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How Amsterdam’s tech scene is staying at the top of its game

Amsterdam is a tech heavyweight in Europe yet office space for growing firms is tight

April 29, 2019

Regularly ranked one of Europe’s top tech cities and home to thousands of start-ups – not to mention offices of Silicon Valley giants like Google, Uber and Salesforce - Amsterdam is an innovation hotspot for AI, nanotechnology, Fintech and virtual reality.

Early investment in its digital infrastructure is paying off. The evolution of the Amsterdam Internet Exchange (AMS-IX), established in the early 1990s and now the largest data-transport hub in the world, has meant connectivity levels are high for tech firms small and large.

Meanwhile, high English proficiency within its business community and the relaxed Dutch way of life, plus a relatively low cost of living compared with other big tech cities, is proving a big draw for international tech experts. Indeed, the Netherlands took top spot in the 2018 OECD Better Life Index, for its work/life balance.

“In the last decade, Amsterdam’s made a name for itself as a tech hub with growing numbers of tech academies, incubators and coworking spaces supporting its entrepreneurial culture,” says Pieter Ravelli, director of JLL’s NLUnlimited team.

“Plus, initiatives like the start-up visa and large-scale tech events are contributing to a cutting-edge scene, which attracts an international workforce.”

Yet its popularity among workers and tech companies is putting pressure on the city; firms looking to launch, relocate or expand in the Dutch capital are now faced with the major challenge of finding space.

“Empty space is hard to find in a relatively small city with a historically low vacancy rate,” Ravelli says, pointing to average office vacancy of around four percent. “However, the city’s small footprint means there’s a real sense of community and collaboration, which welcomes people from around the world.”

Space wars

Large, so-called local tech heroes such as satnav tech giant TomTom, payment solutions provider Adyen - the first Dutch unicorn, hotel reservations behemoth Booking.com and file-sharing heavyweight WeTransfer have grown to rival Amsterdam’s energy and financial sector multinationals when seeking new space.

Younger tech firms, such as Fintech startup Mollie, with its classic canal side HQ, are also growing quickly, says Ravelli.

Some companies are now taking definitive action to meet their space needs. Booking.com has broken ground on a new campus near the central station in the Oosterdokseiland district, with completion due in 2021. At 72,500 square meters, it’s one of the largest urban construction projects in Western Europe.

“Tech firms in the ascendancy look to such examples with awe and admiration,” says Ravelli. And they’re not short of funding. Dutch tech companies raised €750 million in 2018, according to startup analysts Golden Egg Check to help turn their ambitions into reality.

But for new tech firms in expansion, there’s the difficulty of the Netherlands’ rigid office leasing structures to overcome, with typical leases running for fixed, five-year periods.

“That’s quite incompatible with the needs and requirements of new tech firms,” says Ravelli. “What often results is more use of flexspace, or alternatively, the subletting of space, with expanding tech firms moving to larger premises, but having to run the clock down on their old lease by finding a willing tenant to sub-let to.”

Of which, says Ravelli, there is no shortage. Around 25 percent of Amsterdam’s 1.1 million population work in the tech sector and salaries for tech professionals are the highest in Europe.

Helping hand

Much is being done to nurture local talent as well as ensure the ongoing growth of the sector.

Initiatives such as Coding for Amsterdam, which is teaching coding to primary school children while its universities are also building the tech talent pipeline through the Amsterdam School of Data Science – a collaboration between four major universities which also involves tech giants Google and Facebook. New tech bootcamps and training schools such as Ironhack have recently opened in the Dutch capital.

For tech firms in their infancy, schemes such as the StartupDelta programme, which has Dutch prince Constantijn van Oranje as its ambassador, allow startups to apply for kickstart funding.

“It’s encouraging to see government backing and no shortage of training options for career starters,” says Ravelli. “Supporting the talent pipeline and putting Amsterdam as a tech city on the global map is key to the ongoing success of the sector.”

As Amsterdam’s tech scene grows, the city will also need to adapt. The new North-South metro line will have a major impact on the local office market, unlocking new locations in Amsterdam-Noord and providing a boost to ex-industrial waterfront sites. Plus, it can draw on the resources of the wider Holland Metropole, a region consisting of Amsterdam plus the Netherlands’ three other biggest cities, all with their own talent bases located an hour or less away from the capital.

“Amsterdam’s tech scene is an integral part of the city and is critical to its economic future but as it expands, the challenge will be how to accommodate new and growing firms,” says Ravelli.

“There’s plenty of innovative thinking going on inside startups but Amsterdam also needs more creative thinking of its own to find new ways a small city with limited land can provide space for startups to work and grow,” Ravelli concludes.

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