Office market proves resilience time and again

February 8, 2023


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Sebastiaan van Nimwegen

Director Capital Markets

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In early 2022, neither I nor anyone around me saw any hint of dark clouds on the horizon. Crazy to say, now knowing what was about to happen. The trend was positive, returns were stable and expectations were optimistic. Investors were bullish, because the sector had proved that offices still have a right to exist, even in the post-covid era. But the start of the war in Ukraine shook the market to its foundations.

Energy prices went through the roof, and not much later interest rate swaps shot up. And that makes sense, because repeated rate hikes by the ECB were inevitable. They always say: borrowing money costs money – but in recent years, borrowing was practically free. Now money suddenly became expensive, and yields came under pressure. Our clients saw the value of their portfolios decline. Investors came back down to earth, and the market came to a squeaking halt.


Everyone was confronted with the same harsh reality: from the very highest value their portfolio had ever had, clients saw up to 30% disappear like snow in summer. Such a realisation has a paralysing effect – investors became reticent. This results in a vacuum, in which hardly anyone dares to act, or actually does so.

Not without a fight

Take the sale of the Booking campus, which we oversaw. Throughout that entire transaction, I noticed how sluggish the market had become. Buyers were critical, and it became a real tug-of-war. That also meant having difficult conversations with your client, and getting a very good sense of where the bottleneck is. At what price do you say: take it or leave it?

In the end, we sold the Booking campus for a great price, and both buyer and seller are happy with the deal. In recent years, conversations with customers have almost always been positive. But because of that entrenched market, I have been forced to deliver bad news more than once this year. With the exception of Q4, and in particular the last two weeks of the year. That was when I saw another upturn, and we managed to clinch a whole slew of deals. So where did that recovery come from? I think what made the difference was that there was enough information and transparency in the sector.

We have seen a much faster recovery in the European office sector than in previous crises. Thanks to transparency in the market, the denial phase did not last long. In other sectors and regions, you can see that the crisis is still in full swing.

A look behind the scenes

My team and I very quickly managed to make sense of the state of the market and decreased real estate values. We know from previous crises: the more investors know, the faster the recovery. The real estate market in itself is rather opaque. The fact that we had so much information on the price decreases in the office market enabled the office sector to adjust to the new situation more quickly. Investors more readily resigned themselves to the amount they had to settle for. And that’s fortunate, because only when everyone accepts the new price level will they be willing to trade again.

When to make your move?

So what do I expect for 2023? A quiet start, to be honest. It will take some searching and probing, and there is not much new product coming to the market yet. Parties are still orientating themselves: what is the value of my property, and what will my strategy be? I think the second half of the year in particular will be interesting. When the market recovers and inflation and interest rates fall, investing will become interesting again. But parties will be constantly considering: do I buy or sell now, or wait another month? Because the key question is whether the bottom has already been reached.

A modern, central and sustainable office is a showcase for your business. Employees are increasingly attaching importance to where they work. You must therefore invest in that if you want to win the war on talent.

‘Class A offices for sale!’

As the market rebounds, we are going to see movements mainly in the premium segment: the Class A offices. And yes, there too we see an adjusted price, but these types of offices are in huge demand – even more so than before. Because imagine that you rent an office with unprecedentedly high energy costs because not enough has been invested in sustainability. Suddenly, it is becoming interesting to consider that state-of-the-art office at the Zuidas or in other prime locations. Granted, your basic rent goes up slightly, but your energy costs are much lower. And such quality premises have other advantages: the more central, sustainable and advanced your office, the easier it is to attract talent. This is another area in which you can distinguish yourself as an employer.

In the segment below the absolute top, property owners will have to look very critically at their options. To retain tenants, they will either have to invest massively in renovation and sustainability or lower rents substantially.

It is a cliché, but past results are really no guarantee for the future now. Real estate was already bespoke, but now it is even more so. The world just looks very different.

My 2023

I expect to work even more closely with clients in 2023 to determine the best course of action with them. Real estate was already bespoke, but now it is even more so. Choices that were no-brainers two years ago won't necessarily give you a positive return now. The world just looks very different.’ Real estate is still a very attractive investment, because the demand for office space remains. But to be truly profitable in this market, you will have to look critically at your assets, strategy and choices. Develop, refinance or sell? I like to help clients make that choice.

Real Estate Market Outlook 2023

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