How we can more effectively facilitate growth in the Brainport region

May 8, 2023

The Blob in Eindhoven

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Brainport, Eindhoven’s technology region, is regarded as the driving force behind the Dutch knowledge economy. It is home to large companies such as ASML, DAF and Philips, as well as leading scale-ups and start-ups. The region continues to flourish thanks to the economic success of the high-tech industry, among others. This is leading to a shortage of office space, homes and distribution centres. To solve this problem, we will have to deal with the available space in a smarter, more strategic way, says real estate consultant CBRE.

From their Eindhoven office, 25 CBRE professionals provide strategic-level advice to developers, investors and users on real estate issues in the Brainport region every day. Examples concern area developments and housing decisions, as well as the leasing, purchasing and selling of commercial real estate.

Shortage of high-quality office space

The economic boom in leading sectors such as the technology and manufacturing industries means that the Brainport region is growing rapidly of its own accord. As a result, there is a severe shortage of necessities such as office space, homes and distribution centres. A study conducted by Frank Verwoerd, CBRE’s head of Research, shows that just 4.9 per cent of Eindhoven’s offices are currently vacant. The region also has an extreme shortage of high-end, or top-quality, office space. Of the roughly 1.5 million sqm office stock in Eindhoven, only 3.5 to 4 per cent is qualified as A-grade, compared to 10 to 15 per cent in Utrecht and Amsterdam.

The current office stock is therefore too scarce and of insufficient quality to facilitate the growth of the Brainport region. Eric Harmsen, senior director of the Eindhoven CBRE office, says that while office developments are scheduled, such as the construction of Lichthoven and EDGE Eindhoven, he does not expect these projects to solve the accommodation problem. Together, the two projects will provide office space totalling around 40,000 sqm, but approximately 12,000 sqm of this is already reserved for Vodafone, AKD and Deloitte. In addition, realisation is expected to take two to three years, which Harmsen believes is too long.

40,000 new homes

As well as extra office space, the growth of the Brainport region will require homes for additional employees. For example, a company such as ASML has many expat employees, who all need housing. There is also a birth surplus that will lead to strong population growth in Eindhoven. The city is currently home to 238,307 residents, and this is expected to reach 300,000 by 2040. This means an extra 40,000 homes will be needed in the meantime.

Shortage of distribution centres

Logistics and industrial real estate are experiencing the same problem, with just 0.7 per cent of logistics business premises vacant at present. This is due to the growth of the region, with demand for storage spaces and distribution centres increasing accordingly. In particular, the e-commerce sector is continuing to grow strongly, requiring increased urban distribution to ensure that consumers are served quickly and sustainably.

Making smarter use of space

CBRE predicts that the growing business activity and additional shortages will affect Brainport as a business location, with businesses being forced to relocate. According to Harmsen, the region will only be able to grow if this growth is facilitated effectively, by managing the available space in a smarter, more strategic way, and by making mindful policy choices.

Housing, office and distribution centre in one

Real estate investors still think too much in terms of distinct asset classes, keeping offices, homes and logistics real estate separate. However, these three classes should communicate with each other and work together. This can be achieved by giving inner city buildings a mixed function, explains Harmsen. An example is to build a residential tower with a small-scale logistics space on the ground floor for urban distribution. The second to fifth floors would accommodate offices, and floors six to twenty would be for homes. Adding a hospitality facility at the top of the building, perhaps with a rooftop bar, combines all aspects in one building.

One region, one task

Another means of facilitating growth and tackling shortages is to position Brainport more effectively as a single, united region. It already is a single region officially, but the area actually consists of separate municipalities, each with its own municipal executive. This leads to a lot of unnecessary squabbling, which slows down real estate development. At the regional level, it is also easier to determine where homes and offices should be built, and where housing and work should be combined.

CBRE recommends making Brainport a single region with a single administration; a merged municipality with separate districts, just as in Nuenen and Veldhoven. This will reduce conflicts of interest and accelerate decision-making.

Attracting talent

Instead of focussing solely on Brainport’s function as a region, we should also look at its connection with the rest of the Netherlands and beyond. The better that connection, the greater the pool of talent, which will only serve to improve the attractiveness of the region’s companies.

According to Verwoerd, the great diversity of cultures in the region should have an influence at the facilities level, ensuring an inclusive range of amenities that caters to the needs of all of the region’s residents.

The right purpose for every location

If we want to improve, strengthen and enhance the attractiveness of the Brainport region, including internationally, then we have to take action, starting by facilitating companies. Specifically, this means meeting office and laboratory needs, as well as the increasing demand for employees in the region. We have to make better, smarter and more strategic use of the space available. Or in other words: we have to find the right purpose for every location.