netherlands political capital and in this role makes

    a vital contribution to international politics. Eindhoven, as the

    smartest city of 2011, is particularly attractive to innovative,

    high-tech businesses. Utrecht is the city in the heart of the country

    with the largest public transport hub. However, the Dutch city with

    the most influence within and outside the Netherlands is the capital

    Amsterdam. It is our national key city, which acts on the playing

    field of European capital cities, as it has done ever since the Golden

    Age.Whether it concerns population development, growth in

    employment, the presence of businesses in the financial services

    sector, highly educated people, an international allure or tourism,

    this combination ensures that Amsterdam scores highly, also in

    terms of the dynamism on the user and investor markets. Within the

    Netherlands the position of Amsterdam is not unlike that of the

    front runner in a cycling team. If the leader performs well, other

    members of the team will benefit too. That means that these

    members must do everything they can to ensure that the leader

    performs at the peak of his ability, both nationally and

    internationally. A strong Amsterdam benefits all of the Netherlands,

    and it is important to acknowledge this position.

    Amsterdam the centre of relocations

    If organizations wish to relocate, there must be high-quality office

    space available at locations that are attractive to employees.

    Logically such offices are scarce in the popular locations in the

    key cities. They form the start of what DTZ Zadelhoff refers to as

    the dynamic chain. In economically tougher times space is still

    available in these locations, but not usually for very long. Once the

    high-quality office space at prime locations in the key cities is fully

    occupied again, demand shifts in a dynamic process to secondary

    locations in the same city or to prime locations in other cities. On the

    Dutch office market Amsterdam is the key city above all others. In

    2012 some 22% of take-up nationally was in Amsterdam, and in 2013

    this was 20%.

    Dynamic chain

    It is clear that Amsterdams share of national office take-up is

    considerably greater than the share of The Hague, Rotterdam or

    Utrecht. The four largest cities together account for 41% of take-up

    in the country as a whole.

    Key cities and their regions

    For the five largest cities in the Netherlands and for five peripheral

    municipalities around these five largest cities, the average supply/

    take-up ratio in the period before the economic crisis has been

    compared to the period from 2009 (Figure 3). Although there is

    more supply in the key cities as well, supply in the office market in

    the peripheral municipalities is rising relatively faster.

    As demand for property declines, so the importance of the key cities

    increases.

    Figure 2

    Property Vision

    0

    5

    20

    25

    15

    10

    Amsterdam The Hague Rotterdam Utrecht

    Take-up offices four biggest cities as a shareof the total take-up 1993 - 2013 (in %)

    20132003 2005 2007 2009 201120011999199719951993 0

    20

    16

    12

    8

    4

    Availability-take-up ratio key cities vs. periphery2004 - 2008 and 2009 - 2013

    The

    Neth

    erlands

    Perip

    hery

    Big5 Di

    emen

    Zoet

    erm

    eer

    Utre

    cht

    Eind

    hoven

    Big5

    Amst

    erdam

    TheH

    ague

    Rotte

    rdam

    Cape

    llea/d

    IJssel

    Nieu

    wegein

    Sonen

    Breugel

    2004 - 2008 2009 - 2013

    Figure 3

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    7 Choosing key cities

    Southern IJ-banksAmstel Business ParkNorth

    SoutheastPaasheuvelweg areaTeleport-SloterdijkBuitenveldertWest axis

    User market Amsterdam

    South axisCentreCentre Southeast areaDe Omval

    International labour pool in Amsterdam

    The current office market is largely a regional relocation market

    with a concentration in the key cities. This is also the case at a

    national level. Demand for office space is largely generated by

    relocating organizations that are already based in the Netherlands.

    Nationally or internationally operating organizations established in

    the Netherlands relocate mainly to the largest key cities, with

    Amsterdam being particularly popular. It is seldom that a large

    company relocates from Amsterdam to another city, but the reverse

    is certainly true. As far back as 1998 Philips relocated its head office

    from Eindhoven to Amsterdam. By taking this step, Philips wanted to

    become more attractive particularly to international managers and

    high potentials. Akzo Nobel relocated from Arnhem to the Zuidas inAmsterdam because the company decided it would be easier to

    attract top personnel at that location, and Douwe Egberts Master

    Blenders moved from Utrecht to the Oosterdokseiland in

    Amsterdam because according to the organization this location is

    easy to reach by public transport and the international allure of

    Amsterdam city centre is attractive for DE.

    A recent example of a relocation from the region to the city centre

    is that of the research institute TNO, which has moved its head

    office from the outskirts of Delft to New Babylon, immediately

    adjacent to the central station in The Hague (9,750 sqm). The

    opportunities afforded by the New Way of Working and better

    accessibility have been the main reasons for this relocation.

    The presence of highly educated personnel is becoming an

    increasingly important criterion for organizations seeking to locate in

    the Netherlands. Companies with national or international operations

    often choose Amsterdam for this reason. Businesses with regional

    operations also often choose to locate in the key city of their region.

    During the coming years we expect that some organizations still

    based in the regions will decide to relocate to the city.

    Hubs within the key cities

    Within the key cities themselves, however, there can be considerable

    differences between individual districts. Locations that are easy to

    reach by public transport, have a good parking ratio, with a good

    range of functions available and where there is activity at street

    level are particularly popular. Amsterdam too displays distinct

    differences between the attractiveness of particular districts. Figure

    4 compares certain locations in Amsterdam with each other. This

    comparison shows that the historic centre and the Zuidas currently

    have the most severe market shortages, followed by the central

    area of Zuidoost and the banks of the IJ. In the Paasheuvelweg

    district in Zuidoost, at Teleport-Sloterdijk, Buitenveldert and the

    Westas, the ratio between supply and take-up is much greater. These

    districts have a largely monofunctional character.

    Dynamic chain

    In much the same way that Amsterdam is the front runner for the

    Netherlands, within the city itself a distinction can be made in the

    attractiveness of different locations. As the economy picks up,

    dynamism increases first at the prime locations and any available

    space is quickly taken up. Then take-up spreads out to the

    secondary locations in the city and occupiers attention is redirected

    towards the best locations in other hubs. The same dynamic chain

    can be seen in other key cities.0

    40

    36

    32

    28

    24

    20

    16

    12

    8

    4

    Availability take-up ratio in Amsterdam per subarea2013

    Centre

    Southaxis

    Centr

    e

    Southe

    asta

    rea

    South

    ernIJ-b

    anks

    andIJb

    urg Am

    stel

    Busin

    essP

    arkNo

    rth

    South-E

    ast

    Paashe

    uvelweg

    area

    Telep

    ort-

    Slote

    rdijk

    Buite

    nveld

    ert

    Westaxis

    Figure 4

    UN-studio, Amsterdam

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    Choosing key cities 8

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    9 Choosing key cities

    LondonParisFrankfurt

    Top locationsothers key citiesand secondary locationsAmsterdam Amsterdam

    BrusselsStockholm

    South axisCentreCentre Southeast areaDe Omval

    Investment market Europe/The Netherlands

    Property investment market:

    The Netherlands in a European perspective

    Highest percentage of foreign investors in the

    Netherlands since 2007

    This upturn is largely thanks to increased activity among foreign

    investors. They have accounted for around 40% of investment, the

    highest percentage since 2007.

    Particularly striking is that until recently German investors

    accounted for the largest share of foreign investment in Dutchproperty. Now, however, there is much greater diversity. British

    investors in particular are taking advantage of the Dutch office

    market, focusing above all on offices and often complete portfolios

    at good locations in key cities. Even so, a number of German

    investors continue to be interested in Dutch office property, virtually

    exclusively in property in Amsterdam (Figure 5). After all, as far as

    return is concerned the high-quality offices at the Zuidas are an

    excellent alternative to office space in the West End of London and

    the CBD of Paris. This brought the share of Amsterdam in the total

    level of investment to 21% in 2012 and as high as 32% in 2013.

    The increased interest in Amsterdam is expected ultimately to

    benefit other key cities and regions in the Netherlands. As in the

    user market, they form the next link in the dynamic chain. At

    present, competition for high-quality property on offer at the

    popular locations in Amsterdam is growing, leading investors who

    require higher returns to focus on areas with less competition and

    where property is more competitively priced. This is good news for

    areas such as the banks of the IJ in Amsterdam, the station district

    in Utrecht, the Rotterdam Central District, Eindhoven city centre and

    the Paleiskwartier in Den Bosch.

    Unlike the user market, there is considerable dynamism in the investment market. Following a number of years

    of declining investment, we are now seeing investment growing once again. Levels of investment in commercial

    property in the Netherlands have risen to EUR 5.5 billion, a rise of 28% compared to 2012.

    The market is still defined by just a few larger transactions. While

    the transactions during the past few years seemed to be only

    incidental, it now appears that a flow of transactions is gaining

    momentum. With the arrival of venture investors in particular who

    are buying up large portfolios, a trend has started that will

    continue during the coming year. A particularly striking aspect

    here is cross-border dynamism. Where the level of investmentduring the past year was dominated by Dutch investors, we are

    now seeing a wide diversity of foreign investors. In the investment

    market the dynamic chain is comparable to the Dutch user market;

    a chain that starts at a global or continental level. During the crisis

    the focus in Europe was on property in Germany, France and the

    United Kingdom. Although the banks are still providing relatively

    little credit, we are seeing a substantial increase in the volume of

    capital being put into property.

    Dynamic chain

    As the competition intensifies, a number of investors are seeking

    refuge in areas other than the traditional hotspots of London,Paris and Frankfurt. As a result, activity in neighbouring countries

    is growing as well. Property in these countries is relatively

    competitively priced and investors seeking higher returns are

    willing to accept property at locations with a higher risk profile.

    Molenwerf,Haarlemmerweg,Amsterdam

    0

    40

    Share of the total Dutch investment volume in Amsterdam

    2000 - 2013 (in %)

    201305 06 07 08 09 10 11 12040302012000

    5

    10

    15

    20

    25

    30

    35

    Figure 5

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    Choosing key cities 10

    Quality of property is critical

    In the United Kingdom, since the financial crisis broke out there has

    been a growing difference between prime locations and secondary

    locations in both the user and the investment markets. In the

    Netherlands too this gap is widening. It would seem that the

    transitory nature of the life cycle of property is being factored in.

    German investors continue to pay a competitive return for

    high-potential offices that retain their function for the long term. In

    a few cases the gross initial yield is even at the same level as the

    market peak in 2007. Since prime buildings at prime locations are

    scarce after all, there is little new development competition is

    intense and prices are forced upwards. At the same time, certainly

    compared to previous years, much more capital is available for

    investment in property in the Netherlands and elsewhere. Britishventure investors are more interested in promising office property

    that can be transformed into high-potential property if given a

    quality boost. These buildings are however also often sold in

    portfolios, which puts the prices of these buildings under pressure.

    Low-potential property would seem to be in an ongoing downward

    spiral. Return is not important here, but the price is determined per

    square metre which may sometimes not be more than a few tens of

    euros. These differences in price and the choice of property are also

    evident from the interest shown by investors for different market

    segments. Within the office market the differences are now clearly

    expressed. But we also see differences between the various sectors.

    There is much less investment in retail. While this had been caused

    in the past by a lack of property in which to invest, it would seem

    now that the current uncertainty in the retail market is acting as a

    brake on investment. Logistics property, on the other hand, is more

    popular than ever, remarkably often driven by capital from countries

    rich in natural resources (Canada, Norway, Russia). The user market

    is fairly stable and the good locations can be readily identified. This

    applies to Europe, but to the Netherlands as well. The leading

    position of the Netherlands in the logistics chain is indisputable (see

    page 16).

    Quality boost for valuations

    The Platform for Valuers and Accountants (platform

    taxateurs en accountants (PTA)) has put forward 28

    recommendations to give a new quality boost to propertyvaluations in the Netherlands. Ensuring quality in the

    process improves the chance of arriving at a high-quality

    valuation, and that is good for confidence. In order to make

    a good appraisal of the market value, references are

    required. In the current market fewer transactions are being

    concluded than in the past. The reasons why a transaction

    did not take place have now become just as important as a

    reference framework. Transactions are brought about in the

    Netherlands where the price level is in fact lower than the

    land price. Examples are office buildings in Emmen and

    Schoonebeek which have been sold for only a few tens of

    euros per square metre. These examples would seem to

    illustrate that an absolute low has been reached in the

    Netherlands. The ultimate value of property is its future

    usefulness, as has always been the case. Todays market,

    however, views the future usefulness of a property

    differently compared to the past.

    Stricter requirementson valuing property

    Regulatory bodies demand a greater insight into the risksof property financing, and with it an insight into the market

    value of the property compared to the amount of

    outstanding finance. The Dutch Central Bank (DNB), under

    pressure from the European Central Bank, has begun

    imposing stricter requirements on risk analyses of property

    financing provided by Dutch banks. As a result, banks are

    required to make more frequent and better quality

    valuations using external valuers.

    Housing also remains popular among investors.

    Once again investment in housing complexes is high. Within this

    segment the price differences are widening, with prices under

    pressure outside the key cities and growth districts.

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    Dutch property investment marketInvestment volume by year by property type (in mln euros)

    Office Industrial Retail Residential Others

    20132009 2010 2011 201220082007200620052004

    Figure 6

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    11 Choosing key cities

    Conclusion: contours are becoming clearer

    The positive sentiment, perhaps too positive, that dominated the

    turn of the century, followed by a perhaps too negative picture of

    the Dutch property market, seems to have given way to a more

    measured sentiment. The contours of the property market have

    been blurred during the past few years. Now it is increasingly clear

    how these contours will take shape during the coming years.

    During the past few years take-up levels in the office market have

    fluctuated around one million square metres, and this will not rise

    during the coming year. Analyses show that as demand for property

    declines, the importance of key cities increases. Almost half of

    take-up is found in the four largest municipalities. The best locations

    in these key cities form the start of a dynamic chain. Even if take-upis low a certain level of dynamism is always evident. As total take-up

    grows, the dynamism spreads out to the secondary locations in

    these key cities or the best locations in other key areas. Amsterdam

    is the front runner of all the key cities in the Netherlands.

    A comparable dynamic chain can also be seen in the property

    investment market. In a European perspective Amsterdam is not a

    key city such as Paris, London and Frankfurt. As a willingness to

    invest increases in these key cities, cities such as Amsterdam then

    enter the frame. This was evident in 2013 in the level of investment

    nationally, which at EUR 5.5 billion was much higher than in 2012

    (EUR 4.3 billion) and in the share of that total that had been

    invested in Amsterdam. This dynamism will also be evident during

    the coming year.

    Compared to a few years ago, there is a growing awareness that the

    ratio between supply and demand is too wide in various segments of

    the property market. At the same time, the awareness is also taking

    hold that there are different opportunities for high-potential,

    promising and low-potential offices.

    During the past year a number of trends have emerged indicating

    that an appropriate response is being given to the market situation.

    Through redevelopments and transformations, office buildings have

    been given a different and valuable function. A similar trend is the

    firmer interest from foreign venture investors who wish to give a

    quality boost to promising office property in the Netherlands. The

    focus of these developments has been on the key cities, particularlythe promising offices at prime locations and high-potential offices at

    secondary locations. As the dynamic chain gains momentum, they

    form the next link in this chain. The urban area provides these

    opportunities, while secondary locations in the key areas outside

    the key cities have few or none of these opportunities.

    The transitory nature of the life cycle of property is being factored

    in. Property is also being withdrawn from the stock, as yet not on a

    large scale. There are also examples of low-potential offices which

    are sold off for only a few tens of euros per square metre. At the

    other end of the spectrum, very good returns are still being paid for

    high-potential property at the best locations in the largest key cities.

    We have entered a phase in which the market anticipates changes:

    the market is doing its work.

    Waldorf Astoria, Amsterdam

    11 Choosing key cities

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    Choosing key cities 12

    Housing investments: Now foreign interest

    too in Dutch residential property

    Just as last year, sales and purchases of housing complexes has made the residential segment the

    second-largest segment in the Dutch investment market, with a share of 27% compared to 35% in the

    office market. Some EUR 1.5 billion has been invested in residential property.

    Dutch private and institutional investors are especially active in this

    segment. Institutional investors are selling older housing complexes

    from the 1970s, 80s and 90s and buying new complexes from

    property developers. Property developers are making this less

    lucrative choice due to the sharp decline in sales of private

    owner-occupied homes. Dutch institutions are making clear choices

    for quality, and above all location. Here too we see clearly thedifference between key cities and growth areas and the locations

    that fall outside these areas. The expectation was that many

    investors would be able to buy from housing associations, which are

    now able to sell more thanks to the amended Ministerial regulations.

    In practice, however, we see these associations mainly selling to

    each other or choosing to sell off property as individual units. In

    addition, the demand from investors often does not match the

    property being offered by the housing associations.

    In 2013 we observed growing interest among private equity parties,

    both from the Netherlands and abroad. Interest from abroad is

    being generated by the larger volumes, often entire portfolios, being

    offered in the market. A few large German investors have actually

    made some purchases at price levels comparable for Dutch

    investors.

    British investors are also expressing firm interest but are chiefly

    opportunistic in nature, with similar price expectations. The first

    transactions with these investors are expected to become reality in

    the very near future. The arrival of these relatively new players will

    change the dynamics of the housing market.

    Housing in the key cities also popular

    Interest in housing shows clear geographical preferences.

    In 2013 we observed a growing attraction of the following areas:

    1. Large cities in the north of the Randstad conurbation

    (Amsterdam, Utrecht, Haarlem, Hilversum).

    2. Medium-sized cities (> 25,000 inhabitants) with historic centres

    (Groningen, Zwolle, Enschede and Maastricht).3. Large cities in the south of the Randstad conurbation

    (Rotterdam, The Hague)

    4. Other medium-sized cities (> 25,000 inhabitants).

    In the housing investment market too, the central urban locations

    have become more attractive than residential property on the

    outskirts of cities. As an investment product the preference is for

    ground-level housing rather than apartments.

    35%

    13%

    11%

    27%

    14%

    Office

    Industrial

    Retail

    Residential

    Others

    The Netherlands

    Investment volume per property type

    2013 (in %)

    Perzikstraat,Assen

    Figure 7

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    Choosing key cities 14

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    15 Choosing key cities

    Retail

    Kalverstraat

    Its all happening in Amsterdam, also in the retail segment. More

    than ever it is the trendsetting character of the city that is crucial

    for the strategy retailers pursue when opening stores. This isparticularly the case for international retail chains. If a retail chain

    decides to enter the Dutch market, the first store will be opened in

    Amsterdam, after which attention will turn to other cities. For

    example, in 2001 the Spanish group Inditex opened its first ZARA

    store on Kalverstraat in Amsterdam. Since then the chain has

    opened 25 shops in 22 Dutch cities.

    Important hubs for retailers

    Retailers now only select cities with a large potential reach (with a

    growing catchment area). In addition, visitors must be able to enjoy

    an extended visit to a shopping city. The aim is to find the ideal

    combination of a pleasant living and working environment with a

    varied shopping experience. Joel Kotkin (professor of urban

    development at Chapman University in Orange, California) uses the

    term Boutique City to describe this combination. The residential

    function of a city together with good retail premises in shopping

    streets with high footfall are essential for retailers.

    Less footfall

    Just as in the office market, demand has fallen in the retail market,

    as a result of which the best locations are more important than ever.

    According to figures published by Locatus, footfall declined by an

    average of 10 per cent between 2005 and 2012. The recession hashit consumer spending and increased sales via the internet have

    also contributed to a structural reduction in footfall. Retailers are

    anticipating this fall by wanting to occupy only premises in the very

    best shopping streets in a city, intensifying pressure on prime

    locations in Boutique Cities. This rising demand for the best retail

    space has meant stable or even rising retail rents at these locations.

    Fast Fashion

    As retailers have to respond ever faster to the trends of the moment

    in sectors such as clothing, they focus on new production concepts

    such as Fast Fashion where a product gets from the drawing board

    to the stores ever faster. This shorter turnaround time for

    collections means that retailers must have a presence at the best

    prime locations to ensure sufficient footfall. As a result, they are

    willing to pay a higher rent.

    Leading position for Amsterdam

    The Amsterdam core retail area (A1 plus surrounding area) is the

    most important retail concentration in the Netherlands. Of all citiesin the Netherlands, the catchment area here is the largest, and

    moreover Amsterdam has a huge magnetic attraction for people

    throughout the Netherlands and parts of Germany and Belgium who

    want to enjoy a days shopping in the Dutch capital. The battle to

    secure the best locations is most obvious in Amsterdam; a battle

    also fought by the large international retailers.

    The trend for concentration will mean that in the four major cities in

    particular (Amsterdam, The Hague, Utrecht and Rotterdam)

    together with Maastricht, shopping will form part of a day out in the

    city. Visitors will travel from further afield and will spend more on

    higher-end products. The combination of the experience and a

    varied range of shops will be at the expense of existing shopping

    towns in the provinces. The closure of De Bijenkorf branches is the

    first concrete indication of this trend.

    This year the department store De Bijenkorf shocked both friend and foe by announcing the closure of five

    of its twelve stores, despite them all being profitable. In an interview, CEO Giovanni Colauto explained that

    he wished to copy the success story of Amsterdam throughout the Netherlands. The five branches to be

    closed do not adequately meet the conditions of premium excellence. The focus will therefore be on seven

    flagship stores and a web shop of international top quality.

    Primark,Mertropolestraat,Almere

    Bijenkorf, Amsterdam

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    The Netherlands is a European logistics hub

    The outsourcing of production to Asia and Eastern Europe,

    the Netherlands geographical location, the presence

    of two mainports (Schiphol Airport and the Port of

    Rotterdam) and the excellent logistics infra-

    structure: these are factors that have enabled

    the Netherlands to develop as a logistic

    hub for the distribution of goods

    throughout Europe.

    Logistic Hotspot

    Cargo airport

    Seaport

    Major routes

    Choosing key cities 16

    The Netherlands as a magnet

    This unique position of the Netherlands acts as a magnet for

    shippers and logistic service providers. They set up their European

    distribution centres (EDCs) at the most favourable locations in the

    Netherlands to enable them to serve the European market: the

    logistics hubs (see map). A dense distribution network at a national

    level is exchanged for a European network of European distribution

    centres on a vast scale.

    These European distribution centres are not merely places for

    transferring goods, but are versatile links in the distribution chain

    where value is added to products. This places ever higher demands

    on the building and the location, usually in the vicinity of urban

    centres where sufficient labour potential is available.

    The B2B character of the goods flows from distribution centres is in

    decline due to the growth in internet sales. E-fulfilment is the trend.

    Goods flows are delivered direct to the consumer. Around the

    Sinterklaas period Bol.com sent around 200,000 ready-wrapped

    items every day.

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    Shortage of high-potential and surplus of

    low-potential logistics property

    The proportion of high-potential, promising and low-potential

    property in the logistics sector differs to that of the office market.

    The amount of promising property in particular is much smaller.

    Logistics property is consequently generally high-potential or

    low-potential.

    The flip side of the changing requirements of logistics property is

    that there is a surplus of distribution centres of poorer quality.

    These are suitable mainly for storing bulk or low-value goods, but

    compared to some other countries the running costs for these

    premises in the Netherlands are too high for this function. As these

    buildings do not meet the changing requirements of the user,

    despite the shortage of first-class buildings they will be difficult or

    impossible to let. This will produce a greater difference in rents and

    the appeal of top-quality premises compared to other available

    property on the investment market.

    Choosing key cities17

    Distribution centre Bol.com, Waalwijk / Photo: Koen Verheijden

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    Choosing key cities 18

    Supply

    Premises which, at the end of each

    calendar year, have a lettable floor area

    of at least 500 sqm of office space

    available for sale or letting. Available

    space relates solely to complexes that

    have already been completed and those

    under construction, and specifically exclu-

    des developments still at the planning

    stage.

    Supply/take-up ratio

    The ratio between the total floor area ofoffice buildings in which a lettable floor area

    of at least 500 sqmis available for sale or

    letting at the end of each calendar year, and

    the office space that is let or sold on the

    open market with a lettable floor area of at

    least 500 sqmper annum. The ratio

    between the two indicates whether there is

    a shortage or oversupply on the market.

    B2B

    An international indication for Business-to-

    Business. This usually concerns businesses

    that do business specifically with other

    businesses.

    Distribution centre / logistics property

    Large-scale business space in which a range

    of logistic activities are carried out, such as

    storage, transfer, groupage, etc. A

    distribution centre covers an area of at least

    5,000 sqmlfa, has a minimum clear height

    of 8 metres, a minimum work floor load of

    3,000 kg/sqmand has loading docks inthe ratio of one dock to every 750 sqmto

    1,000 sqm. This does not include buildings

    designed for bulk transshipment, liquid

    storage, auction complexes and suchlike.

    Dynamic chain

    Ranking of geographical preference of

    demand for property.

    E-fulfilment

    The distribution of online orders to the

    consumer, including any return flows.

    Fast Fashion

    The process whereby clothing is designed,

    produced and sold in stores within a very

    short space of time.

    The New Way of Working

    Working in a way that is independent of the

    constraints of time and place, thanks to new

    mobile technology. Offices become meeting

    places.

    Key city

    A city which has a magnetic attraction in a

    regional perspective.

    Vacancy

    Space on offer in completed buildings which

    is not or no longer in use at the time of the

    survey.

    Take-up

    Office space which is let and sold on the

    open market with a lettable floor area of

    least 500 sqm, but excluding premises

    covered by sale-and-leaseback transactions,

    lease extensions and new premises built for

    owner-occupiers.

    Take-up figures are recorded as of the dateon which agreement is reached between the

    parties.

    Private equity investor

    Investor who invests with private capital. In

    order to be able to invest, a private equity

    investor accrues capital through pension

    funds, insurers, banks and suchlike.

    (Gross initial) yield

    The gross rental income, before

    depreciation and owners charges, as a

    percentage of the total purchase price, no

    additional costs payable by the purchaser.

    Lettable floor area (lfa)The floor area, measured at floor level,

    between the upright divisions that surround

    the relevant area, allowing for the

    correction factor for glazed surfaces.

    In determining the lettable floor area, the

    following elements are excluded: plant

    rooms, stairs, lifts and shafts and

    loadbearing internal walls (NEN 2580).

    Catchment area

    The area around a key city that looks to that

    key city for all urban facilities and

    amenities.

    Office stock

    Existing office property or property under

    construction with a lettable floor area of

    500 sqmor more. Data supplied by Bak.

    Glossary of terms

    18

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    19 Choosing key citieswww.dtz.nl

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