Structural Vacancy of Office Buildings: The Influence of Building- and Location- Characteristics in the Case of Amsterdam

Ever since the Second World War, office markets world-wide could be characterised as growth markets. Since 2000 though, financial and real estate crises and ìthe new way of workingî are reducing the need for office space, and office markets become replacement markets without a quantitative need for new office buildings: New buildings drive out bad buildings. In December 2008, the Amsterdam office market comprised 6.7 million m2, and an available supply of 1.2 million m2. 60% is classified as structurally vacant, meaning vacancy of the same square meters for three or more years, without perspective of future tenancy. Due to the current financial crisis and the construction of new buildings, the vacancy is expected to increase over the next few years. When relocating, organisations consider buildings and locations within geographically defined markets. Though location characteristics are important, eventually their choice depends on building characteristics. Organisations prefer office buildings that facilitate their main processes, and support their image and financial yield. In this study, we consider the revealed preferences of office organisations by relating structural vacancy to building and location characteristics. This paper will answer the following questions based on the Amsterdam case: which office buildings and locations are preferred by office users and which have the highest structural vacancy? Is structural vacancy related to specific building and location characteristics? Based on former studies we defined building- and location- characteristics that we expect to influence office user preferences. We studied the physical characteristics of 220 office buildings and applied regression analyses to explain the influence of specific characteristics on the office user preferences. Understanding office user preferences is important for understanding movements in replacement markets like the Amsterdam office market. In our study we reveal that building characteristics have a strong influence on office user preferences and should definitely be taken into account when developing new office buildings.