Hoofddorp, the Netherlands,

IN FOCUS : Strategy update

Half year results 2019

In early 2017 NSI re-set its strategy and purpose, by aiming to become the leading specialist in the Dutch office market, with a strong and efficient platform and an emphasis on total return through active asset management, value-add initiatives and active capital recycling.

Just over two years into the execution of this strategy we believe that for all intents and purposes we have delivered on this strategy and that the period of restructuring is now effectively behind us. We have not only executed a proper clean-up of the business, we have also put in place the necessary foundation, team, culture, processes, data intelligence, portfolio, balance sheet and cost of capital to be able to move to the next phase with confidence.

The next phase is a natural, logical, incremental progression for the business, a step up to fully capitalise on the significantly improved focus and quality of the portfolio as well as the embedded value-add potential that has been established in recent years.

We intend to place even more emphasis on long term ownership near major transport hubs, we believe it is warranted to explore multifunctional development and to focus even more on services (and where possible a combination of the three) to drive long term value creation for our shareholders.

Selective multi-functional development

In recent years the focus of the team has been to expand the portfolio with larger, high quality, efficient offices in our core markets. At the same time we have proven to be very specific about micro locations, focussing mostly on the major public transport hubs in Amsterdam, Utrecht, The Hague, Rotterdam and Eindhoven.

As per June 2019 we have circa 55% of the office/HNK portfolio located within a 10 minutes walking radius of these public transport hubs and circa 96% of our potential development programme is located near these hubs.

As a result of this focus we now have amassed a valuable portfolio to fully capitalise on the global trend towards further urbanisation. Multiple studies have suggested that by 2050 nearly 70% of the world population will live in urban areas. For The Netherlands this probably means the Randstad economy is bound to become even more dominant and will see a substantial further influx of people in search of jobs and livelihoods.

Most local authorities recognise the challenge and will, in addition to potential geographical expansion, look to selectively densify in certain areas, especially near the major public transport hubs. We see that comprehensive, aspirational, plans are being worked on to turn major transport hubs into multifunctional locations, where ‘work, education, healthcare, sleep, eat and play’, are integrated into the plans to create a new, sustainable, diverse and vibrant city.

At NSI, as long term investor in many of these key transport hubs, we have a duty of care as well as a genuine economic interest and we fully embrace the trend to multifunctional development, as we recognise both the necessity and potential.

This also changes the role of NSI. We are no longer just an investor in buildings in these locations, but we can and should take on the larger role and responsibility to support the transition of these areas to drive their long term success, in collaboration with the local municipalities.

Included in this, given our position as a long term owner, given our substantial development programme and given our sustainability ambitions, is the clear necessity to consider alternative use in the design phase of our projects. We have seen time and again that the use of buildings and areas can and will change over time, so that it is prudent (and economic) to consider this upfront.

This is one of the guiding principles to our potential Centerpoint mixed-use development in Amsterdam. It also makes sense for NSI to consider retaining some of the mixed-use development projects on completion, instead of selling off the non-office parts, as the embedded upfront cost to enable alternative use is unlikely to be recognised in an immediate disposal. Another benefit of this could be that it would help us to optimise the management of the overall asset, with integrated services offering a better user experience, to generate better returns on these assets.

We have no immediate plans to acquire assets other than offices near the major transport hubs. For now we expect our involvement in multifunctional assets to be limited and driven entirely by our development pipeline. Having said that, if we see opportunities to acquire non-office assets to help strengthen our position in a location and so be better able to plan and optimise our entirety of holdings in this location we will not refrain from doing so.


Real estate is moving from the traditional leasing of square meters, to providing a service to customers. This change has been going on for some time already, but for offices has accelerated in recent years with the emergence of new flex concepts.

At NSI we acknowledged this trend years ago and started our in-house flex office brand HNK. We appreciate that customers do not necessarily need square meters, but they do need a place where they can run their business successfully and can genuinely expect that all secondary/non-core elements to their business, real estate-related and otherwise, are seen to by specialists. It has been our goal to provide mid-size to larger corporates with these places: genuinely vibrant spaces in excellent locations, proper amenities and services and flexibility in lease terms.

We will continue to invest in our service offering to further build the relationship with our customers. For that purpose we will establish more partnerships with leading service operators to provide an all-round offering: a menu card to enable customised solutions.

This programme will include the entirety of our large multi-tenanted office holdings near key transport hubs, in addition to our existing HNK portfolio. In all these locations we typically already offer a mixture of services, but we believe we can provide an even wider range of services as there is sufficient scale and demand (i.e. willingness to pay for these services) to operate profitably.

We believe a key strength and differentiating feature for NSI is that we own and operate the assets ourselves and so are flexible in the way we organise the entirety of our buildings and its services. This flexibility in combination with partnerships with external service providers, should result in a best of both worlds service that can be easily scaled up and down depending on customer demand.