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Why the Utrecht office market is resilient to COVID-19
According to the research report 'City Special Utrecht' the fourth largest city of the Netherlands has several strong fundamentals that make its office market resilient to COVID-19.
- Mix of occupiers
The first factor mentioned by the real estate advisor is the mix of office occupiers. The distribution coefficient* of employment in Utrecht is only 3%, lower than in most other G5 cities, the biggest Dutch cities, meaning that Utrecht is not dependent on one business sector. There is a diverse range of companies based in the city, relative to comparable cities where one sector is dominant. For example, almost a quarter of jobs in The Hague are provided by the government and more than a fifth of employment in the Eindhoven depends on the professional services sector. However, the most dominant sector in Utrecht, healthcare, is only responsible for 15.6% of total employment. - Fewer "COVID-19-vulnerable" sectors
The second factor according to Savills is that Utrecht houses relatively fewer "COVID-19-vulnerable" sectors - at 23.6% - compared to the Dutch average (37.5%) and the G5 average (28%). The extent to which companies are expected to either divest or acquire office space is currently mainly related to the impact of COVID-19 on the operating results. For example, the negative effects of COVID-19 on sectors such as the hospitality industry and culture will be greater than for information and communication technology (ICT) and professional services. - Working from home
The third factor shown in the report is that of business sectors that provide a large proportion of the jobs in Utrecht, (68.9%) already had experience of working from home, pre-corona. The expected lasting trend of (partially) working from home will therefore have less impact on the demand for offices than if employment were determined by sectors that were not yet equipped to work from home.
We are still seeing market activity in Utrecht in times of COVID-19. The most important developments that we observe are the demand for smaller spaces, more flexibility and demand from certain sectors such as ICT and healthcare.
Sander van den Engel, Head of Agency Utrecht
Despite uncertainty caused by the coronavirus crisis, the Utrecht office market remains relatively stable for both occupiers and investors. Due to the diversity of businesses who are spread out across the city, we do not expect a large-scale drop in demand and soaring vacancy rates. This boosts investor confidence for both the short and long term.
Jordy Kleemans, Head of Research & Consultancy
* The distribution coefficient expresses the deviation from the average share per urban business sector. The greater the deviation from the average share per urban business sector, the smaller the distribution of employment is in a city.