Symbol of Dutch office graveyard to be converted into luxury apartments

Commerz Real has finally given up hoping it will find a new occupier for its Dutch office in Amstelveen which has stood vacant these past five years after the previous tenant KPMG moved to other premises.

The German open-ended fund manager is now planning to convert the 49,000 m2 building, which KPMG vacated for a spanking new office just a few hundred metres down the road, into luxury apartments.

The empty property became a potent symbol of the high office vacancy, and in many cases redundancy in recent years, which led to the Netherlands being dubbed 'an office graveyard' by some observers.

But right up til the end, the Germans maintained that there were good prospects for the building, which is located about 10 km from Amsterdam, as an office space. In the last annual report of Hausinvest, the German open-ended fund which is the owner of the building, published at end-March 2015, the building is valued at €76 mln despite the fact that it was virtually completely vacant at that time. Although no mention is made of a valuation in line with the RICS Red Book standards, the report claims the valuation is based on independent advice from RICS-certified valuers in Germany.

The €76 mln valuation seems high for a building that has stood vacant for several years, but marks a significant depreciation against the price of €140 mln that Hausinvest paid for the building in 1997. At the time, the office had a 13-year rental agreement with KPMG.

In the past few years, various parties have approached Commerz Real and the municipal authorities of Amstelveen with initiatives for an alternative use of the building, but none of them succeeded in getting off the ground. Last year, however, Commerz Real, advised by JLL, did succeed in renting 9,000 m2 of office space to IT services provider Atos in exchange for a major redevelopment of that part of the plan.

The German investor has now conceded that it needs to find another use for the remaining 40,000 m2. An interesting detail in that context is that the German investor is being advised by Dutchman Arnold de Haan who in 1997 acquired the building on behalf of Hausinvest.

Luxury apartments
During a meeting for local residents in mid-January, De Haan said that Commerz Real wants to transform the building into a gated community with a level of luxury that would be unprecedented for the Netherlands. Financial details have not been released, but the project is believed to be targeting Amstelveen’s sizeable expat community. In total some 300 to 400 rental apartments are being planned.

The project is believed to be sufficiently attractive for the local authorities and major obstacles in the planning process are not expected The project will be presented to the Amstelveen council later this month or in March.

Luxury apartments and high rents are sorely needed to compensate for the high price that Commerz Real paid in 1997 and to offset the losses that have been incurred since the building was vacated.

Local aldermen Maaike Veeningen (economic affairs) and Peter Bot (urban planning) lauded the plans in a press release, pointing to the huge shortage of rental housing in the municipality. That said, the biggest shortage of rental accommodation is in the medium-priced segment where rents vary between €700 and €1,000 a month so the question is whether the politicians and the owner are talking about the same target group.