There was growth in 2016 in key sectors for the industrial space market, including the construction and manufacturing industries. As in 2015, the user market benefited from this trend, resulting in high take-up rates. Another striking trend was the take-up of logistics real estate by e-commerce companies. In some areas, we note a scarcity of modern industrial spaces in prime locations. The market for existing industrial property is struggling; in these areas, the solution is the transformation of buildings and specific areas.

  • A total of 2 million square metres of new industrial property was developed in 2016. E-commerce companies, in particular, require increasingly large buildings to accommodate their logistics processes. The average size of new logistics properties has been around 30,000 square metres in recent years, versus 17,000 square metres a decade ago (source: Savills).
  • A typical example of this type of property is the new building operated by online retailer Vida XL in Venlo, which covers more than 100,000 square metres, and the Agora 21 logistics campus in Oud-Gastel (approx. 80,000 square metres), where DHL has been confirmed as the first tenant.
  • The expected increase in the demand for space among logistics services providers is resulting in more risk-based development. Around 25 percent of the new buildings in the logistics real estate market were constructed without the tenant(s) being known in advance.
  • A growing number of investors are converting industrial property into alternative spaces such as leisure facilities and creative incubators. Many older industrial locations in urban areas are using their conversion potential for homebuilding.
  • Energy-neutral and flexible construction are becoming increasingly common in the construction of new industrial property. One example is the new Lidl distribution centre in Oosterhout in Gelderland province announced in 2016, which aims to become energy self-sufficient.

  • A total of more than 4 million square metres was taken up in 2016. Take-up was particularly high in the southern provinces and the Utrecht, Haarlemmermeer and Nijmegen areas, often combined with newly constructed buildings.
  • The high take-up rate belies the fact that the market for existing industrial spaces continues to struggle. However, here, too, we are seeing positive developments, including a higher demand for multi-tenant industrial property. The improving economy is driving the demand for consumer goods. The housing market is in overdrive, creating a greater demand for space among construction, home improvement and wholesale companies.
  • Supply has nevertheless remained stable since 2015, being fixed at more than 11.7 million square metres. The industrial market continues to be characterised by a substantial amount of new construction, although much of the take-up is occurring in existing real estate.
  • Beyond the core economic zone, the market is unbalanced due to the limited effective demand and large supply available. We are seeing scarcity in sought-after locations. Demand is especially high for modern industrial properties, leaving many obsolete properties vacant.

  • Due to the scarcity of up-to-date industrial property, the average rental value of industrial spaces increased by 1.3% last year. The average rental value is calculated by linking reference rents for each period to all industrial properties in the Netherlands.
  • We have noted rent increases particularly in locations in the Randstad metropolitan area with an international focus and along the transport routes in North Brabant province. Beyond the strongest industrial locations and for existing properties, however, rents have either been stagnant or declining. We are seeing lower rents in various locations in the north and east of the country.
  • Despite the sharp increase in take-up over the past two years, rental increases have remained relatively small. The large supply of consistently available industrial spaces with low rents has been restricting rent increases. Newly constructed buildings are fairly affordable due to the relatively low land prices in the Netherlands, thereby tempering rents.
  • A growing number of industrial properties are being built with a flexible structure and a high standard of sustainability. We are seeing high rental potential for these properties due to the improved likelihood that the property will be rented to another tenant.

  • Approximately €2.1 billion was invested in industrial spaces in 2016. Logistic real estate remained consistently popular, accounting for 30% of total investments. 
  • Initial yields for marketable industrial property were reduced in 2016; the highest levels currently hover around 5.75% (net). Rent increases are modest and there is substantial capital available for high-quality industrial property in strong locations. 
  • More than 75 percent of investments in 2016 was concentrated in North Brabant (29%), South Holland (20%), North Holland (19%) and Limburg (10%). The bulk of investment activity has been concentrated in these provinces for many years, as this is where the majority of logistics centres are located or being built. The largest single-asset deals in 2016 were completed in Deurne (DC Edco), Schiphol (Fokker 7+8) and Venlo (logistics centre for PVH). 
  • Approximately 15% of investments were made in industrial real estate that is still under construction. This demonstrates the large investment appetite among investors, as well as the value potential witnessed in high-quality, modern industrial spaces.

Sector forecast

  • The recent economic recovery and expected stable economic growth in the coming years are creating a solid foundation for the business community. Increased consumer spending is expected to remain the main driver behind this dynamic. 
  • Due to further urbanisation and the growth of e-commerce, demand for distribution space in and around urban areas is on the rise. The increased delivery volumes call for smarter, environmentally friendly logistics, close to the consumer. New companies such as Bubble Post have capitalised on this trend, as have larger distributors such as DHL and Picnic for groceries.
  • Outside urban areas and core economic zones, the foundation of local business remains largely local. This increases the differences between areas, and, accordingly, the nature of the demand for industrial spaces.

  • The most high-potential areas for industrial real estate are located in the Amsterdam-Bergen op Zoom-Venlo triangle. The high level of business activity and the excellent multimodal availability make these areas appealing for investment in, and financing of, real estate properties. 
  • While investment and financing potential in the other parts of the Netherlands is lower, there is potential in these areas too. Unlike the office market, there is a basis for industrial spaces at every scale level. Since this demand is mostly local, the quality of industrial properties must meet local requirements, and it is particularly important for property owners to have a strong network in the business community. 
  • The one exception is the northeast of the Netherlands, where one of the factors is that there are no major markets in the vicinity and that a decline in population undermines support for the local economy. Other areas in the Netherlands with diminishing populations, such as Limburg and Zeeland, are either located near large markets and/or have access to strong transport infrastructures.

  • The industrial space market experienced a substantial recovery in 2016. The market for logistics real estate, in particular, is in high demand with investors and this situation is expected to remain this way in the coming years owing to economic growth and the further development of e-commerce. We expect this market to remain the most appealing sub-segment within the industrial space market.
  • In addition to logistics real estate, other types of industrial spaces are also likely to benefit from economic growth over the next several years. Due to the strong differentiation in the market, however, capital growth will vary by area. Potential is determined by the quality of the location and property.