Limited effect of corona on office market

So far, the corona crisis has had no moderating effect on the housing market. Supply is far too tight, prices are rising sharply and sales are happening fast. It goes without saying that the office market did come under pressure. There was obviously less demand, both due to the increase in working from home and the economic contraction. Over 1 million square meters were “taken up” by the market in 2020, i.e. bought or rented. And at the end of the year, 5.3 million square meters were for rent or sale, over 11% of the total amount of office floor space in the Netherlands. An estimated 400,000 square meters were withdrawn from the stock to make way for residential construction. The fact that the supply of offices far exceeds the take-up is quite normal. There have been years in which supply exceeded 8 million square meters and absorption was even lower than in 2020. It is noteworthy that some project developers and investors dared to build ‘at risk’, without being certain of tenants or buyers.

All in all, there was still plenty of activity on the market, including in Brabant, where smaller office spaces in particular were in demand. In the city of Eindhoven, too, some 11% of the office stock is for sale or rent. The transaction volume on the retail market also remained fairly stable, according to NVM Business figures. There was certainly a corona effect in the commercial market, but no large-scale doom and gloom. Of course, it remains to be seen how things will progress this year when, on the one hand, the economy recovers, but on the other hand, support packages come to an end. Experts do not expect a major structural effect from the increase in home working to which the Netherlands has now become widely accustomed. Many employers expect that employees will soon be working an extra day a week from home, and that this will mainly be on Wednesdays and Fridays. The need for office space will therefore decrease to a limited extent. This means, I expect, that the transformation of office buildings into living space will not take off in a big way. A lot has already happened in that area, certainly in Eindhoven. Perhaps retail properties will provide more opportunities, but it won’t be in very large numbers.