Workthere: Shortage of Flexible Office Space Looming in the Post COVID Dutch Office Market

Demand for flexible office space in the Netherlands continues. The number of searches for flexible office space has risen considerably and in October and November of 2020 demand was even higher than in the pre-COVID-era. Companies are less willing to commit to long-term contracts due to the continued economic uncertainty. Many are looking for flexible solutions, which is reflected in the number of searches

The number of searches in January 2021 was 50% higher than in January 2020, according to an analysis of the online booking platform for flexible office space Workthere, in collaboration with real estate advisor Savills.

Despite the growing need for flexible office space, the Dutch office market currently only consists of a relatively small percentage of flexible office space. These offices are primarily located in the four major cities (i.e. Amsterdam, Rotterdam, The Hague and Utrecht). Depending on the city, the flexible office stock varies between 2% and 6% of the total office stock. The flexible office stock in Amsterdam, for example, consists of over 380,000 sq m, which is approximately 6% of the total office stock.

The average number of workspaces per request dropped from 11.1 to 7.1 (-35%) in 2020 compared to 2019. This is due to the fact that new requests were mainly submitted by companies with a relatively small number of employees. Although demand for flexible office space comes primarily from small office occupiers, corporates are beginning to join in the search for flexible office space. This widening in demand is largely driven by the permanent shift to a more remote working culture, in which the changing preferences of office occupiers have gained increased focus. Due to the fact that many corporates are currently focusing on these changes, strategic office decisions are currently not being made.

Justin Kruseman Aretz, Head of Workthere Netherlands, says:

“Hybrid working is the answer to the changing needs of employees. The scale at which corporates are currently evaluating their offices and considering hybrid working is so high that an increase in demand for flexible office space is to be expected in the coming years. However, the question is to what extent supply will be able to meet this future demand. After all, flexible office stock is as yet primarily suitable for small occupiers and not corporates, as the latter often require more square footage due to a significantly larger number of employees.”

Scato de Smit, Savills Research, says:

“In addition, the supply of flexible office space has not grown any further, unlike in previous years. Companies that operate business centres (operators) took up less than a fifth of new locations in 2020 compared to the previous year. This indicates that supply has stabilised, while demand is now picking up again. If corporates collectively decide to embrace the idea of flexible office space as a result of hybrid working, supply will soon prove to be insufficient.”

Read the full report here.