Offices

With an investment volume of over €1.8 billion, the dynamics in the office investment market increased in 2024. Nevertheless, the recovery is slow. The ECB interest rate was only lowered for the first time at the end of the second quarter—later than expected. Additionally, the number of forced sales during refinancing remained limited, partly due to greater flexibility from financiers. It has been notably quiet among institutional and international investors. Nonetheless, we are on the brink of a new investment cycle—one that particularly offers opportunities for private equity. We assume that institutional investors will also become somewhat more active in 2025, despite a decline in investment allocation to office real estate. CBRE anticipates that the investment volume will slightly recover in 2025, reaching €2 billion.

Trends and developments

• In 2025, the CSRD obligations^[5] will apply not only to large organisations, but also to medium-sized companies in the Netherlands^[6] – and from 2026 also to all listed SMEs. In addition, smaller companies are becoming involved in the CSRD because they are suppliers to CSRD-obligated organisations. This is creating increasingly concrete ESG ambitions across the board and therefore also a growing need for sustainable office real estate and offices located at public transport hubs to make mobility more sustainable as well. The demand for this type of office is also growing outside the big five cities.
  
  
• Developers in cities such as Arnhem, Amersfoort, 's-Hertogenbosch, Groningen and Zwolle are tackling the challenge and making plans for office projects that meet high sustainability requirements – for new construction and renovation. The combination of an expected rent jump and lower interest rates makes these types of business cases increasingly attractive. However, it turns out to be almost impossible to reduce emissions to Paris Proof level: 0 kilowatt hours for new buildings and 70 kilowatt hours for renovations. A reduction to 80 to 90 kilowatt hours is more realistic. In that case, buildings meet the CRREM^[7] ambition, but are not Paris Proof according to the standards of the Dutch Green Building Council (DGBC).
  
  
• The relatively low vacancy rate in Dutch office cities makes sustainability challenging. Only in Amsterdam, Arnhem, Amersfoort and Tilburg, the vacancy figures exceed the frictional vacancy level of 6%. This limits the possibilities of evicting tenants from office buildings, which makes renovations difficult, costly, and risky. Owners are therefore more likely to opt for continuous exploitation of buildings, with only a few minor improvements – for example to the installations.
  
  
• Initial yields for office real estate showed a stable picture in 2024. his was not the case for the book value of many offices, which was corrected downwards due to the increasing number of market transactions. Falling property values are keeping a negative impact on investor sentiment around office real estate. Nevertheless, CBRE expects 2025 to be marked by a recovery in capital value for prime offices. This will involve both rental value growth and a cautious decline in initial yields.
  
  
• Open-ended real estate funds – particularly from Germany – have been facing continued pressure on returns since the third quarter of 2023. This led to redemptions in 2024, where investors liquidated or reduced their positions in the funds. While capital outflows are expected to remain limited in 2025, some funds will need to sell parts of their office real estate (urgently) to generate liquidity. This trend was already visible in 2024 and often takes place at the pan-European level. Depending on the economic situation, this development may boost the office investment volume in 2025.

Analysis offices

Rising initial yields and the absence of German funds have changed the playing field in the investment market in 2024. At the moment, Dutch institutional parties can offer the most competitive returns, while there is little activity from foreign core investors. Family offices and SCPIs^[8], on the other hand, are entering the market because they see opportunities to purchase real estate at attractive levels.

Under the influence of rapidly falling interest rates, a new investment cycle will start in 2025, after the capital value fell 35-50% in recent years. Due to the expected rental growth, this is an excellent time for private equity to enter the Dutch office market. For the coming year, CBRE expects a cautious increase in capital value in larger transactions, by an average of 5-10%. In addition, a stable development is foreseen for MidCap transactions in 2025.