According to Savills latest research report ‘Utrecht City Special 2019’, published today, the office capital value of the Central Business District (CBD) of Utrecht has more than doubled since 2010. This significant growth can be explained by healthy demographic and economic growth, good accessibility and strong investments which have been made in new office developments in the area. Despite these substantial investments, demand will continue to exceed supply in the coming years and, as a result, the success of the CBD will have a ripple effect on other subareas of Utrecht. This effect is already clearly visible in Kanaleneiland and Savills expects that other sub areas will also benefit shortly.
Utrecht CBD accountable for 40% of the total investment volume
In 2018, the investment volume in the Utrecht region peaked at a total of over €1 billion. Of this total, € 400 million - or 40% - was invested in the CBD; a growth of 33% compared to previous year. The low vacancy level of 2.3% highlights the interest from both investors and occupiers for office space in the area.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “The demand for well-connected office locations, such as Utrecht CBD, is increasing. Although the government encourages new office developments, it appears that the current supply pipeline can not meet future demand. In addition, most of the new developments have already been pre-let. As a result, prime rents rose by 30% to almost € 300 in two years. This ensures that other areas outside the centre will also benefit from the success of the CBD.”
Sander van den Engel, Associate Director at Savills in Utrecht – the Netherlands, adds: “
Certain sub areas, such as Kanaleneiland, are already benefitting from the success of the CBD. In the past year, this previously unattractive office area has doubled its investment volume to €166 million and seen its vacancy rate drop to 4.4%. This can be explained by the shortage of supply in the centre and the development potential of the area. Prime rents have increased by 32% in the last two years to a level of around € 200 per square meter. CBD's success is expected to cause a ripple effect throughout the city, so it is interesting to look into which secondary areas are likely to benefit.”
The willingness of the Municipality and Region of Utrecht (U10) will play a decisive role in determining Utrecht’s future success. With the ‘Kantorenbrief’ an essential step to support future growth has been taken.