ULI Netherlands: The Transformation of De Hallen

On 18 February, ULI Netherlands visited De Hallen, a recently renovated mixed use development in Amsterdam. The event provided attendees with the opportunity to discuss successful urban transformation and its impact on the urban landscape.

What lessons can we learn from the redevelopment of De Hallen in Amsterdam West? That question was the focus of a ULI Netherlands event on the transformation of urban areas. Several commercial developers have failed in their attempt to redevelop the former tram depot. TROM, a combination of private investors and construction companies, were successful in the completion of the De Hallen project. This was, however, done without the pursuit of profit.

History of De Hallen

The redevelopment of the former tram depot in Kinkerbuurt has been under discussion for no less than twenty years. Eise Kalk, chairman of the Tram depot development company TROM, discussed the different plans in his presentation “New life in De Hallen”.

After the former district Old-West and residents took three years to draft a Starting Points Document, the architecture firm Bureau Geurts en Schulze drew up a master plan of the area. The scale of that plan was met with opposition of neighbours, the district and entrepreneurs in the neighbourhood. That led to a more moderate plan years later, but developer Bouwinvest was unable to use this.

After this, entrepreneur Harry de Winter tried to create a new site plan with a pop music venue and a theatre. That plan led to the establishment of the foundation Vereniging Rond de Hallen, which expressed its dissatisfaction with the slogan “don’t ruin our halls”. Ultimately, de Winter was not able to secure adequate financing for his project.

A subsequent effort was made by Burgfonds, which went bankrupt. Burgfonds intended to redevelop De Hallen together with rental housing organisation De Key. Because of new government policy with respect to housing corporations, De Key exited the project and a new developer had to be found. Urban district administration member Bouw Olij thought that this should be Lingotto, which had successfully brought the chewing gum factor in Overamstel back to life.

However, the plan presented by Lingotto touched a sore spot with the neighbourhood and national heritage protectors. Lingotto had the intention to replace the most monumental part of the depot block with a hotel that would tower above the rest of the block. The planned hotel was very important in order for Lingotto to secure financing for the project. In addition, the plan consisted of units in De Hallen which would be suitable for a flexible lease. And a new district office had to be build at the Bilderdijkkade. After some time it turned out that building a new district office was no longer relevant due to the modernisation of the administrative system in Amsterdam.

The neighbourhood and occupiers

During the planning stage, Lingotto established a resonance group intended to have a conversation with the neighbourhood. After some time, an initiative group arose from that resonance group, which would develop a new plan from the point of view of future occupiers and the neighbourhood. The initiative group made an appeal to the future occupiers.

Eventually, agreements were entered into with 70 entrepreneurs. This way, according to Eise Kalk, the block could largely be filled with facilities which also had a direct value for the surrounding neighbourhood. In this scenario the initiative group, in the meantime, formalised in the foundation Stichting Tramremise Ontwikkelingsmaatschappij (TROM), was certain it could secure 90 percent of lessees if it got the opportunity to redevelop the block. It furthermore offered the possibility to differentiate commercial and non-commercial lessees and to organise the surplus value of several facilities beforehand. In a competition organised by the district in which the plans of Lingotto and TROM participated, preference was eventually given to TROM. According to Carel de Reus, who was a member of the panel at the time (currently member of the supervisory council of the foundation TROM), several reasons were decisive. Support in the neighbourhood and agreements with future occupiers did play an important role with this.

TROM furthermore offered four million Euros for the acquisition, which Lingotto did not deem fair because the halls had millions in overdue maintenance.

Financing

After winning the competition, the plans (with most prominent drivers being André van Stigt and Eise Kalk) would have to be detailed and the financing for the project had to be secured. A low interest loan of five million could be acquired from the fund Nationaal Restauratiefonds. In order to get half of the budgeted amount, and therefore secure a loan with the Triodosbank (the only willing bank), private money had to be used. According to Kalk it had become clear halfway during the crisis that not much financing could be expected from the (local) government and housing corporations. Contractor De Nijs and subcontractors also invested in the project, which brought the budget to 31.4 million (eventually the completion cost 31.6 million). To do this, it was necessary to sell two parts of the block. This involved the parking garage to a commercial party and a relatively small part to the urban restoration society.

Because investors committed to the project for a minimum of ten years, an attractive fiscal arrangement could be entered into with the tax and customs administration and involvement was guaranteed for a longer period.

According to Van Stigt, the cooperative association of investors as it exists now could be changed into a federation of owners after ten years. After ten years users will have a right of first refusal, something that is logical according to Van Stigt because they contributed to the increase in value of De Hallen.

Smart planning and development

De Hallen is a mix of local and commercial facilities. The passageway provides for a new walking route through the neighbourhood which connects all the facilities. During redevelopment, which facilities would fit best was carefully considered. For instance, it was made sure that no daylight can enter the location of studios and theatres in the monumental block. Costs for reconstructing the roof were saved because of this. It was furthermore agreed upon with the historic buildings council that insulation measures would be affixed on the outside of the building (“not in, but on”). Because of this, De Hallen scored fairly high with respect to sustainability, resulting in energy costs of only 12 Euros per square meter per year. De Hallen also has a WKO system, which was supposed to heat the new houses at the Bilderdijkkade. Van Stigt thinks it is a missed opportunity that the municipality did not impose this as a hard requirement on the combination Van Wijnen/Altera. Eventually De Hallen was delivered in phases, after only 14 to 21 months.

Besides thinking from the point of view of users and the (im)possiblities of the building block, there was another aspect that was important for the successful redevelopment of De Hallen. André van Stigt, already involved in a number of redevelopment projects in Amsterdam, was not only actively involved with the design and construction (construction as well as installations), but also with management; he says “do not leave buildings behind”.

Housing development

An important moment in the redevelopment was “splitting up” the area. Playing a determining role with this was Co Stor of the municipality of Amsterdam. Initially the idea was to include houses integrally on the plot next to De Hallen at the Bilderdijkkade in the development. This was dropped in order for a better organisation of the project. Van Wijnen and Altera Vastgoed took the risk in the middle of this crisis to develop a mix of private property, rental property and subsidised housing.

Initially a combination of a district office and houses were supposed to be built at the Bilderdijkkade. The district office was no longer needed and during the crisis, Rochdale had no means to develop the houses either. Florentien Vandehoek, project developer with Van Wijnen said: “The area looked pretty bad and the housing market was going through a tough time, but we believed in this location.”

Edvard van Luijn, head acquisition with Altera, said:

“We wanted to invest in Amsterdam, especially in housing, but hardly any houses were being sold at that time. This led to an internal discussion and we chose to invest in rental properties.”

Van Wijnen and Altera won the competition held by Rochdale, amongst others, because of the good bid and the promise to rapidly build the houses. Vandehoek said: “The municipality wanted to get that project off the ground quickly, and it happened.”

The fact that the zoning plan was finalised in the meantime did contribute to this, project developer Vandehoek said. The houses were developed in close collaboration between Van Wijnen and Altera, says Van Luijn. In hindsight, Van Wijnen and Altera would have built less rental property and more private property.

De Hallen as an example

The redevelopment of De Hallen can serve as an example for buildings that are being disposed of by housing corporations, municipalities, or the government in the future. It remains to be seen if they will only look at the highest bidder or also the social value of the redevelopment itself.

This is something Van Stigt and Kalk are worried about. The De Hallen project was a convincing success from which the entire neighbourhood benefits. However, there is a question whether the profits received by the municipality could have been distributed differently. This is something that can especially be considered for new, comparable projects, Van Stigt said.

Kalk added that the municipality of Amsterdam also intends to abolish the long lease and only wants to sell social property at prices in line with the market. “With this you abolish two instruments which you can use to develop buildings, from a point of view of social surplus value.”

Which lessons can be learned according to Kalk and Van Stigt?

  • Ensure that there is support and a vital coalition. Think from the point of view of future users. First look at the feasibility and surplus value and lay this down in a zoning plan and not the other way around.
  • Create social surplus value and provide clarity for all users about lease differentiation.
  • Use a social project developer; after all the revenue is formed by the social surplus value.
  • Ensure mixed financing. It will no longer be possible to receive money from government and corporations. You can also use a financing mix of banks, private money and construction companies.
  • Use a construction manager who not only provides the design but who is also actively involved in realisation and management.
  • Develop for the long term.
  • Keep the project organised and manageable. “Splitting up” the new build and redevelopment accelerated the renewal of the entire area.
  • Develop the public area in the neighbourhood with the same speed.

This post was written by Joost Zonneveld