H1 2017

Office VisionRandstad Area

1. THE OFFICE OCCUPATIONAL MARKET

1. The office occupational market 3

LOWER TAKE-UP LEVELS compared to first half 2016

Even though the Dutch economy continued to pick up, during the first six months of 2017 the office market in the Randstad area was not quite able to match the relatively high take-up levels reported in the same period last year. On the open market, approximately 405,000 sq m of office space had been taken up in the first six months of 2017, and 440,000 sq m in the same period a year ago.

1. The office occupational market 4

Take-up numbers did not fully meet expectations due to limited demand in Rotterdam and Utrecht. Considerably less office space has been taken up in both regions compared to last year. The Amsterdam region did well in terms of office take-up. In fact, transaction volumes even increased. Higher take-up levels also occurred in the city of The Hague and surroundings towns. In general, demand for office space involved existing buildings in the first place, given the fact that only 11% of total take-up in the Randstad involved new offices.

Also hardly any new space has been added to the open market in recent years. Despite lower take-up levels compared to 2016, demand for slightly larger surface areas (starting at 5,000 sq m) remained steady. In this office market segment, approximately 120,000 sq m were taken-up in the first half of 2017, just as much as in the same period last year.

TRANSACTION VOLUMES UP IN AMSTERDAM AND THE HAGUE REGIONS

600.000

500.000

400.000

300.000

200.000

100.000

0

700.000

800.000

900.000

2008 2009 2010 2011 2012 2013 2014 2017 (H1)2015 2016

The Hague conurbation

Utrecht conurbation

Amsterdam conurbation

Rotterdam conurbation

Take-up of office space in the Randstad

1. The office occupational market 5

The Amsterdam region thrived without a doubt. About 200,000 sq m of office space exchanged users, with a significant role being claimed by Hoofddorp. Here, approximately 35,000 sq m have been let out after sizeable transactions were signed with e.g. Asics Europe and Ingenico Epayments. Also a number of major transactions have been realised in the city of Amsterdam itself, the most eye-catching one involving the take-up of 18,000 sq m by Alliander. Nevertheless, Amsterdam’s office market slowed down a little bit, pushing transaction volumes down.

Interesting is that the popular Zuidas (South Axis) business district was able to benefit from further recovery only to a limited extent, mainly because the amount of suitable office space available for immediate occupation has dropped significantly. Just like in previous years, demand for office space at the city centre remained just as high. Limited supply means rents continued to climb. Lessees were also very interested in Sloterdijk-Teleport and the Amstel Station area. One of the reasons is that these locations come with large surface areas.

HEALTHY TAKE-UPin the Amsterdam region

1. The office occupational market 6

Two transactions determined take-up in The Hague

Just like the Amsterdam region, The Hague region too succeeded in being positively different. More office space has been taken up in both The Hague and the adjacent municipalities of Rijswijk and Delft in the first half of this year, compared to the same period of 2016. When it comes to the city of The Hague, take-up levels were to a great extent determined by two major transactions with the Municipality and Kosovo Tribunal respectively. They represent nearly 60 percent of total take-up in this city.

Transaction volumes down in Rotterdam

As mentioned earlier, the office market in the Rotterdam region had to settle for smaller transaction volumes, affecting not only the city of Rotterdam but also the neighbouring town of

Capelle aan den IJssel. In Rotterdam, The Prins Alexander area suffered the most, where no lease transactions have taken place whatsoever according to information available.

City of Utrecht is lagging behind

Besides the Rotterdam region, demand for office space also diminished in the Utrecht region in the first half of 2017. Decrease in take-up volumes was felt mainly in the city of Utrecht, because the number of lease transactions in the peripheral municipalities has actually been quite steady. Those transactions that did take place in Utrecht, mainly involved buildings located in Papendorp, Rijnsweerd and Kanaleneiland. Utrecht’s city centre is currently having a serious makeover, adding new offices as well that will come available the coming years. This should allow the area to push up take-up volumes over the coming time.

1. The office occupational market 7

Total supply continued to drop in the four largest cities in the Netherlands during the first six months of this year; 3.57 million sq m were on offer in early 2017, and about 3.33 million sq m halfway through the same year. Availability dropped most severely in the Amsterdam region. Property vacancy levels went down because of office space take-up but also after approximately 155,000 sq m had been withdrawn from stock. For instance, many vacant offices located in Hoofddorp in an area called Beukenhorst-West will be taken down to build new houses instead. Some places in the Amsterdam region did not benefit from this development. Like Schiphol and Schiphol Rijk, reporting pretty much the same amount of space immediately available.

Opposing tendencies occurred in The Hague region. While vacancy levels dropped in Delft and also in Zoetermeer, availability increased in the city of The Hague. A similar situation presented itself in the Rotterdam region, reporting a drop in the city of Rotterdam and a climb in Capelle aan den IJssel. In the Utrecht region, it was mainly Houten and Nieuwegein that succeeded in pushing down vacancy levels, mainly because offices were being converted here as well.

TOTAL SUPPLY DOWN IN G4 3.000.000.000

2.500.000.000

2.000.000.000

1 .500.000.000

1 .000.000.000

500.000.000

0

3.500.000.000

4.000.000.000

4.500.000.000

2008 2009 2010 2011 2012 2013 2014 2017 (H1)2015 2016

Availability of office space in the Randstad

The Hague conurbationAmsterdam conurbation

Utrecht conurbationRotterdam conurbation

25%

28%

21%

12%

14%

Availability of office space in the Randstad | Category 2017 H1

1.000 - 2.500

5.00 - 10.00010.000 and more

Less than 1.000

2.500 - 5.000

1. The office occupational market 8

The relative scarcity of high-quality offices will not boost take-up for the rest of the year; few new properties will be completed and supply on good locations is limited indeed. In Amsterdam – especially in areas like South Axis (Zuidas) and Southeast – new supply is possible in terms of availability of land and also market demand.

SCARCITY OF HIGH-QUALITY OFFICE SPACE

400

350

300

250

200

150

2008 2009 2010 2011 2012 2013 2014 2017 (H1)2015 2016

Prime office rentsThe Hague conurbationAmsterdam conurbation

Utrecht conurbationRotterdam conurbation

2. THE OFFICE INVESTMENT MARKET

2. The office investment market 10

Unlike the occupational property market, reporting slightly hesitant trends in demand, the property investment market was all about strong demand for offices. Supported by some sizeable transactions, about EUR 2.1 billion have been invested in Randstad offices in the first six months of 2017, up 35 percent compared to the same period last year.

STRONG DEMAND FOR OFFICES

3.000.000.000

2.500.000.000

2.000.000.000

1 .500.000.000

1 .000.000.000

500.000.000

0

3.500.000.000

2008 2009 2010 2011 2012 2013 2014 2017 (H1)2015 2016

Big fourOther locationsOffice Investments in the Randstad by location

112. The office investment market

A key role was claimed by the city of Amsterdam, with investors spending around EUR 1.06 billion on office buildings. One of the transactions that really mattered to the Dutch capital was the sales of the Atrium office complex at the Zuidas (South Axis) business district, involving approximately EUR 500 million. Interestingly, investors were also very interested in the city of Rotterdam. The deals signed in this city involved as

much as EUR 320 million in total. Especially the sale of the World Port Centre in the district known as Kop van Zuid seriously pushed up investment volumes. In addition to Amsterdam and Rotterdam, office investors also paid attention to yet another city: Utrecht. One of the eye-catching transactions taking place here has been the disposal of part of the office building Hojel City Centre in the downtown area.

KEY ROLEfor Amsterdam

122. The office investment market

Although foreign investors prevailed generally speaking, Dutch office investors were active as well, investing approximately EUR 500 million during the first six months of 2017. Just like last year, (foreign) investors were mainly interested in (first-class) office locations, however they also considered high-risk profile alternatives due to limited availability. Another interesting detail is that investors were mainly interested in large buildings, covering 10,000 sq m and beyond.

FOREIGN INVESTORS REMAIN INTERESTED

3%4%

19%

74%

Office Investments in the Randstad by size | Category 2017 H1

2.500 - 5.000

10.000 and more

Less than 2.500

5.000 - 10.000

132. The office investment market

Investors’ strong demand for offices and the relatively limited availability of suitable buildings continued to push down initial yields during the first six months of 2017. This development has served the city of Amsterdam in the first place. Average gross initial yields in Randstad amounted to 5.1% halfway through the year. They were slightly lower for first-class buildings in Amsterdam, anywhere between 4% and 4.5%.

INITIAL YIELDS CONTINUE TO FALL

10 ,00

9,O0

8,00

7 ,00

6,00

5,00

4,00

2008 2009 2010 2011 2012 2013 2014 2017 (H1)2015 2016

Other locationsPrime locationsAverage gross initial yields on offices

in the Randstad

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