Savills has unveiled its latest research report, shedding light on the often overlooked opportunities in the complex world of industrial real estate in the Netherlands. The report highlights the untapped potential of the traditional industrial sector, distinct from logistics, which has already been gaining investor attention for some years due to its strong fundamentals.
In recent years, logistics has dominated investor interest and was the largest sector by investment volume in the Netherlands in 2022. However, according to Savills, the traditional industrial sector, presents excellent opportunities for investors. The sector encompasses heavy industrial as well as light industrial, with light industrial split into single- and multi-let assets, covering approximately 160 million square metres of floor space in the country, excluding large logistics buildings.
The report reveals that industrial real estate investment volumes reached record highs in 2022 as investors recognised the sector's strong fundamentals and favourable pricing. The industrial sector consistently delivers solid performance and boasts a significant positive yield gap compared to other sectors. Investors are increasingly drawn to its potential as it offers a reliable investment option in the face of rising debt costs.
Notably, Dutch industrial real estate stands out with a low vacancy rate of 1.9%, significantly lower than offices, retail, and logistics. This can be attributed to the majority of industrial properties being owner-occupied by medium-sized businesses with longstanding regional connections. The strong performance of the Dutch industrial sector over the last years, coupled with the scarcity of land for new developments, contributes to this low vacancy rate as well. Future land constraints due to competition with the residential sector and environmental concerns are expected to limit new industrial developments, increasing the importance of existing business parks even further.
Savills has developed the Savills Industrial Market Indicator, to assist investors in evaluating industrial real estate locations. It ranks Dutch business parks based on various data points, including market dynamics, quality of stock, spatial characteristics, and relevant local economic factors. Afrika- en Amerikahaven in Amsterdam emerged as the top-ranked business park with a stock of 100,000 sq m. In particular, its favourable location near the Dutch capital led to high scores on factors such as local economy and the property market. Purely on quality of built stock, the score was actually lower than numbers 2 and 3 (Nieuw-Vennep Zuid and Forepark).. However, the report emphasises that business parks with lower-quality stock can still offer great potential, allowing investors to consider multiple dimensions when assessing opportunities within the sector.
Despite its attractive fundamentals and market dynamics, Dutch industrial real estate has seen relatively low investment volumes compared to other asset classes. Savills market intelligence illustrates that the sector remains relatively unknown to many investors, showing that there is a need for a thorough analysis of its dynamics and key defining variables to uncover its true potential.
"We are excited to present our latest research report, which highlights the untapped potential of Dutch industrial real estate," says Niek Poppelaars, Co-Head Logistics & Industrial at Savills in the Netherlands. "The Savills Industrial Market Indicator is a guide that assists investors with identifying the best opportunities and locations in the Dutch industrial real estate market. Our in-depth analysis offers investors a unique opportunity to explore this often overlooked sector and capitalise on its strong fundamentals and favourable pricing."
Read the full report here.