Over the past five years, the Netherlands has seen a record number of small business units constructed. Driven by the explosive growth of freelancers and small companies, construction volumes reached historic levels. But now that the market shows signs of saturation, the question arises: how many multi-tenant business buildings do we really need?
Explosive growth fueled by small entrepreneurs
According to Statistics Netherlands (CBS), the past decade has seen an increase of more than 600,000 freelancers, alongside a sharp rise in microbusinesses. For them, business units are an attractive solution: flexible, relatively affordable, and often a clever mix of workshop, office, and storage space. During the pandemic, demand grew even further due to the boom in e-commerce.
Developers eagerly responded. With interest rates at historic lows until 2022, financing was simple, and many projects were largely pre-sold before construction even began. Investors spotted opportunities for high returns and entered the market in large numbers.
High yields per square meter
For years, multi-tenant business buildings have delivered impressive profits. Compact units maximize the use of plots and can be built quickly and cheaply. Yet this success has a downside. Building standards are often limited, creating risks around quality and fire safety. Municipalities also face additional enforcement costs, since activities in these buildings are less visible.
A saturated market emerges
Figures from NVM Business show that between 2020 and 2024, some 2.2 million m² of business units were built more than triple the volume of the previous five years. Units have also been getting smaller, averaging just 103 m² today. While this boosts supply, it intensifies competition for available plots, making it harder for other companies to expand.
Brokers now signal a turning point. Supply in smaller segments is rising sharply, while rentals and sales are becoming more difficult. Rental prices are falling, and investors are accepting shorter leases or tenants who don’t fully match their original targets.
Tension with other businesses
The boom in multi-tenant buildings is crowding out other companies that need space to grow. Developers can often outbid manufacturers or logistics firms for plots, given the higher potential returns. In addition, many tenants of these units could easily be located in office parks or city centers, meaning their added value to industrial estates is limited.
Local regulation urgently needed
Despite clear signs of oversupply, there has been little national debate on the issue unlike the “boxification” of logistics real estate, which has led to concrete policy responses in some regions. Only a few municipalities, such as Deventer and Etten-Leur, have introduced temporary bans on new small business units.
Brokers emphasize the need for municipalities to take a stronger role in assessing local demand. Without clear policies, the market risks overbuilding and structural vacancy.
Finding balance
Multi-tenant business buildings have undoubtedly played a key role in supporting entrepreneurship in recent years. But with growth now shifting, it’s time to reassess the balance: how can we ensure that scarce space remains available for all companies that want to grow?
