More prime offices up for sale in Dutch market

More sales of large high-quality office buildings are on the cards in Amsterdam following Deka Immobilien's acquisition of the Viñoly office building in the city's Zuidas business district. The German open-ended fund manager snapped up the prime office building from troubled peer Credit Suisse for EUR 140 mln, reflecting a yield just under 7%.

Other assets reportedly up for sale in Amsterdam’s Zuidas include the Symphony and Atrium buildings. Prime office buildings will also come to the market in other locations in the urban agglomeration in the west of the Netherlands known as the Randstad, Jones Lang LaSalle predicted earlier this year in its Dutch Capital Markets Outlook.

So far, the liquid German fund managers have been at the forefront of the spending spree in the Dutch market. Earlier this month, Deka bought the Rock office tower in Amsterdam's Zuidas (South Axis) business district from Evans Randall for just less than EUR 133 mln or a record high gross initial yield of 7%. Evans Randall bought the property in 2007 for around EUR 165 mln or a gross initial yield of between 5.25% and 5.5%. The 30,000 m² building was delivered in 2009 and is occupied by international law firm De Brauw Blackstone Westbroek on a 20-year lease.

Besides Deka, Munich-based Real I.S. has also been very active. Last week the closed-end fund manager bought two adjacent office buildings in Rotterdam from Commerz Real for EUR 36.4 mln. Located at Blaak 28-34, the fully renovated buildings provide some 16,500 m² of office space and are let on long leases to Rotterdam city council and a law firm.

The German closed-end fund manager recently reiterated plans to make more investments in the Dutch office market, despite the country’s exceptionally high vacancy levels. Nationwide, the office market is plagued by a vacancy rate of 16%, running to 18% in Amsterdam and as high as 25-30% in some outlying business parks.

While conceding that the current capital market turbulence and eurozone woes were also a source of concern, CEO Jochen Schenk said he still felt ‘comfortable’ investing in the Netherlands. ‘There’s a huge difference between A and B locations. A few years ago, there wasn’t much core stock available but the Dutch pension funds and other institutional investors are not trading so much at the moment so we’re now seeing opportunities.’

Major Dutch institutional players are also eyeing the opportunities. For years, they were sidelined in the Dutch market for prime offices due to strong competition from foreign players. At the same time, even they have become wary of investing in the much-maligned and much-discussed Dutch office market - even when the opportunities are first-class buildings at a top location.