Office conversion a growing trend in Benelux - Investment Briefing

Converting empty office properties to other uses is a growing trend in the Netherlands and Belgium, PropertyEU’s Benelux Investment Briefing heard at the Realty Brussels real estate fair on 22 May.

The Netherlands and Belgium suffer from high vacancy rates compared with neighbouring markets. At 16%, the Netherlands has one of the highest office vacancy rates in Western Europe. Amsterdam - which has a number of competing A and B-class office locations - has a vacancy rate of between 17-18%. Brussels has a lower vacancy rate than Amsterdam. In 2011 the average office vacancy in the Belgian capital was around 12%. But some office clusters had void rates of as much as 35%, according to a recent CBRE report.

Tristan Dhondt, Real Estate leader Belgium at Ernst & Young and one of the panellists at the briefing, said there are a number of conversion projects under way in the Dutch market, with new uses ranging from hotels, residential accommodation, student accommodation and nursing homes. 'There are a lot of projects today that involve conversion to student housing,' he said.

Examples of such redevelopments in Amsterdam - highlighted in the May edition of PropertyEU Magazine - include City Living working on the conversion of an old office building formerly occupied by publisher Reed Elsevier into The Student Hotel. The first phase of the project is due to be completed by spring 2013.

Heino Vink, CEO of Multi Development, told the Investment Briefing that some office buildings in the Netherlands that were recognised by everyone as 'totally valueless' over the last five years have finally undergone significant re-pricing in the last six months. In some cases the re-pricing entailed a 40-50% drop in valuations. ‘This makes it financially viable to undertake redevelopment,’ he said. 'Finally, banks and owners have been forced to come to the conclusion that the value of these buildings has dropped and it is now possible to redevelop.'

CBRE said that conversion has been a feature of the Brussels market for many years. Some 300,000 m² of office space has been transformed into housing, elderly homes, hotels or schools.

Read more about the Benelux Investment Briefing in the June edition of PropertyEU Magazine. Click on the link below to subscribe