Navigating the Dutch Life Sciences boom: a 66% decline in Science Park take-up versus a 61% increase in average rents

The Dutch life sciences sector has grown significantly in recent years, due to its attractive ecosystem. The number of life sciences companies has increased by 29.2%, with both its Gross Value Added and real estate footprint (LFA) increasing 13.9% and 27.2% respectively since 2015. However, remarkably, take-up in Science Parks has decreased by 66.1% in the same period.

According to Savills ‘Spotlight: Dutch Life Sciences – 2024’ report, the reason for this decline is threefold. Firstly, an increasing number of life sciences developments are built-to-suit, contributing to low vacancy rates and low take-up. Secondly, a weaker economy has put downward pressure on leasing activity across all real estate sectors in the Netherlands, with leasing down 25.8% Year-On-Year (YoY) in 2023.

Similarly, life sciences leasing was down 23.6% YoY in 2023. Thirdly, occupiers have been unable to find adequate space due to tight supply. Therefore, occupiers have been willing to pay higher rents, with average rents in Science Parks increasing by 60.8% between 2015 and 2023. By way of comparison, average office rents in the Netherlands, excluding Science Parks, have decreased by 4.2% in the same period. Moreover, rents for life sciences properties were on average 3.2% higher between 2018 and 2023 when they were located in a Science Park, compared to similar buildings located elsewhere in the same municipality.

Unsurprisingly, the growth of the life sciences occupier base and the positive outlook of the sector has attracted a significant amount of investment. VC investments into the Dutch life sciences sector have been impressive since 2019. Even though volumes dropped to €458.4 million in 2023 after peaking at €774.9 million in 2021, it has still grown 159.9% between 2019 and 2023. Capital flows into sciences & life sciences real estate have grown from €49.2 million in 2015 to €212.2 million in 2022 (338.8%), including a peak of €1.3 billion in 2021. The sale of the High-Tech Campus Eindhoven (HTCE) for just over €1 billion contributed to a record year in 2021. In 2023, sciences & life sciences transaction volumes fell to €48.6 million. The 77.2% YoY decline was a result of a worsening economy and higher interest rates, and is part of an overall drop in real estate investment of 57.3% YoY.

Wouter van ‘t Grunewold, Market Intelligence Analyst at Savills in the Netherlands, says: “The active promotion of collaboration between businesses, knowledge institutions, and the government in the Dutch Life sciences sector, the so-called “Triple Helix” model, is widely regarded as the driving force behind the sector’s success. Furthermore, the attractiveness of the Netherlands as a place to work and live has attracted much foreign talent which, subsequently, boosted the life sciences sector.”

In the period 2011 – 2022, the international student population of the Netherlands increased by 127.8%. Both the number of EU and non-EU students grew at the same pace. Similarly, the number of EU and non-EU (skilled) migrant workers increased by 164.9%, from 25,985 in 2011 to 68,820 in 2022.

Van ‘t Grunewold continues: “Looking ahead, the life sciences sector can safeguard its future development by actively engaging with citizens and explaining its important role in contributing to the future success of the Dutch economy. The sector’s successful engagement with the wider population involves incorporating ‘society’ into the “Triple Helix” model and transforming the model to a “Quadruple Helix”

Read the full report here.