Hidden vacancy: The occurrence, causes and consequences

The Dutch office market is characterized by a large supply of office space and a high vacancy of 14,6 per cent due to a structural mismatch between supply and demand. On top of the normal and extended vacancy there is also an unregistered vacancy created by tenants and user-owners. This so-called hidden vacancy in the office market could be larger than the office owners register now. Tenants face a hidden oversupply of square meters in the market once the leases come to an end. Current space consumption reflects past demand which depends on past rental rates and past expectations of required space during the course of the contract. It does not reflect the current rental rates and current need of space. This research has focused on the difference between the current office space occupancy and the actual current space demand at the prevailing market rent.