The outlook for 2025 is by no means positive for commercial real estate. The expected economic contraction in the user markets is causing a decreasing demand for square meters. Property investors are also keeping their hands on the cut due to the uncertainties about the European debt crisis. This is according to research by ING Economic Bureau.
The most important users of office space, the business services sector, have come to an end to the early recovery. 2024 has been concluded by a good first half of the year with a turnover growth (+1.5 percent). However, in 2025, service providers are expected to see their turnover fall by 1 percent. Decreasing business investment and substantial cuts in the government put a brake on the number of assignments and tariffs.
Business service providers more negative
The opinion of business services entrepreneurs on the economic climate has been deteriorating since August 2024. However, the number of companies that expects revenue growth in the coming months in November surpasses the number that foresees a loss of turnover. The number of companies that want to hire new staff has fallen sharply in recent months and thus gives a pressing effect on the demand for new metrages of office space. However, the differences between the branches are large. The flex industry has shown considerable growth in 2024 and legal service providers also managed to increase turnover. In architectural firms, on the other hand, turnover shrank by more than 10 percent. Accounting firms also faced a contraction in 2024.
Recording office space
In the 3rd quarter of 2024, almost 416,000 m2 of office space was included. This is almost a third more than in the same period in 2023. Over the first nine months, the rented and sold office space with more than 300,000 m2 is above that of 2023. Especially in the Amsterdam region, the number of withdrawals increased considerably and doubled in the third quarter to almost 100,000 m2. For the first time in a long time, the supply is again falling from 1.3 million m2 at the end of the third quarter in 2023 to 1.2 million m2 in the same period in 2024. The rise in the number of admissions to the capital has been somewhat distorted by a high number of withdrawals. Due to the high vacancy, more and more owners / investors no longer see any benefit in the search for a new tenant and look for a new destination for their property. Several properties are thus converted into student housing or hotels. For example, the Volkskrant building on the Wibautstraat is transformed into a multifunctional building with, among other things, a three-star hotel.
Shorter leases
An imminent new lease guideline for companies can ensure that tenants want to conclude shorter leases in the coming years. The new scheme is unlikely to take effect until 2025. Operational leases, including the lease of new buildings, will then have to be accounted for under the new proposed IFRS guidelines on the balance sheet. Tenants covered by these directives are expected to keep their debt on the balance sheet as low as possible and are therefore potentially inclined to enter into leases for shorter terms. Real estate owners can also deal with the effects of the new schemes without accounting under IFRS.