Belgium Real Estate showcase 2016

Connect to pro-realestate.be for news, trends, network and real estate management best practices

MARKET TRENDS vacancy, take-up, investment & letting trends

PROJECTS

town planning, offices, housing & retail

PARADIS EXPRESS, mixed-use project in Liège.

Winner ’Best Futura Project - MIPIM Awards 2016.

A2M Jaspers Eyers Architects-BAG

Business Interactive Media sprl - Belgium Real Estate Showcase 2016, a special issue of Profacility Magazine - May - June - July 2016 - 35 Eur - Afgiftekantoor Leuven Mail - P304098

Showcase 2016 / BELGIUM REAL ESTATE

KEY PLAYERS

developers, local authorities, architects, advisers, brokers Photo courtesy ofBruno AG Real Estate Architects: Atelier Albert / Archi + I , Pierre Lallemand

TOWN PLANNING © BURO II & ARCHI +I for Atenor

urban regeneration, smart cities

Brucity, the new futuristic Administrative Centre for the city of Brussels, to be located right alongside the new pedestrian zone of downtown Brussels.

BEST STRATEGIES

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www.cbre.be www.propertyweb.be

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EDITORIAL

A changing landscape

W

e are in a somewhat turbulent market, where the traditional dynamics no longer seem to apply as automatically as they used to. Perhaps the most obvious demonstration of this is in the fact that during 2015, more money was invested in retail property than in office property. Who would ever have predicted that, when the centre of the Belgian real estate market is the capital of Europe…? It will be argued that the investment figure in retail was largely due to a huge investment in two of the country’s most successful shopping centres, Waasland and Wijnegem. True, but investors put their money where they expect to get the best returns, and they chose retail.

So what about offices, are they out of favour? Not in the slightest, as another headline event proves. This time it occurred earlier this year, when the ‘Black Pearl’ building in the heart of the European district changed hands for a yield of just 3.8% - never before seen. And as the brokers will confirm, there is so little prime office space coming to the market that whenever one of these jewels does appear, up to twenty potential buyers appear. This is not likely to push yields downwards, although something over 4% may be more the norm than 3.8%.

Once again, who would have thought we would be talking of ‘something over 4%’ being the norm, just a few years ago.

The other shift has been seen in the regionalisation of investment. More of it is going outside of Brussels than in the past. This is a logical consequence of tenants looking outside of the capital to locate their businesses. Where the tenants go, the investors go… Why are tenants moving? The most often stated explanation is for reasons of mobility. The capital is getting more difficult in this respect. The tunnels are falling to pieces, parking is being restricted, the RER seems no nearer than it has ever been. The pedestrian zone does not help, although solutions to the initial problems will doubtless be found. The terrorist attacks have had an obvious impact on visitor levels, and on inhabitants venturing into the city centre – but we may hope that this effect is temporary.

In overall terms, more than 4 billion Euros was invested in Belgian property this year.

Professional association UPSI, believes this may be surpassed by as much as 50% this year.

In these pages we have gathered the expert views of some of the country’s top brokers, on subjects such as investment, retail, the office markets, logistics… These views are from the people who take the pulse of our property markets every day, and who know better than anyone else what is actually happening. We detail some of the most significant projects – along with structural changes within city centres, including the regional towns not often in the ‘real estate’ news. We look at ‘Smart Cities’, which can be described as not just a good idea in terms of urban living, but as representing what our cities are going to have to look like, if 70% of the world’s population is going to live in them at some point in the not too distant future.

Tim HARRUP Final editor Pro-Realestate Media tharrup@pro-realestate.be

BELGIUM REAL ESTATE SHOWCASE 2016 3

Belgium Real Estate Showcase 2016 A special issue of Profacility quarterly magazine published by

Business Interactive Media sprl Avenue Louise, 523 - 1050 Brussels Phone: +32 (0)2 669 77 65 Fax: + 32 (0)2 626 37 17 info@bimedia.be - www.pro-realestate.be Publication Director Didier VAN DEN EYNDE - dvandeneynde@bimedia.be EDITORIAL Final Editors Tim HARRUP - tharrup@pro-realestate.be Eduard CODDÉ - redactie@profacility.be Journalists Patrick BARTHOLOMÉ, Benoît DORTHU, Kim VERHEGGE Our grateful thanks to Patrizia Tortolani from de Crombrugghe & Partners, Kim Verdonck from CBRE, Jean-Philip Vroninks and Pierre-Paul Verhelst from JLL, Christophe Nihon from Immoquest, Hadrien Vandenbroucke from B4F. All of them have brought us their expertiseand knowledge of the real estate markets & property management best practices.

ADVERTISING & MARKETING Marketing & Partnerships Didier VAN DEN EYNDE - dvandeneynde@bimedia.be

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→ PROJECTS LIBRARY

town planning master plans, offices, logistics & retail projects

→ LIBRARY

trends & best practices in asset, property, workplace and facility management

→ NETWORK

coordinates & company profiles of key players

in the Belgian real estate industry, along with suppliers

→ NEWSLETTER

2016 forthcoming issues: 13/09 - 11/10 - 08/11

© Pro-Realestate a trademark of Business Interactive Media (Bimedia) www.pro-realestate.be I info@bimedia.be I TEL. +32 (0)2 669 77 65 www.pro-realestate.be/advertising I advertising@bimedia.be 4 BELGIUM REAL ESTATE SHOWCASE 2015

The project descriptions in this e-magazine are non-contractual, and do not bind any of the developers or architects, Business Interactive Media or any other companies cited.

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CONTENT

Showcase 2016 / BELGIUM REAL ESTATE

Image – Sou Foujimoto architects + Manal Rachdi Oxo Architects Compangie de Phalsbourg + OGIC – Morph

06 08 >> → 33

Image – Buildings GATEWAY & PASSPORT, design Jaspers-Eyers Architects

The ‘Real Estate Showcase’ guide gives real estate professionals a global view and analysis of the Belgian real estate market. It sets out market trends in terms of leasing and investment for offices, retail, main housing scheme and logistics estates. Complementary to the online real estate projects library www.pro-realestate.be/projects, the guide presents major town planning projects and main projects for office buildings and shopping centers. It highlights some best practices in real estate development, property and workplace management.

34 53 → 33 08 >>

REAL ESTATE MARKET TRENDS & PROJECTS

SMART CITIES & TOWN PLANNING

Brussels office market & office buildings projects I Investment market I

Smart initiatives to give foundations for the future of cities: 10 business

Office buildings conversion I Flanders and Liège office markets I

cases I The promises of the Brussels Bouwmeester I Financing smart

Retail market & investment trends I Semi-industrial & logistics market

cities I Town planning and land development master plans: projects of

trends I

a ‘district-wide’ size involving a high degree of mixed use; integrating sustainability and mobility concerns I

REAL ESTATE DEVELOPMENT, ASSET, PROPERTY & WORKPLACE MANAGEMENT Senior living: market size & investment opportunities I BREEAM 2016 New construction scheme I Business Case ‘Stay or Leave ?‘ I Alliance for real estate development of serviced flats I European

78 54 → 33 08 >>

Photo Equilis - Art & Build Architects

‘Occupier Cost index’ benchmark for offices I Smart & green buildings solutions I Design trends for future workplaces I Leesman index : measuring the value of a work environment I

BELGIUM REAL ESTATE SHOWCASE 2016 5

6 PROFACILITY GUIDE 2012

REAL ESTATE MARKET TRENDS & PROJECTS Choosing an existing building in which to install your activities is more than ever a multi-facetted decision requiring a good knowledge of the district in which the building is located, projects planned for this zone which could improve – or deteriorate – accessibility, along with the technical qualities of the building, especially in terms of energy and environmental performance.

In this section, you will find a real estate barometer of the real estate markets and a shop window of exemplary buildings.

→→

Image – Buildings GATEWAY & PASSPORT, design Jaspers-Eyers Architects

While the Brussels periphery has been the poor relation in terms of take-up of office buildings over recent years, the decision of two of the largest accounting and audit firms – Deloitte & KMPG – to locate their future headquarters virtually at the front door of Brussels Airport, may lead to an expectation of other developments in this zone which is so strategic at European level.

PROFACILITY GUIDE 2012 7

VISIT US AT REALTY 2016 WEDNESDAY M AY 25 T H , 2016 STAND 2216, TOUR & TA XIS, BRUSSELS

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I N V I T A T I O N We create the future today advertentie Realty_Vuiteindelijk.indd 1

19/05/16 11:26

INVESTMENT TRENDS

2015, a year to remember A number of trends characterised the investment market in 2015. These involved asset types, locations and yields… JLL has drawn up a summary of these trends, with some explanations.

T

he investment market in Belgium in 2015 was exceptional for more than one reason. Firstly, it was a record year with a total or around 4.4 billion Euros invested, all property sectors taken together. Secondly, for the first time ever – and something which no-one would have predicted just a few years ago – investment in retail property exceeded that in office property. While it is true that one mega-investment, the acquisition by CIC of a CBRE Global Investors’ portfolio including the Waasland Shopping Centre and half of the Wijnegem Shopping Centre, had a huge impact on this figure – the fact is still there. The buyer could, after all, have chosen to put his money into offices… The result is that in 2015, retail accounted for very nearly half of all investment (47%) while offices represented less than a third (31%). To put this into perspective, during the 2006-2014 period, offices were at over a half on average (55%) while retail was at exactly one fifth.

Portfolio deals

Remaining with retail for a moment, the CIC deal was worth some 825 million Euros – almost a fifth of total investment in property during the year –, while the next biggest deal, the sale by CBRE Global Investors (again) of the Galeries Saint Lambert in Liège, to AG Real Estate, was worth 135 million Euros.

The remainder of the top five is made up of an MG Real Estate portfolio of shops in various locations, this time bought by CBRE Global Investors, a similar transaction from Equilis to Société de l’Argayon, and the Basilix Shopping Centre in Brussels, sold by Cerificate Basilix to Primonial. The much more modest sums invested in these deals were, in order, 80, 75 and 64 million Euros.

Office activity

Though surpassed by retail, investment in offices was still at a very high level in 2015.

A quick calculation shows that 31% of 4.4 billion Euros is around 1.4 billion.

The top three deals were all in Brussels North district. They involved the Ellipse building, sold by AG Real Estate to Fubon Life Insurance, Astro Tower (to refer to this as the North district may be stretching things a little), sold by Luresa to Patrizia for Korean clients, and the Royal Warehouse on the Tour & Taxis site, sold by Ackermans & Van Aaren to Leasinvest Real Estate. The values of these three were 215, 168 and 108 million Euros respectively.

Increased activity in the Regions

The shift in the geographical preferences of investors is part of a trend. Jean-Philip Vroninks, explains: “The occupier market has been decentralising out of Brussels for some time, particularly for reasons of mobility. The investment market quite naturally follows occupants, and so increased investment outside of the capital is likely.” Putting this into figures, in 2015, just over a third of investment was in the Brussels Region, and almost a half in Flanders (35% and 46% respectively. Wallonia attracted 14%, while the remaining 5% was split.

Jean-Philip Vroninks, Head of Capital Markets at JLL

INVESTMENT TRENDS

During the immediate post-crisis period 2010-2014, the figures were: Brussels, 50%, Flanders, 38% and Wallonia 8%. Prior the crisis the domination of Brussels was even greater, accounting for 57% of all investment from 2003 to 2007.

A realistic prime yield for a long term lease in a top building/top location (triple A) is around 4.25%, however. Investors in retail property have to settle for even less – around 3.75% for both the best shopping centres and high streets.

Investor origin

Jean-Philip Vroninks looks to the likely situation this year: “The yield compression we have seen in 2015 is likely to soften this year, though yields for buyers are not expected to rise.

As many as 20 potential buyers can compete for the very best buildings.”

These very best buildings are rare, however, and this is leading to a change in investor behaviour. JLL refers to this as ‘AB-BA’: this signifies that as genuinely triple A buildings become difficult to find, buyers are prepared to settle for ‘A’ buildings in ‘B’ locations, and vice versa. This trend will continue in view of the lack of speculative developments.

This situation contrasts with that of the 20102014 period. During this time, Belgian investors represented exactly two thirds of the market, Germany was at 13%, the UK and USA at 2% each. China had started to make an appearance but represented just 3% of the total.

Yields

Black Pearl was sold for a Belgian record yield for an office building, of 3.8%.

Earlier this year, the ‘yield’ figure hit the headlines with the most expensive deal (in these terms) ever seen in Belgium. Black Pearl, on the Rue Montoyer in the European District of Brussels, was bought by a German fund for a yield of only 3.8% !

Where the first quarter of 2016 is concerned, the investment market has got off to a good start. Almost 500 million Euros had already been placed in offices by the end of the quarter.

With investments in other types of property, the total at the end of March stood at 0.8 billion Euros.

Tim HARRUP

© Photo Art & Build Architects

Belgium is becoming increasingly attractive to foreign investors. In 2015, just under half (49%) of all investment was made by Belgian investors, and just over half, therefore, by others. Leading the pack was China, which represented 19% of the incoming funds, followed by the UK and the USA (11% and 10%). Germany, a traditional investor, was down at 3% in 2015, along with Belgium’s other large neighbour, France.

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BELGIUM REAL ESTATE SHOWCASE 2016

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OFFICES - MARKET TRENDS BRUSSELS

2015 : Annus horibilis for the letting market Following the signs of recovery seen in the figures of 2014, in 2015 take-up was at one

of its lowest levels since the crisis first broke out back in 2008. With a volume of around

370,000 m² (including lease renewals and purchases for own occupation), take-up was some 20% down on the previous year, and substantially lower (-18%) than the average since the start of the crisis in 2008.

B

y contrast with 2014, the public sector was virtually absent from the market, accounting for only 20% of total volume (some 80,000 m²), despite real demand from the public authorities and institutions. Calls for tender launched by the European institutions, which are looking for 27,000 m² for the Commission and 12,000 m² for the European Parliament, were not able to be satisfied despite interest having been shown in Black Pearl (the passive building of around 11,000 m² developed by Immobel) and Merode (around 13,000 m² located at Avenue de Tervueren 41 and renovated by P&V). The reasons for this are to be found in the appeal lodged with the European Court of Justice

by Banimmo (whose proposition was not selected), obliging the European Union to state the reasons for its choices. In the end, the Office for Infrastructure and Logistics confirmed in late 2015 that it had opted for these buildings, and the lease contracts should be finalised during 2016.

Anticipation of demand from the public authorities and institutions

In total, the future needs of the European Commission amount to some 150,000 m² between now and 2020/21, as current lease contracts come to an end and following the restructuring of its real estate holdings.(1) This expectation only involves the Commission and the executive agencies, and therefore takes no account of possible requirements from other institutions and or bodies of the European Union.

The Brussels Capital Region has launched two calls for tender of around 4,000 m² each for its services, and discussions are underway on the one hand with LCEBE-JCX-Immo, owner of a building located at 59, Rue de Namur, and on the other with Breevast for C. de Ligne. These are well on the way to being finalised during 2016.

Patrizia Tortolani, MRICS de Crombrugghe & Partners The City of Brussels has definitively signalled its agreement to locate its new administrative centre – Brucity – on the site of the current Parking 58 (Rue de la Vierge Noire), owned by AG Real Estate. Works on the new administrative centre of 37,500 m² are set to start in 2017, with a view to the 1,500 civil servants moving in during 2021. The transaction involves a 30 year lease with purchase option.

The Belgian State Buildings Agency has also confirmed its selection of the Pacheco building (approx. 30,000 m²), a historic building belonging to Belfius. These potential future transactions can only augur well in terms of more positive figures for 2016, with an active public sector.

Drastic reduction in take-up

In parallel with a lack of activity from the public sector, large size transactions (>10,000 m²) were also virtually inexistent in 2015. The few large scale transactions which did take place involved the acquisition by the City of Brussels of the De Ligne building in the centre of Brussels (approx. 31,000 m² of offices), in view of future occupation by the metropolitan police,

(1) Read also about the subject the interview of Alain Hutchinson, new Commissioner of the Brussels Capital Region in charge of welcoming international bodies, including the EU Commission. Acting as a single point of contact, part of his mission is to shorten the time needed between expressing of the needs of official bodies and responding to them.

This is change has been made following the sixth reform of the State, Alain Hutchinson is a political representative of the Brussels Governement and not anymore an ambassador connected to the Foreign Ministry. Download this article “European District and PUL on the move” via www.pro-realestate.be/library BELGIUM REAL ESTATE SHOWCASE 2016 13

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OFFICES - MARKET TRENDS BRUSSELS

the letting of some 13,000 m² by KPMG in Passport – a building developed by Codic at the airport and just alongside the Gateway project developed by Immobel for Deloitte.

Along with these come the letting by the Schaerbeek social security agency (CPAS) of some 10,350 m² in the Silver Building on the Boulevard Reyers, the take-up by the Single Resolution Board of Treurenberg, the new 9,800 m² passive building by AXA, one of the rare transactions of any size by the European institutions in 2015.

tunnels has certainly not helped in this), the slow-down in development activity leading to a scarcity of supply in buildings responding to current energy criteria…

Despite the drastic decrease in take-up, vacancy remains around the 10% mark for the Brussels market as a whole, in particular due to the decrease in speculative office real estate developments (only 20% of buildings currently under construction and set to be delivered within two years are speculative), and to the conversion to other use activity, which is

“The absorption of current and scheduled supply, estimated at 2,530,000 m², would require 5 years in view of average take-up of 455,000 m²/year“ Differing activity per district

The central districts saw a decrease in activity compared to the previous year. Their proportion of total take-up only amounted to around 35% in 2015, whereas the previous year they accounted for almost half of take-up in Brussels and the periphery. The Pentagon and airport districts recorded the highest increases, with 47% and 114% higher take-up respectively, than 2014. This is nevertheless, principally as a result of a few large transactions, such as the letting of Passport (approx. 13,000 m²) by KPMG in the airport district, and the acquisition for own occupation of De Ligne (approx.

31,000 m²) by the City of Brussels in the city centre.

Over recent years, the European / Leopold district had dominated the market in terms of take-up in Brussels. But in 2015 it was overtaken by the decentralised districts, which accounted for around 26.5% of all take-up, against just 13% for the Leopold district, which thus trails the Periphery (18%), the Pentagon (17%) and the zone around the airport (14%).

Business districts of the centre less in demand compared to previous year

There are a number of factors which play a part in the loss of speed experienced by the business districts of the centre: the feeling of insecurity caused by the terrorist attacks, the consequences of the reduction in parking spaces in office buildings within the framework of the COBRACE climate code, the growing problems of mobility (the closure of certain 14 BELGIUM REAL ESTATE SHOWCASE 2016

growing from year to year. Without any great surprise, it is still the peripheral and decentralised zones which record the highest vacancy levels with around 22.5% and 13.5% respectively.

Can demand absorb supply …?

The limited number of new projects has led to stability in the vacancy level. Despite this, it will in theory require several years before there is equilibrium between supply and demand, because it is estimated that for the current supply (rental vacancy plus speculative projects) to be totally absorbed by demand, will take five years, taking into account current availability of some 2,530,000 m² (made up of around 1,540,000 m² vacant plus 990,000 m² of speculative development), and of average annual take-up of 455,000 m² since the crisis of 2008.

This situation varies greatly according to districts. It is observed that despite the presence of many obsolete buildings, the absorption rate in the Louise district is short, just 1.7 years, thanks to the policy of the city which is favouring the conversion of these office buildings into residential use. New office projects here are virtually non-existent. The longest absorption rates are to be found in the decentralised and peripheral districts, where vacancy levels are high. These figures have to be treated cautiously, however, as they do not reflect other movements to come.

© JLL

Dashboard of the Brussels office market in 2015: 14,851,000 m² KEY FIGURES Stock

Centre

Midi

Leopold

North

Louise

Decentralised

Periphery (airport)

Periphery (excl. airport)

Total BCR 14.851.000

2.449.000

577.000

3.238.000

1.670.000

801.000

3.227.000

1.504.000

1.385.000

Percentage of total stock

16%

4%

22%

11%

5%

22%

10%

9%

Proportion of second hand buildings

46%

20%

28%

19%

56%

42%

18%

26%

Vacancy level**

5,3%

3,8%

5,9%

2,7%

7,0%

13,5%

0

0

118.000

0

0

200.000

15.000

15.000

4.000

0

69.000

0

0

7.000

0

12.000

92.000

4.000

0

187.000

0

0

207.000

15.000

27.000

440.000

under construction (non-speculative) under construction (speculative) Total Under Construction

22,5% 348.000

Projects (non-speculative)

95.000

0

66.000

292.000

0

118.000

49.000

6.000

626.000

Projects (speculative)

183.000

67.000

95.000

65.000

0

216.000

30.000

242.000

898.000

Total projects

278.000

67.000

161.000

357.000

0

334.000

79.000

248.000

1.524.000

Take up (2015)

62.500

13.000

47.500

12.500

18.500

99.000

52.000

68.000

373.000

Average take up (2008-2015)

62.500

11.500

99.500

45.500

33.500

81.500

50.500

71.000

455.500

Number of years to absorb take up

5,1

7,7

3,6

2,4

1,7

8,1

Prime rents ( €/m2/year)

220

210

265

195

220

195

150

7,8

5,5

Strong and week points of the various districts of the Brussels Capital Region Advantageous fiscal regime

-

-

-

--

-

-

++

++

++

++

+

++

=

-

--

--

Quality of stock

=

++

+

+

-

=

+

+

Presence of facilities

++

++

++

++

++

+

+

+

-

--

-

-

=

+

++

++

Acces by public transport

Presence of green areas ++ Excellent

+ Good

* Prime rent : best rent obtained

** Vacancy level : % of office space immediately available

= Average

- Bad

-- Very bad

Sources: de Crombrugghe & Partners / Expertise News BELGIUM REAL ESTATE SHOWCASE 2016 15

Quatuor

Mobius Towers

16 BELGIUM REAL ESTATE SHOWCASE 2016 © Photo courtesy of Befimmo - design by Jaspers-Eyers Architects

© Picture IMMOBEL - Assar Architects

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OFFICES - MARKET TRENDS BRUSSELS

Major stakes in the North district

The North district is at the centre of attention.

Despite its advantages (proximity to the city centre and to the international railway station), this business district finds it hard to attract occupants, even though it has many quality projects available to let.

Many movements are expected here. The centralisation of the services of the Flemish authorities in 2018 into the Meander project (now re-named Herman Teirlinck) on the Tour & Taxis site, and of the services of BNP Paribas Fortis into its new headquarters under construction on the Rue Montagne du Parc scheduled for 2021, will result in several buildings which have now become obsolete (Noord Building, Graaf de Ferraris, Boreal, Manhattan Center), gradually being vacated.

This future vacancy, coupled with numerous projects-in-waiting (Silver Tower (approx.

35,000 m²), WTC IV (approx. 55,000 m²), Möbius (formerly known as Brussels Tower, (approx. 59,000 m²), Quatuor (approx. 60,000 m²), leads to an expectation of a substantial increase in vacancy over the coming five years (around 500,000 m² by 2020 is being spoken of). And on top of this, the European institutions are not keen on installing here, because it seems to them to be not near enough to their nerve centre.

There is a glimmer of light, however, as it is rumoured that Allianz, which is looking for a new headquarters, may have shown an interest in one of the two towers of Immobel’s Möbius project (i.e. 30,000 m²).

Increasing speed in converting obsolete office buildings

The activity in converting unsuitable second generation buildings continued in 2015, as the volume of office space taken off the market each year has now exceeded an annual average of some 50,000 m² over the past 18 year. A few large buildings perfectly demonstrate this trend. Among these are the Leopold Tower of some 16,600 m² (Rue de Genève), to be renamed Leopold Views and converted to 201 residential units by Matexi, the 22,500 m² of the Green Island building (Avenue du Port 12-14) belonging to KBC and recently acquired by the Cavens group with a view to converting it into apartments. Boulevard de la Woluwe 60, currently 40% let is also representative of these obsolete office buildings of the 80’s, and is to be converted into 60 apartments by Eaglestone.(2)

This conversion activity is certainly going to speed up in light of the new decree of February 4th 2016 from the Brussels government, with the objective of granting subsidies to public service property companies, communes and social services organisations (CPAS), for converting unused office or other buildings into social or low rent housing. This is designed to decrease rental vacancy and create 3,000 extra social housing units and an extra 1,000 units for the middle classes.

Two speed rental market

Despite a decrease in rental vacancy, rents are tending to stabilise and concessions granted by owners remain very substantial, due in particular to the high level of competition, especially from first generation buildings which meet current energy norms. It may be expected that the gap between obsolete buildings and new buildings responding to energy consumption norms (PEB), will widen over time. The increasing demands of these norms, along with the slow-down in new projects, risks leading to a scarcity of buildings which meet the norms, and a corresponding increase in rents for this type of building, to the detriment of second generation buildings.

Energy performance is a criterion which has become determining in the choice of installation for major occupants such as the European institutions and public authorities, and it is taking on more weight with other players on the market. Large users are obliged to carry out energy audits and to set out their plans for reducing their carbon emissions. The take-up figures confirm this trend, as new buildings, those under construction or in project form, represent almost 30% of take-up, despite the low level of take-up by the major institutions and public bodies.

Patrizia TORTOLANI, MRICS de Crombrugghe & Partners

(2) Also read the article Office conversion continues unabated published on pages 20-22 of this edition BELGIUM REAL ESTATE SHOWCASE 2016 17

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OFFICES - BRUSSELS PROJECTS

In the real estate library www.pro-realestate.be/projects you will find a description of the principal office buildings projects under construction in Brussels and its periphery. Each description lists the players involved in the project, the scheduled delivery date along with the brokers so far designated and named for marketing the office space.

Buro II – Archi + I for ATENOR

Banimmo – Assar Architects

The search engine integrated into the home page enables you to access the description of a project by typing in its name or the type of project (offices, retail, residential…).

WTC

image A2RC Architects

WOW > www.pro-realestate.be/projects/WOW

MEE

BELLIARD 40 > www.pro-realestate.be/projects/Belliard40

Atelier Bruno Albert / Archi + I / Pierre Lallemand

MÖBIUS TOWERS > www.pro-realestate.be/projects/Möbius

THE ONE > www.pro-realestate.be/projects/TheOne Art & Build Architects for Cofinimmo

IMMOBEL - ASSAR Architects

AXA BELGIUM > www.pro-realestate.be/projects/AXABelgium

BRUCITY > www.pro-realestate.be/projects/Brucity 18 BELGIUM REAL ESTATE SHOWCASE 2016

QUATUOR > www.pro-realestate.be/projects/Quatuor

MEA

ASSAR Architects

Fedimmo – Jaspers-Eyers Architects

WWW.PRO-REALESTATE.BE/PROJECTS

ASSAR Architects

WTC IV > www.pro-realestate.be/projects/WTCIVTOWER

Alides - Conix RBDM

REALEX TOWER > www.pro-realestate.be/projects/Realex

Benoy / Jaspers-Eyers Architects

OXYGEN > www.pro-realestate.be/projects/Oxygen

MEANDER > www.pro-realestate.be/projects/Meander

UPLACE > www.pro-realestate.be/projects/Uplace Accarain-Bouillot – Atelier d’Architecture de Genval

Architects : Neutelings Riedijk Conix RDBM architects

MEEUS 5-6 > www.pro-realestate.be/projects/Meeus5-6

SILVER TOWER > www.pro-realestate.be/projects/SilverTower 19 BELGIUM REAL ESTATE SHOWCASE 2016 19

REAL ESTATE DEVELOPMENT TREND

Office conversion continues unabated The trend of office space conversion to alternative uses is still strong, with another 92,000 m² of office space being reconverted in 2015.

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well-established trend is the conversion of offices to alternative uses, particularly in Brussels, which has the most substantial office stock in the country at 12.7 million m². Typically, older, out-dated office properties abutting residential districts have been redeveloped over the last decade, though office space in traditional business districts has also garnered interest. Over the last three years, more than 340,000 m² of office space has been converted to alternative uses such as housing, elderly homes, hotels, schools, and student housing more recently. Since 2008, almost 800,000 m² of office space has been converted.

In 2015, 92,016 m² of office space was announced for conversion, down from the year before and the 2013 high of 145,000 m², but well above the long-term average.

Office conversion has gained the most traction in Brussels, with strong support from local urban planning authorities. Major ongoing projects include the redevelopment of the 70,000 m² former CGER headquarters in the city centre (Chambon project) and the redevelopment of the 50,000 m² former Solvay headquarters just off of Chaussée d’Ixelles. Both projects are undertaken by Allfin.

Also in the city centre, the QPT Office Tower will become a new residential tower called the Cosmopolitan (by Besix). In the suburban districts east of Brussels, conversion has been the most dramatic, with former office districts like Marcel Thiry, Colonel Bourg and Rue de Genève gradually being transformed into mixed or pure residential districts.

Office conversion is also taking place in other cities. In Antwerp, Cores has redeveloped the former Douanegebouw (‘t Eilandje) into a 40,000 m² residential development. Other notable examples are the Antwerp Tower (24,000 m²) from Wilma Project Development, which will be partly redeveloped into apartments, and the Tolhuis (23,800 m²) from Immogra, which will likely end up as a residential complex.

In Ghent, the RTT-toren will be redeveloped into a mixed-use residential complex in 2020.

Housing provides better exit values

Michael Niego, Director Capital Markets at CBRE “ Even without changing the structure and shell of the building, redevelopment costs quickly exceed 1,100 euro/m² excluding soft costs and VAT“ 20 BELGIUM REAL ESTATE SHOWCASE 2016

The motivation for the conversion of office space has been a colliding trend of economic factors. While population growth in cities is high and residential prices have increased substantially, the office market has been less fortunate over recent years. In times of economic uncertainty, corporate downsizing and costs savings have resulted in a surge of office voids all over the city. Structural voids in some office districts have contributed to

vacancy rates as high as 30% in out-of-town districts. Once an older office building is vacated by its previous occupant, the costs to modernize and enhance the marketability is often prohibitive, and does not guarantee a successful commercialisation. With office rents under pressure in an ever more competitive market battling for the same but limited corporate demand, offices are no longer the preferred exit strategy of developers or landlords. This trend is new, and could dramatically change the balance of power in urban planning towards housing.

The Cosmopolitan project by Besix RED is set to be a new landmark residential development right in the heart of Brussels old town. Architects Bogdan & Van Broeck will convert the 60s office tower into 156 apartments.

The redevelopment of an office building in apartments is most often a better and safer exit strategy for a developer or landlord, especially when taking into account exit risk. As apartment prices have almost doubled over the last decade, residential prices exceed those of offices in most locations. If there is a choice between housing and offices, housing has become the logical choice in most parts of Brussels. Another advantage of residential development is the phased sales process, which starts well before the actual construction.

“ Over the last three years, more than 340,000 m² of office space has been converted to alternative uses such as housing, elderly homes, hotels, schools, and student housing more recently “ It is not uncommon to see 20% to 30% of units already being sold “on plan”. Subject to the Breyne regulation, which allows the buyer a gradual payment over the construction process, the developer already enjoys some incoming cash flow. The customer base is also very diverse and large in the residential market, with both private investors and end-users being targeted.

© Besix RED

The exit strategy for an office development is significantly different. The commercialisation almost always happens at the end of the construction process, once the occupant has been able to visit.

BELGIUM REAL ESTATE SHOWCASE 2016 21

REAL ESTATE DEVELOPMENT TREND

It is therefore not uncommon to see new office buildings with voids well after delivery.

And once largely let, the building still needs to be sold to an investor to secure the full exit for the developer. Nonetheless we see again core investors looking forward to acquiring uncommitted office projects before delivery and without rental guarantee but only in AAA locations where the letting risk is minimized.

Pre-sales and lower exit risks make residential projects more attractive to developers.

The intense competition in that segment has led many developers to reconsider their margins in order to be able to secure new projects. Feasibility studies showing gross margins between 15% and 20% are quite common.

Conversion is not always feasible or possible

Converting office space into residential uses is not always economically feasible. A typical office building differs strongly from a typical residential building. These differences are sometimes hard to overcome. Moreover, most office space is well located, and therefore simply too expensive to acquire for conversion purposes.

In a lot of cases, only the concrete structure of the buildings, the stairways and the lifts can be maintained. Interior walls, floors, technical installations, electricity and plumbing typically have to be completely renewed.

The conversion of offices to alternative uses is a wellestablished trend, particularly in Brussels, which has the most substantial office stock in the country at 12.7 million m².

22 BELGIUM REAL ESTATE SHOWCASE 2016

Also, factors such as neighbourhood, accessibility, visibility, building proportions, depth, free height, orientation, interior daylight and parking space do not always favour alternative uses. Even without changing the structure and shell of the building, redevelopment costs quickly exceed 1,100 euro/m² excluding soft costs and VAT. It is worthwhile noting that these costs apply to the gross areas whereas only the net areas are priced in residential.

Zoning plans must also be carefully analysed.

Depending on the location, the local authorities may be more or less in favour of changes of use. Eventually, the mere interest of maintaining an existing structure lies in the volumes that were permitted for the previous use, whereas new construction could be limited in certain ways. A trade-off is sometimes required when the features of an existing structure are not ideal: square meters vs. quality standards.

Finally, the high exit prices of residential units that make a project feasible are not always what the market needs. Housing affordability is quickly deteriorating at the bottom-end of the market, leaving first-time homebuyers and lowincome households out in the cold.

Michael NIEGO Director Capital Markets, CBRE

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OFFICES & RETAIL - MARKET TRENDS FLANDERS

Antwerp shines in Flemish office take-up The figures for the Flanders office and retail markets for 2015 and the first quarter of 2016

have been prepared by JLL, and they show differing performances for the four major cities of Antwerp, Ghent, Mechelen and Leuven.

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here Antwerp is concerned (by far the largest office market in Flanders), take-up during the first quarter, while only 20,000 m², was nevertheless 74% higher than the same quarter in 2015, and around a quarter higher than the five-year average. The centre is traditionally the most active, in Q1 2016 it represented 49.3% of take-up, against 60% a year ago and 53% on average over the past 5 years. Average deal size was 425 m² up against 357 m² a year ago.

The Port district was more active than usual with 18%, against 4% on average over the past 5 years, due to several mid-size transactions such as the letting to Molenbergnatie of 1,200 m² in the Loft K. The Ring district contributed to 17% of take-up, down against 51% last year and 21% on average. The largest transactions were the sale to Sunny Europe of a 2,700 m² building in the Centre, as well as the letting to AMS of 1,738 m² in the Albert building, also in the Centre. There was no transaction by local administrations in Q1, only corporates were active.

Turning to vacancy, this remains high at 10.76%, slightly lower than the 11% of three months ago, meaning there is only 10,800 m² immediately available. While vacancy in newly constructed office space continues to decline, vacancy increased in second-hand buildings.

Availability in new buildings is expected to improve somewhat with the launch of speculative developments in the Ring district, available for occupation from late 2017/ early 2018 onwards, including Ghelamco’s The Link I & II project in Berchem (27,000 m² in total, planned for 2017-2018) and Kairos’ Kievit Kantoor in the Centre (approx. 6,000 m² for 2018). Prime rent remains at € 145/m²/year (approximately half of the level in Brussels), but JLL believes it may rise for new projects.

24 BELGIUM REAL ESTATE SHOWCASE 2016

The recent star of the Flanders office market has been Ghent, which saw first quarter takeup at around 15,500 m², just 4% lower than the same quarter last year. With 33 transactions recorded against 19 in the same quarter last year, however, the number of transactions was 74% up on last year, pointing to much lower average surface areas. The 3 largest transactions recorded in Ghent at the beginning of 2016 were the acquisition of 3,450 m² by the KU Leuven in the city centre, the letting of 2,600 m² by BNP Paribas Fortis in the recently delivered Quantum Building, and the letting of 2,100 m² in the Blue Towers by Cegeka.

Vacancy stands at a healthy 4.5% while prime rents are higher than those in Antwerp, currently standing at € 155/m²/year.

Some 4,700 m² of space is currently under construction in Ghent, in the MG City Station Ghent, scheduled for delivery at mid-year. Only 1,768 m² is under construction speculatively.

In 2015 Mechelen only recorded 13,300 m² of take-up last year, of which 2,600 m² was in the first quarter. There has been virtually no activity during the first quarter of this year, just a 485 m² letting by De Chinezen in the Zuidpoort Building. Over 50,000 m² are currently available in Mechelen, of which 17.5% in new buildings and 82.5% in second-hand properties. This free space gives a vacancy rate of 10.5%.

Prime rent is similar to that of Antwerp, at € 14/m²/year.

Leuven is a smaller market than Mechelen, with some 8,800 m² of take-up last year. In the first quarter of 2016 take-up amounted to 1,680 m².

The largest transaction was the letting of 575 m² by Icometrix, in the Vander Elst building. Local administrations were also active, accounting for 2 out of the 5 recorded transactions. Vacancy stands at around 13.5%, and there are no new projects currently under construction to push this any higher. Prime rent is stable, and in line with the rest of the Flanders, at € 150/m²/year.

Where investment is concerned in Flanders, the most notable transactions recorded by JLL last year were the Markland portfolio, 8 buildings in Antwerp downtown, sold to US private equity firm Cores for € 65 million, and the building occupied by Deloitte in Tetris Business Park on ‘The Loop’ in Ghent, acquired by insurer L’Intégrale for € 25 million

Retail

No investment in retail property in Flanders has so far been recorded this year (to the end of the first quarter). JLL expects a lower level of investment in 2016 than last year. Prime yields stand at 3.75% for high street property and 4.25% for shopping centres. Retail warehouse property is cheaper to buy in comparison, with prime yields reaching 5.75%.

Tim HARRUP

The most important letting transaction registered in 2015 in Flanders has been the preletting of 4,600 m2 by Crelan in the Post X Project in the Antwerp’s ring district.

© Photo courtesy of IRET Development

JLL has also prepared the headline figures for the retail market across Flanders as a whole.

These show that first quarter take up this year amounted to 74,200 m², a robust figure (without any seasonal considerations taken into account) when compared with the 231,000 m² of the whole of last year.

Some 66,000 m² of new space came onto the Flemish market during the first quarter of 2016, not far short of the 78,000 m² of the whole of last year.

BELGIUM REAL ESTATE SHOWCASE 2016 25

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OFFICES - MARKET TRENDS LIÈGE

Low take-up and virtually no vacancy The largest real estate market in Wallonia has been very visible over recent years.

The Finance Tower, office activity around the Calatrava station (itself the most mediaticised recent construction), Médiacité, the new bridge over the Meuse linking one to the other…

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iège can also pride itself in one of its projects – Paradis Express – winning the ‘Best Futura Project’ award at Mipim this year. This complex will total some 35,000 m² of built area. The project still has to be subject to an impact study, and has to apply for its single permit. As soon as this is obtained, the real estate developer Befimmo is planning to confide the residential part of the project to a specialised partner, while it will take care of the office part itself, phased in line with marketing.

All of the highly publicised events do not make a market though. So what does, and what is the state of the market at the moment?

Immoquest has been analysing the performance over the past year, looking in detail at every aspect of Liège’s current status.

Of immediate note is the fact that 2015 saw only 11 office transactions for a total of around 9,000 m². This compares to 15 transactions totalling 10,000 m² in 2014. With no new constructions delivered, the office stock has remained stable at some 620,000 m², and vacancy is at just 1.3%, or in numerical terms, around 8,000 m². The office stock is made up, to the tune of almost 70%, by buildings which are more than five years old and the space which is available most often suffers from poor accessibility or is in need of renovation.

Several developers are working on large development projects to close this gap.

Over recent years the stock of new buildings has expanded thanks to the construction of new offices but for own use. To put the Liège office stock into perspective, the two capital cities in between which Liège is located – Brussels and Luxembourg – have around 14.8 million and 3 million m² respectively. Average rents in Liège stand at € 125-145/m²/year for recent buildings.

Projects

Returning to the station district, and to buildings and projects, the controversial Finance Tower has finally been built, and the esplanade in front of the neighbouring station has been laid out.

A little further away, the enquiries and permit process for the former Bavière hospital site is underway. This is a major project which will eventually see not only a company incubator at the initiative of the Province of Liège (the first element likely to be built), but 250 apartments, 450 student flats, educational or training facilities, sports facilities, a rest home…

Much further advanced, and involving another Liège icon, the Val Benoît project should see its first phase completed by the middle of this year. This is the former civil engineering institute, totalling around 13,000 m². By the time the project is finished, it is expected to see 30,000 m² of space dedicated to companies. And it will constitute a new city district in itself, connected by the future tram line.

Other projects in Liège and its surroundings, detailed by Immoquest, include E-Lyge (11,000 m2), Feronstrée 54 (11,000 m2), Ardent projects (10,000 m2) facing the Guillemins station, Crystal Park (20,000 m2) on the former Val Saint Lambert industrial site, and developments around Liège Airport.

Tim HARRUP

This article with an in depth look at Liège districts and projects can be downloaded via www.pro-realestate.be/library > 23/05/2016

The rehabilitation of the Val Benoît site is going well with the renovation of the buildings previously occupied by the University of Liège, before it moved to SartTilman. Around 13,000 m2 of workspace should be ready in September this year.

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SEMI-INDUSTRIAL MARKET LIÈGE PROVINCE

Demand outstrips supply A survey by Immoquest, with the help of the SPI and of ‘Foncière Liégoise’, highlights the specific characteristics of this market, and its issues in terms of availability.

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mmoquest registered a record number of semi-industrial transactions in the Liège province during 2015, compared to previous years. Small regional enterprises are largely behind this, feeding off the improving economic climate. Immoquest recorded 57 transactions, totalling over 125,000 m² of space. Managing Director Christophe Nihon comments: “This reminds me of the levels of the pre-crisis years!... Realistic current rents for a quality semi-industrial building are currently around € 36/m²/year. Certain smaller buildings can achieve, exceptionally, rents of the order of € 65/m²/year. Over the past five years, there has been a higher number of transactions, but overall, they remain around 100.000 m². There is little rental vacancy.

The great majority of transactions is concluded by local players.

New installations of foreign origin are rare, except in the domain of logistics.”

© Photo PAL_Chris Renault

TRILOGIPORT platform will accommodate logistics activities, along with the allied transport of merchandise by water, rail and road, and with the priority vocation of bringing together the shipments upstream of the northern European maritime ports.

The SPI confirms that much demand is unable to be met by supply. There is a stock of over 5 million square metres of semi-industrial space in the Province, much of it in the 54 business parks managed by the SPI, which are around 90% occupied. One of the current projects in this domain is the extension to the business park at Hauts-Sarts (Herstal). Immoquest states that this is of particular importance.

It involves an extension of 60 hectares. But the project which is the most advanced is around 10 hectares at Soumagne-Barchon, set to be marketed this year. Other larger zones (Seraing, Chênée, Flémalle, Werihet) are under study but far from being ready to come to market.

Almost half of the semi-industrial market – and

therefore around 2 million square metres of space – is concentrated around Liège itself.

Only 65,000 m² of this space, confirms Immoquest, is currently vacant.

The rest of the activity is concentrated around the port and the airport. Trilogiport represents 120 hectares under development by Liège Autonomous Port, the Port of Antwerp and Liège Province Development Agency (SPI). It is a multi-modal platform with a 15 hectare container terminal and a 40 hectare logistics zone destined to accommodate EDC’s (European Distribution Centres). Two companies specialising in logistics real estate have obtained operational concessions: Warehouses DePauw and Deutsche Lagerhaus Trilogiport.

Over time, these companies will develop some 200 000 m² of logistics premises. Moving to Liege airport, by the end of this year it is expected to arrive at around 100,000 m² of constructed semi-industrial space.

Conforming to circumstances

The SPI and Immoquest both observe that along with the fact that there is a very high proportion of local demand for small surface areas (up to 2,500 m²), the choice of location is often imposed by circumstances: the place where the company head lives, and the necessity of turning to second hand existing buildings because it is very difficult to build new ones.

Rehabilitation of former industrial sites

Would the conversion of former industrial sites be the solution for the construction of new semi-industrial buildings?. The SPI states that this has already happened – Liège Science Park, New Tube Meuse – or is currently underway – Val Benoit, Sartel, … However, this type of site is often to be found nearer to city centres and therefore further from the motorway networks. And they are often polluted, with the extra time and money this involves.

Tim HARRUP

The full research results and analysis are to be found in a report available on www.immoquest.be

28 BELGIUM REAL ESTATE SHOWCASE 2016

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LOGISTICS MARKET TRENDS

Slow but likely to improve The logistics market in Belgium was relatively moderate in terms of take-up during 2015.

As broker JLL reports, total take-up amounted to 483,000 m², which is 19% below the five-year average.

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n terms of the most popular regions for new logistics take-up, the BrusselsAntwerp axis accounted for 192,000 m², and is expected to rise during the coming year, as is the overall market. The Antwerp-LimburgLiège zone is the next most sought-after, at 158,000 m², and with a stable outlook for this year. Antwerp-Ghent contributed 50,000 m², and Wallonia 38,000 m². This leaves 45,000 m² for the rest of the country.

Turnkey projects represented nearly 80% of the take-up volume in the category above 20,000 m² and all top-3 transactions were build to suit projects. Immediate vacancy in this category remains extremely low, varying between zero in prime locations to a maximum of 5% in decentralised zones. The three largest transactions mentioned above were for 58,000 m² Mobis Parts Europe in Beringen (E 313 Antwerp-Liège), 42,000 m² for Aldi at Turnhout in the same zone and 36,500 m² for DHL at Zaventem (Antwerp-Brussels axis).

Deliveries of new space were barely higher than a quarter of total take-up. Just 127,350 m² of new space came to the market during the year, all non-speculatively. This volume was 60% below the average delivered in the 5-year period from 2010 to 2014. Only one delivery was recorded in the final quarter of the year, the 8,000m² distribution centre for Pharma Belgium in Grimbergen on the Brussels periphery. The largest completions in 2015 include a new distribution centre of 30,000 m² for Colruyt in Lessines, an extension of 25,000 m² to the DC of Skechers in Liège (Milmort), and 15,000 m² developed by MG Real Estate for Damco in Willebroek.

Investment

Where investment is concerned, the picture is very much more positive. JLL recorded €295 million in total, very nearly double the figure in 2014. This volume is the highest of the decade and would have been even higher, says the broker, if more products had been available.

The buy-side was dominated by local Belgian REITs (56%), whilst pooled funds from the USA and the UK were active in large portfolio deals which accounted for respectively 20% and 8% of the volume.

The top buyers were Belgian REITs WDP and Montea and Logicor (Blackstone Group), a newcomer on the Belgian market. In order, they transacted deals involving the AXA logistics portfolio (€60 million, 156,00 m², various locations), DHL Supply Chain properties in Bornem (€58 million, 90,000 m²) and the logistics hub of DHL Aviation at Brussels Airport (€30.5 million, 36,500 m²). Two other transactions, by Intervest Office &Warehouses at Herstal, and

by WDP at Willebroek, were larger in terms of surface area than the 36,500 m² of Montea, but lower in value.

Prime yield for logistics property stood at 6.5%, which is lower than the previous year and expected to become even further squeezed as supply of prime product fails to satisfy demand.

Prime rents remained stable at €55/m²/year, and are expected to remain in this range in the near future.

Tim HARRUP

The build to suit construction project of Mobis Parts Europe’s new European Distribution Center (EDC) in Beringen along the E 313 highway (Antwerp-Liège) was the main logistics turnkey project delivered last year. On a plot of 12 ha bought directly from the commune of Beringen, the new EDC represents a surface area of 58,000 m² (with the possibility of extension to 75,000 m² plus 3,000 m² for offices), and is to be used for handling all incoming goods destined for the European market and delivery to six other Mobis Parts Europe regional distribution centres, and also for direct supply to dealers of sister brands Kia and Hyundai in the Benelux, France and Switzerland. JLL advised Mobis Parts Europe in the concept, lay-out and the technical specifications of this project and also for the construction of the EDC by Goodman.

BELGIUM REAL ESTATE SHOWCASE 2016 29

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RETAIL MARKET & INVESTMENT TRENDS

Retailers and shoppers making choices Despite good occupational demand, retail markets are increasingly polarized, with AAAlocations performing markedly better than secondary locations. This phenomenon is not just a question of retailer preference, but is impacted by how consumers envisage the shopping experience.

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Sébastien Vander Steene Senior Director Retail Brussels, Wallonia & Luxembourg CBRE

Geoffrey Wilkinson Senior Director Out-of-town Retail CBRE

30 BELGIUM REAL ESTATE SHOWCASE 2016

he leasing market continues to diverge, with rents stable or even trending slightly upwards in prime locations, while declining elsewhere, particularly in poorer secondary and tertiary locations. Rents of up to 2,000 €/m²/year are paid for the best retail units (of 200 m²) on the Meir in Antwerp and the Rue Neuve in Brussels.

In 2015, retail voids in Belgium continued their upward trend for the 7th consecutive year, and are now above 9%, according to Locatus. While vacancy remains low on the most important high streets of Belgium’s largest cities, more voids have been registered in secondary and tertiary locations and smaller cities.

Leasing activity has performed well in recent

accessible and highly convenient, needs-based retailing. Out-of-town retail is in fact the physical proxy of online shopping, with the advantage of providing immediate and local access to the product.

For experience and fun shopping, consumers are more likely to visit the big cities and large shopping centres. As consumers become ever more demanding, city governments and shopping centre owners invest heavily in making their high streets or shopping centres more ‘experiential’ to boost footfall as well as the all-important dwell time. Here, shopping is not just a necessity but much more of a social activity where savvy consumers expect an

“Consumers are increasingly making choices, between experience and convenience“ years, while new retail schemes such as Dockx Bruxsel (a 41,000 m² shopping centre) and Be-Mine (a 17,500 m² retail park) have added significantly to take-up in 2015. While most retailers are still expanding, transactional evidence and increasing marketing lead times indicate that retailers have become much more selective in their choices. Retailers are clearly optimising their store networks, in favour of the bigger cities or more convenient accessibility.

A notable example is H&M, which reorganised its retail offering in Antwerp to have 3 bigger stores along the Meir and the Leysstraat, while also actively expanding its out-of-town retail offering.

Experience or Convenience?

As e-commerce continues to gain market share, shopping has never been easier and consumption behaviour is changing structurally.

Consumers are increasingly making choices, between experience and convenience. Out-oftown retail suits the modern consumer better in terms of convenience. Both supermarkets and other peripheral retail formats deliver easily

inclusive experience, with a large range of diverse retailers, some entertainment and plenty of food and beverage choices.

Small and mid-sized cities struggle to keep up with the modern consumer. Car-banning policies and expensive parking charges might have marginally increased the ‘experience’ of a too limited and narrow retail offer, but at the expense of convenience. But mobility and accessibility is a key prerequisite to attract consumers.

Out-of-town remains popular

In Belgium, out-of-town retail is the largest shopping format in terms of size. At least 8 million m² is dedicated to convenience shopping in peripheral locations. Admittedly, this number includes a vast amount of supermarkets. New out-of-town developments are increasingly focused on retail parks, where multiple warehouses with a consistent architectural look, share the same car park. The out-oftown retail format has evolved towards a more urban integrated concept and a more appealing architecture.

Particular attention is given to the consumer experience and the retailer mix. Strong quality brands are important with an increasing presence of fashion and leisure retailers.

Be-Mine in Beringen, Driespoort in Deinze and Olen Shopping are excellent examples of this trend. And new projects such as the new retail park next to the Les Bastions shopping centre in Tournai will continue this trend, with both the consumer convenience and experience in mind.

Out-of-town retail still enjoys relative buoyancy compared with other destinations. Vacancy rates in out-of-town retail are quite low, between 2% and 3%. In general, voids in peripheral retail are short-lived. Only smaller stand-alone warehouses in the wrong locations are prone to structural voids. Rents are obviously significantly lower in the out-of-town retail segment. This, in combination with the ability to operate on large floor areas and the accessibility of the format, are the main advantages. Rental growth has nevertheless been impressive over recent years.

Retail warehouse clusters around Brussels, Antwerp and Ghent have seen steep growth in terms of rents. For the very best out-of-town locations in the surroundings of Brussels, rents have surged to as much as 200 €/m²/year for retail units of 1,000 m². But peripheral retail too is increasingly polarised, with some locations suffering marginal rent corrections. The strong rental performance over recent years has caused local overdevelopment in a number of prime out-of-town locations. If most out-oftown retailers are already present in a certain location, adding more space is unlikely to be successful in the short term. Belgium numbers some very successful out-of-town players, but the proportion of active retailers pales in comparison to the diverse and endless list of retailers active in city-centre destinations or shopping centres.

New entrants to the out-of-town format are limited, despite the many different retail chains active in neighbouring countries. Nevertheless, foreign retailers such as Ikea, Decathlon and H&M are hugely successful in Belgium.

Over recent years, Albert Heijn, Action and MediMarket have been the most important newcomers. They have taken the market by storm, and could hopefully inspire others to do the same.

2015, a record-breaking year for investments

Transaction volume in the retail sector in Belgium amounted to €2.15 billion in 2015, compared to only €412 million in 2014.

The most notable transactions in 2015 were the acquisition of two shopping centres by the Chinese Investment Corporation (CIC).

CIC now owns 50% of Wijnegem (62,000 m²), worth €400 million, and 65% of Waasland (45,000 m²) for a value of €360 million.

CBRE Global Investors also sold the Galeries Saint Lambert (40,500 m²)) in Liège to AG Real Estate. Substantial investment volume can also be expected for 2016, with a series of shopping centres and retail parks being marketed.

The new retail park next to the Les Bastions shopping centre in Tournai is one of the recent examples of out-of town retail paying particular attention to providing the consumer with a good retail mix.

Because of its popularity among both private and institutional investors, retail has become one of the most expensive property types in Belgium. Investment yields as low as 3% are being paid for the very best high street units in Belgium.

Sébastien VANDER STEENE, Senior Director Retail Brussels, Wallonia & Luxembourg Geoffrey WILKINSON, Senior Director Out-of-town Retail

BELGIUM REAL ESTATE SHOWCASE 2016 31

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RETAIL MARKET & INVESTMENT TRENDS

Food & Beverage: Belgium missing out Having a snack of a coffee while out shopping is no longer something which merely responds to a sudden feeling of hunger or thirst. It has become part of the overall

shopping experience, but Belgian shopping destinations are not making the most of this trend.

A

Denys De Kempe Senior Director Retail Flanders CBRE

ccording to the latest Food and Beverage (F&B) report by CBRE, almost a third of all visitors to shopping centres across Europe, South Africa and the Middle East will visit a restaurant or coffee shop. However, where Belgium is concerned, the figure is around half of this, at what CBRE calls an ‘unenthusiastic’ 16%.

Somewhat surprising in that Belgians find eating and drinking a vital part of the shopping experience, and an indication that major improvements can – and should – be made to please customers and get the most out of retail destinations.

The report surveyed 22,000 customers across 22 markets in Europe, South Africa and the Middle East, of which more than 1,000 customers were Belgian. The goal of understanding what their perceptions were of F&B within the shopping centre environment were

met with some fascinating results. In Belgium, males spend on average 2.60 Euros more than females on F&B, and couples are by far the most discerning group and highest spenders per person.

New trends

The responses, however, highlight a gap between valuing the dining experience and being influenced by the available options.

Belgian consumers, already spending among the most in EMEA, simply demand better value, higher quality and more choice. In terms of types of establishments desired, innovative and pop-up restaurants tallied the most votes.

Food trends such as gourmet burgers and niche restaurants have experienced enormous success in recent years. These popular eateries have almost bypassed shopping centres altogether, currently representing a missed opportunity to maximize their full potential.

© Image Art & Build Architects / Jean Paul Viguier

Denys De Kempe, Senior Director Retail at CBRE comments on the situation in Belgium: “We know that a shopping centre is more than the sum of its parts: it’s about the overall proposition. With shopping centres competing for shopper attention, F&B will become increasingly important as a footfall and revenue driver. A strong food and beverage offer fits with the notion that shopping is a leisure activity. Customers not only have a ‘desire’ to shop, but have a ‘need’ to eat. Given that nearly every Belgian surveyed had visited a shopping centre in the last 12 months, the opportunity to create an impact via F&B is substantial”.

Denys DE KEMPE, Senior Director Retail Flanders

View over the dining plaza and entrance to Spirouland indoor amusement park, to be created in the Mall of Europe, part of Europea, phase 1 of the NEO development on the Heyzel plateau, to the north of Brussels.

32 BELGIUM REAL ESTATE SHOWCASE 2016

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34 PROFACILITY GUIDE 2012

SMART CITIES & TOWN PLANNING By 2020, it is expected that 70% of the population in Europe will be living in cities. This constant growth requires new thinking, in order to bring greenery back into the city, decrease carbon missions, produce renewable energy, ensure a social and functional mix within districts, encourage ‘soft’ and multi-modal mobility and the use of public transport… The challenges are numerous for cities which wish to be worthy of the name ‘Smart Cities’ in the future.

→→

PROFACILITY GUIDE 2012 35

Image – Sou Foujimoto architects + Manal Rachdi Oxo Architects – Compangie de Phalsbourg + OGIC – Morph

For this, it is necessary to think out of the box. And this is exactly what the Deputy Mayor of the City of Paris – Jean-Louis Missika – intends to do.

He is in charge of planning and launched ‘Let’s reinvent Paris’. This is the subject of the conference entitled ‘Cities: Innovators of our way of living’ organised by professional association UPSI/BVS at REALTY. The project designed by architects Sou Fujmoto & Manal Rachdi fits in perfectly with this trend.

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TOWN PLANNING SMART CITIES

‘Smart’ initiatives to give foundation The concept of ‘smart cities’ is more and more emerging as a response to the various problems caused by the growth in urban populations. The Smart City Institute in Liège,

and the ‘Belfius Smart City Award’, are pioneering this concept in Belgium and leading by example.

T The priorities in sustainability objectives which cities are looking to achieve are firstly ‘smart environment’ with efficient production and consumption of green and renewable energy, water management, and waste management which, if well recycled, can create raw materials once again. The other priority to be found at the top of the agenda involves the performance of infrastructures, integrating various types of intelligent and multi-modal mobility solutions.

36 BELGIUM REAL ESTATE SHOWCASE 2016

he rapid growth in urban populations is throwing up new challenges in domains such as mobility, housing, employment, education, culture and safety, without of course forgetting the management of resources including water, energy and waste. The concept of ‘intelligent cities’ is more and more emerging as a response to these challenges.

“A Smart City is a city which manages to ensure economic prosperity, the well-being of its citizens, deploy management which respects natural resources, while making use of new technologies”, explains Nathalie Crutzen, a professor at HEC-ULg and Director of the Smart City Institute. This university institute established last year – with the support both of the City of Liège and partners Accenture and Belfius – has set itself the goal of stimulating research, training, innovation and an entre-preneurial spirit in the domain of intelligent cities, known as ‘Smart Cities’.

Rewarding smart initiatives

Whether large or small, our cities and towns, our communes, have no other choice if they wish to remain attractive for business, shops and citizens, than to become ‘smart’. It is important that everyone is made aware of what is at stake, and of the opportunities provided by cities which are ‘intelligent’. Within this framework of awareness-raising, Belfius, in collaboration with Vif/L’Express, Knack, Proximus and Accenture, launched the first edition of the ‘Smart City Award’ in 2015.

To inspire others by example, a professional jury selected ten projects from the cities and communes of the three regions, which stood out in particular for their sustainable, innovative and integrated characters. Each project translates into concrete terms one or more components and facets of an ‘intelligent’ city. Last December, the City of Antwerp was crowned for its ‘Stadslab 2050’ project, following the vote of the professional jury and the public.

tions for the future to our cities

Six pillars

The ‘Smart City’ concept is based on six pillars: ‘Smart Environment’ with energy, water and waste management, ‘Smart Governance’ which includes a consideration of how the city is managed; ‘Smart People’ involves education and culture, while ‘Smart Living’ includes the way people live their lives and consumption; then come ‘Smart Economy’ which involves company clusters and economic dynamism, and finally ‘Smart Mobility’.

When it is considered that more than half of the world population lives in cities, it is not surprising to see problems of mobility becoming ever more present at the current time. Within the European Union, the figure is even as high as two thirds.

And the figure is expected to rise to 70% by 2020. Encouraging multi-modal ways of getting around, making access to the city easier, reducing environmental harm, improving the well-being of citizens through innovative projects, these are some of the essential points of the ‘smart mobility’ approach which aims to optimise the efficiency of transport.

It is easy to understand that there is no ‘absolute’ smart city. The form which an ‘intelligent city’ will take will depend on mentalities, and the strengths and weaknesses of each city.

“The local authorities have to gather together around them a whole series of players, including citizens, local or multinational companies which can provide their expertise and best practices, public institutions along with the academic world with researchers and students”, states Nathalie Crutzen. “All of these forces need to be brought together so that they can move in the same direction in accordance with the specific characteristics of each city”. Just as with a sustainable approach strategy, the framework of each ‘smart city’ will be defined according to the nature of each city, as is demonstrated by the ten projects which were in the running for the first ‘Belfius Smart City Award’. These projects are highlighted in the following pages.

You can find the full reports as published in the Vif/L’express magazine via www.levif.be/ belfiussmartcity

An ideal to be achieved

“A Smart city represents an ideal which we should attempt to achieve, but it won’t be done in just a few years. It is a long term reflection and dynamic. But it absolutely has to be started now. All of the players involved in this have to sit down round the table in order to determine their vision, the projects they will undertake”, explains Nathalie Crutzen. According to the Director of the SCI, there is nevertheless no real ‘intelligent city’ today: “It is more relevant to talk of ‘Smart City’ approaches, with some of them more advanced in this process, but there is not yet any real ‘Smart City’. It’s a bit like a sustainable company, there aren’t any around in the genuine sense of the term, but there are certainly companies which set themselves objectives within a sustainable development framework. This is an on-going situation”, she details.

Canal Z / Kanaal Z places “smart cities” in the spotlight The television channel Canal-Z/Kanaal Z keeps up to date with these smart evolutions and solutions derived from (technological) innovations that help building the cities of tomorrow. In a series of ten documentaries called “Z-Smart Cities”, Canal Z / Kanaal Z goes in search of the trends that will turn our cities into real smart cities: sustainable, ecological, qualitative and pleasant to live in.

In the series, ten mayors talk about the approach in their city or community and their goals for the future. Companies and experts also explain how they can contribute to creating the smart city of the future.

The series is accessible via www.kanaalz.be / http://canalz.levif.be/entreprendre/z-smart-cities/

BELGIUM REAL ESTATE SHOWCASE 2016 37

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TOWN PLANNING SMART ENVIRONMENT

Energy at the heart of the city Under the name of ‘Stadslab 2050’, the city of Antwerp has deployed a project which is intended to help the city become sustainable.

A sort of ‘urban laboratory’, this initiative is a partnership between the public authorities, private companies, citizens and organisations at the origins of ‘pathways’, involving specific themes. Each of these pathways has the objective of resulting in concrete actions and experiences which will help to make Antwerp a sustainable city. The sharing of good practices, commitment by those parties involved, permanent surveillance of, and stimulation of, the inspiration needed for a sustainable city…

One of the principle objectives of Stadslab 2050 is that the action being undertaken always remains visible.

CC Stadslab2050 via Flickr

(1) Consult to www.stadslab2050.be for illustrative initiatives en best practices.

38 BELGIUM REAL ESTATE SHOWCASE 2016

Among these initiatives, one of the pathways is ‘Energie voor het Antwerpse hart’ (Energy for the heart of Antwerp). With three partners – Smart Grid Flanders, Unizo, Antwerpen Stad and Eandis – the local authorities thus wished to speed up the deployment of energy savings and the promotion of sustainable energy within

the very heart of the city, within a pilot zone which runs from Antwerp Central Station to the Schelde, and which is characterised by intense activity, a high concentration of shopping and many recreational initiatives.(1) Many concrete activities and experiences are underway within the framework of the project.

An ‘energy pop-up store’ for example been launched for shop traders who wish to carry out a thorough energy renovation of their premises, and a ‘smart box’ to facilitate the intelligent ordering of cooling, lighting and heating systems enabling energy bills to be reduced by at least 20%. Eandis is also working on a pilot project involving the closing of shop doors, in order to avoid heat being lost, and thus energy being wasted.

In another move, the ‘Energy Performance Contracting’ concept has resulted in three pilot projects. The first, in collaboration with E&Y, involves the 30% reduction in energy consumption by several academic buildings: Universiteit Antwerpen, Karel De Grote Hoge-

school, Atheneum Antwerpen and Steinerschool Antwerpen. As for the second project, this concentrates on apartment buildings and co-owners’ associations, while the third pilot project has been launched at the Antwerp World Diamond Centre (AWDC). Following a first energy audit which revealed a saving of 15% at the AWDC via ‘Energy Performance Contracting’, the group is now going to promote this formula to other building owners in the Antwerp diamond district. And finally, the University of Antwerp has drawn up a map of energy losses which should, in time, help to stimulate intelligent thermal dialogue between buildings.

Making a reduction in the carbon footprint more accessible

Project focuses on the energy aspect: the pilot project of the city of Ostend which combines investments aiming to improve the energy performance with a guaranteed yield, such as roof insulation or the installation of a high output boiler, with personalised assistance and madeto-measure advice. Back in 2010, the City of Ostend had already ratified the Convention of Mayors involving local sustain-able energy. The city thus accepted of its own free will, to go further than the levels set by the EU in terms of CO2 emissions.

The desire behind this new ‘smart’ initiative is to enable low income families to reduce their energy bills, and therefore their CO2 emissions too, without directly increasing their monthly household budget. This project stands apart for its method of financing the investments made with a view to improving energy performance.

The concept of ‘guaranteed yield’ proposed by the AG EOS (Autonomous Communal Agency for Energy Savings in Ostend), signifies, in concrete terms, that at no time will the investment weigh on monthly household budgets.

Turning Ghent into a carbon neutral city

Just like Antwerp and Ostend, the ancient city of Ghent has deployed a ‘Smart Environment’ initiative. With its project ‘Energiecoaching op maat van uw bedrijf’ (Made to measure energy coaching for your company), the city is pursuing an objective to individually assist at least 110 enterprises, during the 2014-2019 period, which wish to structurally reduce their energy consumption and thus reduce annual emissions of CO2, by at least 9,350 tonnes at local level, which is the equivalent of the output of 1,900 households. The City of Ghent’s project falls within the context of a prolongation of a European pilot project within the framework of ACE2, ‘Management Energy Assistance Route’, which has already enabled around fifteen Ghent enterprises to reduce their energy consumption by up to 20%, which gives an overall saving of 360,000 Euros and 1,820 tonnes of CO2.

Improving insulation, heating, heat recovery, air conditioning, updating the lighting, steam, compressed air, consumption in standby mode…

The city is providing two types of assistance, based on the company’s energy consumption.

On the one hand, extended coaching to a value of 7,000 Euros destined for enterprises and organisations with high energy use and with complex production processes, and on the other coaching to a value of 4,000 Euros intended for enterprises and organisations whose energy consumption varies between 100,000 and 500,000 kWh of electricity, or between 345,000 and 1,725,000 kWh of natural gas.

From a financial point of view, the participation of the company is limited to 10% of the cost of the coaching, a maximum of 700 or 400 Euros therefore, and priority is given to investment, to measures involving behaviour, to monitoring, to maintenance and control.

The investment is repaid by the households via energy savings actually achieved. After five years, inhabitants thus have a better insulated home, and the savings made on their energy bills are no longer used to repay the investment, but are theirs to keep. From the point of view of the AG EOS, the guaranteed yield system should, in the end, result in a neutral situation where the budget is concerned.

BELGIUM REAL ESTATE SHOWCASE 2016 39

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TOWN PLANNING SMART MOBILITY

Ecological urban transport in Liège In the domain of mobility, the city of Liège has set itself apart with its Vélocité project. Some five years ago, the city set up, in partnership with the ProVélo association, a long or medium term bicycle hire service, unique in Wallonia. For just 10 Euros a month, or 80 Euros a year, Liège residents have free use of a new city bike, highly efficient and fully equipped, for all of their trips.

In this programme, the authorities see a partial solution for freeing the city of traffic congestion.

With the success of Vélocité behind it, the city of Liège is going further and setting up a new system to enable Liège inhabitants to familiarise themselves – free of charge and for two months – with electrically assisted bikes. While trips in the heart of the valley can easily be made with

traditional bikes, longer or cross-city trips are more difficult due to the uneven nature of the land. An electric bike may be the ideal solution in these circumstances.

The only real inconvenience to this remains the purchase price, which is still relatively high.

Through this initiative, however, the city is intending to remove this psychological barrier.

By March 2017, no less than 440 persons or households will have the opportunity to try out electric bikes. Vélocité forms a coherent part of the urban development of Liège, which include soft and multi-modal mobility. The redesign of the banks of the Meuse, with an independent cycle track, along with the much anticipated arrival of the tram, are two elements of this.

Intelligent and sustainable mobility in Deinze For its part, the town of Deinze has established an innovative project in the mobility domain.

Affiliated to the Blue-Bike bicycle hire network (set up by Blue Mobility in conjunction with the SNCB) – since 2011, the local administration quickly saw in this a partial solution to the problems of mobility in the town. Deinze was thus the first Belgian town to assume itself the financing of trips made by Blue-Bike. To do this, a system of personalised third party payment was set up. This system met with great success from the very start. The number of trips made by shared bikes on the territory of the town saw exponential growth: from 3,298 trips made in 2012, Deinze moved up to 13,021 in 2013 and to 19,715 in 2014. Since then, other cities such as Eeklo and Bruges have followed the example of Deinze and also deployed a system of third party payment for the shared bikes. This system of third party payment for the Blue-Bikes has proved to act as the starting gun for a genuine cycling policy. Promoting bikes now takes place within every project involving town planning and mobility. Particular attention was therefore paid to two-wheeled transport when the Grand’Place and the St. Poppoplein were rehabilitated. In line with what has been achieved in Copenhagen,

40 BELGIUM REAL ESTATE SHOWCASE 2016

a ‘cycling motorway’ is in the process of being established, with the Province, between Deinze, Ghent and Waregem. The major part of the section between Deinze and Ghent is now in operation.

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TOWN PLANNING SMART ENVIRONMENT

Herstal Re-Evolution Another Liège project was in the running for the first ‘Smart City Award’. With its Re-Evolution project, the Meuse-side town of Herstal has committed to a vast project of urban revitalisation for its town centre, with the new administrative centre, fully operational since last September, as its culminating point. The building was designed

by Brussels architect Frédéric Assevoets. Solar panels for heating and hot water, planted roofing

and exterior walls, materials which respond to the strictest environmental norms…The new Town Hall – the cost of which amounted to 30 million Euros – uses modern technologies to the full and was constructed with a concern for energy savings. The centre works on the principle of e-administration. It has several intelligent computer points for the use of citizens, who also benefit from free wi-fi in the commune’s buildings and on the square.

Innovative lighting plan for the city of Mechelen In 2011, Mechelen became the first city in Flanders to put into practice an ambitious public lighting plan named ‘Luna Vision’ in a reference to the nick-name of the city’s inhabitants, the ‘Moon extinguishers’ (Maneblussers in the original Dutch). For this lighting plan, the city is working with Eandis and Philips, in order to install a particularly highly performing lighting system. Based on the extremely energyefficient LED technology, this system is also modular and can be associated with ‘smart’ public lighting applications, such as adapting the intensity of the light, and movement detection. Finalised at the end of 2012 in the city centre, the communal administration then decided in 2013 to equip the residential districts on the periphery of Mechelen with the same type of lighting.

decrease kits CO2 emissions and become a neutral organisation by 2018, where the climate and emissions are concerned. At this stage of the project, energy savings already achieved amount to 36.6 mWh, or a decrease of around 18% in energy consumption, the equivalent of a reduction of some 8.5 tonnes of CO2 and an annual saving of 6,500 Euros on the city’s energy bill.

Along with strengthening the reputation of the city and heightening the feeling of safety, the lighting plan in its entirety fits in with the commitments of the city, which intends to

BELGIUM REAL ESTATE SHOWCASE 2016 41

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TOWN PLANNING SMART GOVERNANCE

Brussels: digital city at the service of everyone In just a few clicks, Brussels residents have access – free of charge and without conditions – to a mass of public information involving mobility, demographics, local democracy, local administrations, facilities for children and the young or old, sports infrastructures, culture, heritage, tourism, folklore, cleanliness, the environment… The ‘OpenData.Bruxelles.be’ project is aiming to facilitate the lives of citizens.

The ‘Open Data portal enables, among others, the state of the collections in communal libraries to be checked, the exact location of parking spaces for persons with reduced mobility to be seen, or the nearest automatic bank telling

machines to be found, along with finding out, in real time, the availability of shared bikes.

Launched in 2014 and designed by French company OpenDataSoft, a player recognised at an international level, the City of Brussels portal already has 348 sets of digital data relative to Brussels and its partners.

By systematically digitalising public data in order to share it with its inhabitants, Brussels is clearly setting itself up as a pioneer and an example of smart governance in terms of Open Data in Belgium, and is following in the footsteps of major metropolitan areas such as Paris and New York.

La Hulpe at your fingertips Potholes in the road, faulty lighting, graffiti, fly tipping, pollution or harming the environment, blocked drains, broken benches, damaged street signs… From the end of 2013, all inhabitants of La Hulpe have been able, with a photo to back it up, to inform the commune of a problem they have seen in public areas.

Thanks to the ‘Better Street’ app, developed by young Belgian start-up ‘Better Company’, employees of the public works department are thus instantly informed and have the necessary information to be able to effect the works without first having to go and inspect the site. Timesaving, more rapid reactivity, wasted journeys and time avoided, rapid intervention, a feeling of taking part in, and being committed to, the life of the commune… This 2.0 approach adopted by the town of La Hulpe offers advantages which are far from negligible. In total transparency and in real time, citizens can consult all incidents which have been signalled, are being dealt with or already resolved, by visiting https:// betterstreet.org/be/lahulpe.

Another of the strong points of this ‘smart’ initiative: by compiling all of the data collected in this way, the commune has a precise map at its disposal, showing both the places and the reasons why it has been called upon to intervene.

It can therefore take account of this for its policy orientations and its structural decisions in the domains of security, environment, infrastructures and the laying out of public areas. With the success registered by Better Street, the commune has taken another step in its digital revolution with the launch of a new website and an all-new app named ‘La Hulpe’.

42 BELGIUM REAL ESTATE SHOWCASE 2016

Automated notary data in Lier Thanks to a strategic location between Mechelen and Antwerp, Lier sees many property transactions on a daily basis. With a concern for efficiency, the town has decided to set up a system which will speed up the process where notary data is concerned. The project began in October 2013 and six months later it was fully operational. In order to relieve the workload of communal employees, while making the life of notaries and estate agents in Lier easier, the city entirely automated the handling and provision of notary data. To do this, the existing registers were brought up to date and completed.

Those which were not, were digitalised and brought together in a single central database.

A saving in time and workload, getting rid of

paper documents‌This data is now accessible in real time, whereas it previously took several weeks. This is a first in Flanders.

Forming part of the policy of the town in the domain of services to the population, the project has a dual objective: firstly, it is oriented towards the client, and secondly it is more convivial.

With this optimisation project, Lier is setting itself up as a fine example in terms of efficiency, for other communes to follow, and most certainly when it is taken into account that the development of the project cost no more than 15,000 Euros.

Kim VERHEGGE

Van Praet — Brussels

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BELGIUM REAL ESTATE SHOWCASE 2016 43

TOWN PLANNING & FINANCING

WWW.PRO-REALESTATE.BE/LIBRARY

Financing the best projects from Belgian communes In order to finance intelligent cities, the EIB and Belfius joined forces and launched a little

over two years ago the programme ‘Smart Cities & Sustainable Development’. This was

a first in Belgium, and in Europe. The purpose was to enable communes to benefit from financing at reduced interest rates in order to progress towards the status of Smart City.

I

n order to finance intelligent cities, the EIB and Belfius joined forces and launched a little over two years ago the programme ‘Smart Cities & Sustainable Development’. This was a first in Belgium, and in Europe. The purpose was to enable communes to benefit from financing at reduced interest rates in order to progress towards the status of Smart City.

According to the local statistics on which the Smart City programme is based, around 70% of Europeans live in urban areas, a proportion which is even higher in Belgium. Evidently, the challenges in terms of urbanisation are immense.

And there is another worrying reality: in developed countries the public authorities should devote 4% of their GDP to infrastructure. In Belgium, this proportion is only 2%.

This demographic concentration is considered to be a source of challenges in the cities, which generate almost 85% of the GDP, but consume 75% of the energy produced in order to do this and are responsible for 80% of CO2 emissions.

It is within this context that the Belgian-European ‘Smart Cities’ project is positioned, a project which claims to be ‘sustainable and intelligent’.

In practical terms, the 589 communes and cities of Belgium can, from now, obtain financing at reduced interest rates. The credit line is available to public authorities and to others, but always for the benefit of the local administration.

This preferential rate financing is being made available by the European Investment Bank (EIB) and Belfius, and involves a total of 400 million Euros. The two banks are each contributing 50% of this. At Belfius, they say they do not underestimate the budget pressure felt by communal bodies for some years, “but the annual charges for such an investment will be more easily able to be financed thanks to the triple A rating of the EIB”, believes François Franssen, Head of Strategy at Belfius.

Financing small and large scale projects

Pim van Ballekom, Vice-president of the EIB, considers that the ‘Smart Cities & Sustainable Development’-programme is a first in Belgium and also in Europe.

44 BELGIUM REAL ESTATE SHOWCASE 2016

The objective of the EIB is to finance both small and large scale projects in order to set a real dynamic in motion around ‘Smart Cities’, in line with the Europe 2020 strategy. The aim is for intelligent, inclusive and sustainable growth, so that this approach becomes the new norm for constructing the cities and communes of tomorrow. In order to benefit from these credit lines, the communal projects have to be judged ‘sustainable and intelligent’ in three precise areas: mobility, urban regeneration, energy efficiency/renewable energies.

The project has to constitute a holistic communal plan

In more practical terms, amongst the criteria to be met in order to benefit from reduced interest financing, is the necessity to produce a strategic plan. The project has to give examples along with a financial justification. Other eligibility criteria, fixed by the EIB in discussion with Belfius which has to ‘recognise certification guidelines’, are to be added to this. The EIB was already financing cities and communes within the framework of sustainable cities, energy efficiency and urban regeneration. With ‘Smart Cities’, projects have to be innovative where technologies are concerned and inclusive through the participation of stakeholders. In short: projects which include a vision for the future.

Through this process, the European Commission is hoping to see standards emerge in this domain. Every city is unique but the challenges are the same. The philosophy behind this partnership is to connect cities with companies, industry, SME’s, and the academic world.

In pragmatic terms, the objective of Smart Cities is also to incite initiatives which could be replicated in order to associate the needs of the cities and the regions. The idea is to encourage standards to emerge, and to identify eco-districts to serve as references.

To learn more about the ‘Smart Cities & Sustainable Development’ programme, read the full article ‘Financing the emergence of Smart Cities’ published in our previous edition. You can download it via www.pro-realestate.be/library

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COURSES AND SEMINARS Led by specialists, the courses and seminars provide you with theoretical bases, technical information and regulatory developments, illustrated by practical examples or visits. www.environnement.brussels/ prosdubatiment THE FACILITATOR These independent experts answer your questions free of charge and give you personalised advice during every stage of your project, sometimes even on-site. www.environnement.brussels/ prosdubatiment SUSTAINABLE BUILDING GUIDE The online guide helps you design and implement your sustainable projects.

In just a few clicks, you can access a wealth of technical recommendations produced by a multidisciplinary team of experts. www.environnement.brussels/ guidebatimentdurable SUSTAINABLE CONSTRUCTION PORTAL Initiated by Brussels Environment and the Wallonia Public Service, and in partnership with the CSTC and the Construction Confederation, the portal centralises all the information on sustainable construction. www.portailconstructiondurable.be © Architectenbureau Cepezed - Image : Yvan Glavie

Find our offer and more info on Energy Subsidies, EPB, Exemplary Buildings, the PLAGE project for energy management, green energy... on

www.environnement.brussels/prosdubatiment

The Belgian Buildings Agency

Scheepvaartpolitie Zeebrugge

Philippe SAMYN and PARTNERS architects & engineers, LEAD and DESIGN PARTNER. Philippe Samyn and Partners architects & engineers, Studio Valle Progettazioni architects, Buro Happold Limited engineers.

The real estate expert of the Federal State

Philippe SAMYN and PARTNERS architects & engineers, LEAD and DESIGN PARTNER. Philippe Samyn and Partners architects & engineers, Studio Valle Progettazioni architects, Buro Happold Limited engineers.

Join our team!

Founded in 1971, the Belgian Buildings Agency provides office accommodation for the federal public servants and manages the federal architectural heritage.

The Agency manages about 7,3 million m² in real estate property, divided over some 1,150 sites .

About 812 of them are owned by the Federal State (about 4,6 million m²) and some 352 sites are rented (about 2,7 million m²).

Our core activities are: • Real Estate management • Facility • Construction, renovation and restoration We also ensure the engagements of the Belgian Federal Government to provide various international organizations with office accommodation such as the European Council or infrastructure for the European Schools.

The federal heritage under our management includes several buildings and sites of immense architectural and historic interest.

Quality service and a specific and unique expertise in the fields of estate management, facility, construction and renovation make the Belgian Buildings Agency the real estate expert of the Federal government.

www.buildingsagency.be

Buildings Agency

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TOWN PLANNING BRUSSELS REGION

Brussels Bouwmeester keeping his promises When we interviewed the Brussels Master Architect (Bouwmeester) last year, he was new to the job, and with new ideas. In the intervening period, Kristiaan Borret has been as good as his word, and has expanded the thinking to include new types of development.

T

he role of the Bouwmeester (the use of the Dutch term seems to be commonplace across all of Belgium) may have been thought to involve public buildings, or some sort of helicopter vision resulting in giving the right advice. For Kristiaan Borret, the task is wider ranging and much more concrete.

Last year, he said: “I take the approach of stimulating, looking for collaboration. So I see my appointment and this widening of the role as an invitation to the private sector to develop a collaborative approach. I used this approach in Antwerp (his previous role – ed.) and some of the major players even asked me to organise architectural competitions for their private projects”.

Newsletter

This involvement with the private sector has indeed become a reality in Brussels. Calls for tender are outlined in another innovation introduced by the new Bouwmeester: a newsletter. These are published periodically, and outline new projects (public or private), the objectives, the specification, who can apply, the timescale, the fees paid to those applying…

The Bouwmeester was looking for a company or association of companies which could help improve the quality of the educational facilities in the Brussels Region. Pointing out that the school population has been substantially growing for some time, he says that the Region has scheduled the creation of 28,000 new school places between 2010 and 2025.

The renovation of the Abbey in the centre of the commune of Forest, districts in which productive activities and residential accommodation can function together, public areas in the future Josaphat site, 4 ‘pocket parks’ in Bockstal, rehabilitating the current NATO site… All of these and more are the subject of Bouwmeester newsletters and calls for tenders.

Tim HARRUP

To register and receive the Brussels Bouwmeester newsletter, contact info@bmabru.be

A short while ago, another call for tenders also involved a project which does not involve either offices or the current ‘star’ of real estate, residential accommodation.

BELGIUM REAL ESTATE SHOWCASE 2016 47

© Bernard Dekeyzer

Over recent months, a number of different projects have featured in these newsletters.

One of the most recent of these is a perfect illustration of the Bouwmeester’s involvement with the private sector. Triple Living, the owners of the KBC building, on the Avenue du Port close to Tour & Taxis, have asked the Brussels Bouwmeester to assist in defining a project for transforming a total of 28,500 m² into residential accommodation of various types with associated services. This project is also striking in that it involves an office building which may have been thought of as being part of the ‘new’ Brussels.

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REAL ESTATE PROJECTS ONLINE LIBRARY BRUSSELS

NEO www.pro-realestate.be/projects/NEO

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© ASSAR Architects

© Architects : DDS & Partners | A2M for AG real Estate

BNP PARIBAS HEADQUARTERS www.pro-realestate.be/projects/BNPParibas

© Architects : KCAP | Art & Build | Jean-Paul Viguier

© Architects: Be baumschlager eberle I Styfhals & Partners

In the section www.pro-realestate.be/projects within the Pro-realestate.be information platform you will find detailed description of town planning and land development master plans: projects of a ‘districtwide’ size, involving a high degree of mixed use (offices, residential, retail, infrastructure) and integrating sustainability and mobility concerns. Forthcoming large office building projects are also highlighted in this section together with major shopping and leisure centers developments. All projects descriptions include the short listing of key players involved in those real estate projects and for some of them their company profile.

ERASMUS GARDENS www.pro-realestate.be/projects/Erasmus-Gardens

48 BELGIUM REAL ESTATE SHOWCASE 2016

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MEDIA PARK (RTBF-VRT) www.pro-realestate.be/projects/Media-Park

© Architectassoc. for Citydev

DELTA OUEST www.pro-realestate.be/projects/Delta-Ouest © MDW architecture

© BPI

THE MINT www.pro-realestate.be/projects/TheMint

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© IMMOBEL

© Architects: Jaspers-Eyers, A2RC for Allfin

WWW.PRO-REALESTATE.BE/PROJECTS

CHAMBON www.pro-realestate.be/projects/Chambon

© Ateliers Christian de Portzamparc (master plan)

© ATENOR

© Architects : Jaspers-Eyers | SAQ

UNIVERSALIS PARK www.pro-realestate.be/projects/Universalis-Park

© Image : Archi2000

BELAIR - RAC www.pro-realestate.be/projects/Belair

CITY DOCKS www.pro-realestate.be/projects/CityDocks

PROJET URBAIN LOI www.pro-realestate.be/projects/UrbainLoi

© Image courtesy of ADT

© Architectassoc. for Citydev

REGENT PARK www.pro-realestate.be/projects/RegentPark

TIVOLI SUSTAINABLE NEIGHBOURHOOD www.pro-realestate.be/projects/Tivoli

MIDI STATION DISTRICT www.pro-realestate.be/projects/BrusselsMidi

BELGIUM REAL ESTATE SHOWCASE 2016 49

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REAL ESTATE PROJECTS ONLINE LIBRARY FLANDERS

HAV www

© SOGENT

BLUE GATE I ANTWERP www.pro-realestate.be/projects/BlueGate

© Architects: KCAP | EVR

PROVINCIE HUIS I ANTWERP www.pro-realestate.be/projects/Provinciehuis

ZNA www

OUDE DOKKEN I GHENT www.pro-realestate.be/projects/OudeDokken

OST www

MECHELEN STATION DISTRICT www.pro-realestate.be/projects/MechelenStation

50 BELGIUM REAL ESTATE SHOWCASE 2016

NIEUW ZUID-STRIGA TOWER I I ANTWERP www.pro-realestate.be/projects/StrigaTower

RINK www

ZNA SPOOR NOORD I ANTWERP www.pro-realestate.be/projects/ZNA

EILANDJE-WESTKAAI I ANTWERP www.pro-realestate.be/projects/Eilandje-Westkaai

OSTEND OOSTEROEVER www.pro-realestate.be/projects/Ostend-Oosteroever

DE KROOK I GHENT www.pro-realestate.be/projects/deKrook

RINKKAAI I GHENT www.pro-realestate.be/projects/Rinkkaai

GROEN ZUID I HOBOKEN www.pro-realestate.be/projects/Groen-zuid

BELGIUM REAL ESTATE SHOWCASE 2016 51

© Architects : Aranda Pigem Vialta | Coussée & Goris

© Architects: Michel Desvigne I Diener & Diener | David Chipperfield | Tony Fretton

KIEVIT II I ANTWERP www.pro-realestate.be/projects/KievitII © VK studio | Robbrecht & Daem

HAVENHUIS I ANTWERP www.pro-realestate.be/projects/Havenhuis

© Architects : Stephane Beel | Jaspers-Eyers

© Architect: Zaha Hadid

WWW.PRO-REALESTATE.BE/PROJECTS

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ARDENT PROJECT I LIEGE www.pro-realestate.be/projects/Ardentproject

© Image: SPI

© Architect: DDS & partners for ATENOR

© Buol Architect for Immo Retail –Circus group

REAL ESTATE PROJECTS ONLINE LIBRARY WALLONIA

LA SUCRERIE I ATH www.pro-realestate.be/projects/Lasucrerie © Skope Architect for Whilhem & Co

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BAVIERE I LIEGE www.pro-realestate.be/projects/bavière

BELGIUM REAL ESTATE SHOWCASE 20162015 52 52 BELGIUM REAL ESTATE SHOWCASE

ELYGE I LIEGE www.pro-realestate.be/projects/ELYGE

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SERAING www.pro-realestate.be/projects/seraing © Architect: DDS & partners for Eagelstone

© Image: Immoval

CRISTAL PARK I LIEGE www.pro-realestate.be/projects/CristalPark

© Art & Build Architects for Buelens Group

LA STRADA I LA LOUVIERE www.pro-realestate.be/projects/Lastrada

AQUILIS I NAMUR www.pro-realestate.be/projects/Aquilis

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© Image: SPI

© A2M Jaspers Eyers Architects-BAG

WWW.PRO-REALESTATE.BE/PROJECTS

LES JARDINS DE COURBEVOIE I LOUVAIN-LA-NEUVE www.pro-realestate.be/projects/Courbevoie

COURT VILLAGE I COURT-SAINT-ETIENNE www.pro-realestate.be/projects/CourtVillage

© Architect: DDS & partners

© Syntaxe Architects for Besix RED

© Architect: DDS & partners for Eagelstone

RMI CHARLEROI www.pro-realestate.be/projects/RMI

© Architects: ABR | Altiplan for Equilis

PARADIS EXPRESS I LIEGE www.pro-realestate.be/projects/Paradis-Express © Architect: DDS & partners for IRET Development

VAL BENOIT I LIEGE www.pro-realestate.be/projects/ValBenoit

RIVE GAUCHE I CHARLEROI www.pro-realestate.be/projects/RiveGauche

BELGIUM BELGIUM REAL REAL ESTATE ESTATE SHOWCASE SHOWCASE 2016 2015 53 53

54 PROFACILITY GUIDE 2012

REAL ESTATE DEVELOPMENT, ASSET, PROPERTY & WORKPLACE MANAGEMENT Which assets will bring the biggest returns, or returns guaranteed over the long term? Which are the buildings that will be most favoured by future occupants? Which are the most sustainable buildings? Location and accessibility are crucial, but what is going to make the difference in the eyes of occupants, patients or consumers…? In particular, the way in which they will live and experience their workplace, shopping, stay…

→→

PROFACILITY GUIDE 2012 55

Photo Equilis - Art & Build Architects

This is the reality with which DOCKS BRUXSEL will be confronted when it opens its doors in October. The first shopping centre to be built in the capital since 2000! And also the largest for the past 25 years. Developed on a 4 hectare site along the banks of the Brussels-Willebroek canal, DOCKS BRUXSEL will constitute a district in itself and will symbolise urban renewal in Brussels by providing an original mix of shopping, activities, culture and leisure.

www.pro-realestate.be

Connect to www.pro-realestate.be NEWS → news on market trends and transactions

PROJECTS → town planning master plans; offices, logistics & retail projects

LIBRARY → trends & best practices in property, building, workplace and facility management

NEWSLETTER → hot news, jobs, events & seminars, projects & market news, trendwatching

NETWORK → coordinates & company profiles of key players in the Belgian real estate industry, along with suppliers

© Pro-Realestate a trademark of Business Interactive Media (Bimedia) www.pro-realestate.be I info@bimedia.be I tel. +32(0)2 669 77 65 Advertising: www.pro-realestate.be/advertising - advertising@bimedia.be

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REAL ESTATE DVELOPERS LOBBYING & KNOWLEDGE CENTER

UPSI – from MIPIM to REALTY The UPSI has been a sponsor of Realty from the very start. And just like the organisers

of the show, it takes care to find out what is going on at ‘big sister’ Mipim, held two months earlier in Cannes. To find out about the current thinking of the real estate

professionals’ organisation, we caught up with its Managing Director Olivier Carrette in Cannes, and asked him to explain.

T

ell us about Mipim and Realty in terms of the importance for your members. Are they different?

“Well the UPSI has been a partner of Realty since it started. We are at Mipim to meet our members, meet the politicians who are here and, if possible see whether other real estate professionals here may become members of the UPSI. So our presence here is in a representative capacity.

The contacts we make are very important, and once again this year we see that the Belgians are here in force. Some companies had decided not to come any more, or had skipped a year, but we can see that they seem to be back again this year. We can also see that there is quite a lot of money around, and that investors are looking for good products. This is what is lacking at the moment, good product.

So I think it is time to call on the public authorities of the cities and regions to help produce flagship projects. This will attract foreign investors, who want to place their money in our country. These investors are here but they are looking for the ‘rare pearl’.

We have seen some very appetising projects, in Antwerp and Ghent for example, but more are needed. Brussels needs more large, exciting and innovative projects, as the capital of Europe, to really put it on the real estate map.”

Moving back to our own Belgian fair, what is UPSI up to at Realty this year?

“We have a very exciting programme. We have invited the deputy Mayor of the city of Paris – Jean-Louis Missika – in charge of planning.

He is responsible for the ‘Let’s reinvent Paris’ project, which involves 33 sites in greater Paris.

A call for projects has resulted in over 800 developers signing up. The deputy Mayor is going to explain this project by presenting it for us. One of the architects – Manal Rachdi – who has won the competition for one of the major projects, will present his project to us as well – 1000 Trees – at the Porte de la Chapelle.

This is an immense futurist project and like the whole scheme, should serve as an inspiration for Brussels.”

Tim HARRUP

About UPSI/ BVS The UPSI/BVS exists to assist the real estate developers in administrative and legislative matters, thus enabling players within the sector to carry out their task more efficiently. It represents its members before federal and regional authorities, and informs them about all legal, technical and financial issues affecting them. The UPSI also represents Belgium at the European Union of Developers and House Builders.

The UPSI is involved in: • 40,000 jobs • 60% of turnover in the real estate sector • 83% of the office market • 60% of the retail market • 40% of the residential market

Managing Director, Olivier Carrette UPSI

REAL ESTATE DEVELOPMENT STRATEGY

WWW.PRO-REALESTATE.BE/LIBRARY

Public-Private Partnerships: added value as key to success Although PPP – Public-Private Partnership in full - is a concept that was slow to get off the ground in Belgium, the tide finally seems to have turned, provided the formula pursues a win/win for all parties concerned.

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he formula was eyed most suspiciously, and was in the first instance geared towards financing projects for which the necessary funds were not readily available, while the added value of a PPP to a project was not, or hardly, taken into consideration.

Public-Private Partnerships can relate to real estate, more often than not linked to a longterm DBFM(O) agreement (Design, Build, Finance, Maintain & Operate), or can be applied to area development, where collaboration is limited to the construction or development phase. In Belgium, the DBFM approach and PPP have almost become synonymous, but this shouldn’t be the case.

Progress reports on PPPs

By contrast with the Netherlands, the possible added value of a Public-Private Partnership in comparison to a traditional tender is not, or hardly, assessed at all in Belgium. Progress reports on PPPs have been in place in the Netherlands since 2006. Following that, ‘progress reports’ on PPP projects governed by a DBFM(O) agreement were introduced in 2010.

Flanders does have its ‘Jaarlijks Verslag van de Vlaamse Regering: Alternatieve financiering van Vlaamse Overheidsinvesteringen (Annual Report by the Flemish Government: Alternative Financing of Flemish Public Investment)’ with an appendix ‘Jaarrapport Kenniscentrum PPS (Annual Report PPP Knowledge Centre)’.

But, by contrast with the Netherlands, where ‘added value’ is the name of the game, Flanders mainly focuses on the aspect of alternative financing, i.e. the off-balance sheet cost saving.

In 2014, Wallonia decided to merge the CIF (Centre d’Information Financière - Financial Information Centre) with the WBFin Cell, which comprises a project to overhaul public accounts in Wallonia and the Wallonia-Brussels Federation.

58 BELGIUM REAL ESTATE SHOWCASE 2016

The Netherlands sets the example

In the Netherlands, private financing is not a goal in itself. The preferred option is settled on a project-by-project basis whereby the Kingdom invariably rules in favour of the added value to the taxpayer. Only in cases where the project value of housing developments is more than 25 million Euros or that of infrastructure works exceeding 60 million Euros, does a PPP become an obvious choice. In these situations, the added value of a DBFM(O) agreement ranges between 10 and 15% on average. If the aforementioned thresholds are not met, the effective returns are lower than the transaction costs. Since the progress reports were introduced in the Netherlands, DBFM(O) agreements have pushed the added value up to well over 1.3 billion Euros, to be increased by the as yet to be calculated added value generated by opting for more high-end solutions.

PPPs in the Netherlands have been a success story because budget, timing and the international quality rules are adhered to.

In countries such as France, Germany, the United Kingdom and undoubtedly in Belgium (Flanders) too, public opinion is somewhat anti-PPP, more specifically because, in the early years, many PPP projects were executed without proper risk arrangement having been carried out between the market and the authorities and because the aspect of ‘value for money’ to taxpayers was somewhat overlooked.

To turn the PPP formula into a success, added value must take precedence over the offbalance sheet funding of the projects.

The perception of DBFM(O) agreements must be enhanced by separating them from alternative financing and from the concept of PPP itself. Ideally, DBFM should be given its own identity.

For a more in depth understanding, read the full article published in our previous edition via www.pro-realestate.be/library > 18/05/2015

Facility & Real Estate Management in de zorgsector een speciale editie van Profacility Magazine verschijnt op 8 december 2016 Meer informatie via www.profacility.be/FMRE-Zorg Š De PROFACILITY media zijn publicaties van Business Interactive Media (Bimedia) advertentietarieven via www.profacility.be/advertising I www.profacility.be I info@bimedia.be I TEL. +32 (0)2 669 77 65

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ELDERLY HOMES MARKET & INVESTMENT OPPORTUNITIES

Vision on elderly homes needed to cope with the rapid age in The expected growth of the older adult population will have an unprecedented impact

on the national health care system. There is a clear need for additional nursing homes and healthcare workers, to avoid potential shortages in the coming years. Like most other European countries, Belgium is confronted with a rapid ageing of its population.

This is the direct result of longer life expectancy and continuous improvement in living standards.

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he ageing ‘baby boom’ generation (people born between 1946 and 1964) will have a profound impact on the Belgian health care system over the coming decades, with elderly (inactive) people rapidly outgrowing the younger active population.

Pieter Paepen, Senior Director, CBRE Valuation “A substantial surge in the number of elderly people is expected as from 2024. As a result, Belgium will need 3,000 additional beds per year from 2025 onwards, to avoid significant demand/ supply imbalances“

Concerns have emerged about the long term sustainability of the national pension system.

Belgium is trying to address this issue by adopting a range of measures, such as delaying the retirement age or promoting alternative sources for funding pension welfare.

In 2016, 1.45 million Belgians are at the age of 70 and older. This is 12.9% of the total Belgian population. By 2025, this population group will increase by another 290,425 people. By 2035, 2.2 million people or 17.8% of the total population will be 70 years or older.

Net addition & future need of beds per year per region (1996-2030)

60 BELGIUM REAL ESTATE SHOWCASE 2016

ge ing of the population Consolidation trend in the market

In 2016, Belgium numbers 142,818 beds in 1,502 elderly homes. The majority of elderly homes are to be found in Flanders, with 77,481 beds in 770 homes. Wallonia numbers 49,484 beds in 583 institutions and Brussels provides 15,853 beds in 149 elderly homes.

Elderly homes in Wallonia and Brussels are more often operated by a commercial enterprise. In Flanders, the majority of nursing homes is still managed by non-profit organizations or the government itself. Often, commercially driven nursing homes are smaller in size.

With legislation on nursing homes increasingly stringent, smaller privately-led nursing homes are slowly disappearing. Over recent years, larger corporations specialized in nursing homes have appeared on the scene as part of a consolidation trend towards less players and more beds per home. New commercial players that are expanding across the country are Senior Living Group, Armonea, Orpea, Senior Assist, Noble Age and Domitys.

Prospective on the need for additional beds in the upcoming year

Because nursing homes are heavily subsidized by the state, caps to the number of beds have been imposed to control costs. The development of new homes is therefore limited.

Based on calculations by CBRE, Belgium needs to continue its development of around 1,000 beds per year until 2025 (not taking into

account possible shortages today). Most of these beds are required in Flanders, while the need for additional rooms in Brussels and Wallonia is less pronounced, mostly because of strong development in the recent past.

Flanders will have to develop an average of 640 beds per year in the period 2015-2024, while Wallonia requires 145 beds per year in that same period. A substantial surge in the number of elderly people is expected as from 2024. As a result, Belgium will need 3,000 additional beds per year from 2025 onwards, to avoid significant demand/supply imbalances.

Our calculations take into account a continued rise in health standards and an increase in home care and assisted living. While today, the total number of elderly care beds in Belgium equates to around 9.6% of the people older than 70 years or 23.1% of those older than 80 years, we expect these ratios to gradually drop to 8.1% and 21% respectively in 2035.

While the requirement for more beds is definitely an issue going forward, the most important problem within the sector remains the ability to find suitable staff. Since the active population in Belgium will significantly decrease towards 2050, this problem is likely to grow over time.

Legally, a minimum of 1 nurse per 30 beds and per floor is needed. Property-wise, this requires operators to look for or build properties that can handle this legal requirement in the most efficient way. Modern nursing homes ideally have a multiple of 30 beds per floor.

BELGIUM REAL ESTATE SHOWCASE 2016 61

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ELDERLY HOMES MARKET & INVESTMENT OPPORTUNITIES

“The transfer of the elderly homes from the Federal towards the Regions has been effective since the first of July 2014“ The 6th reform of the state : from federal to regional elderly care policy Elderly population - % of population older than 70 years per commune - 2013

Elderly population - expected growth in elderly people toward 2030 > 70 years

Uneven regional demographics regarding population aging Over the coming years, growth in the number of elderly people tends to differ strongly upon location. The Brussels Capital Region has a fairly young population, with only 9.4% elderly people. Flanders, on the contrary, has the oldest population, with the share of 70 year olds rising from 14.0% in 2016 to 16.0% in 2025. While Wallonia numbers fewer elderly people, it is expected to have the steepest growth, from 12.1% to 14.5% in 2025.

Today, most Belgians aged 70 years or older are to be found in West- and EastFlanders (with strong concentrations along the sea coast), in parts of Limburg, the province of Liège and parts of the Provinces of Namur and Luxembourg. Numbers by the Federal Planning Bureau indicate a strong expected rise of elderly people in areas such as Kempen, Limburg, Walloon-Brabant and Namur. In some of these communes, the elderly population is expected to increase by up to 75% in the next 15 years.

62 BELGIUM REAL ESTATE SHOWCASE 2016

Previously, elderly homes were regulated in large part by the federal health care system, with the Regions only being responsible for the actual licensing of retirement homes, and possibly implementing additional legal requirements on top of the federal regulations.

The transfer of the elderly homes towards the Regions has been effective since the first of July 2014. The Regions obtain full control over senior living, including legal regulations, financing, price control and licensing.

It is unclear whether the Regions will continue the current licensing programs and financing.

As from 2025 onwards, the financial burden will rise rapidly. It is likely that regional differences will emerge to cope with this situation.

Once each Region can implement its own elderly care policy, it can be expected that home care and assisted living will be heavily promoted, to ease the need for actual elderly homes.

Outsourcing the bricks & mortar

Nursing home operators prefer to sell off the real estate component in their business model.

The released cash can subsequently be used to expand and develop new nursing homes and to acquire beds.

The outsourcing of the property component happens in the form of long-term lease rights, whereby the operator and investor agree terms on for example a 27-30 year lease (2 times 15 years) contract with a purchase option or renewal option for the operator.

The rent paid to the landlord is not generally linked to revenues, but consists of an annual rent, indexed to the health index. Rents paid by elderly home operators to landlords are € 5,000/room/year on average or € 115/m² on average, with the best locations trading at

rents per room between € 7,500 /m²/year and € 9,000/m²/year. Rents may vary depending on a number of specific parameters such as the quality and efficiency of the structure and interiors, the location of the property, services available, the residual value and possibly, the type of targeted customers.

Nursing homes are typically more expensive in communes with a wealthier population or with higher residential values. The operator is in most cases responsible for maintenance expenses and also bears the costs linked to the upgrading of the facilities and related equipment.

Attractive investment assets

Senior housing has attracted growing interest from investors over recent years for the bricks and mortar component. Operators prefer to focus on their operational activities to allow for quick expansion, without having to carry the property costs.

Since 2006, the sector has quickly emerged as an alternative investment class for those investors looking to diversify their portfolios.

1.79 billion Euros have been invested by property investors since that time. Many of these deals have been transacted through sale-and-leaseback constructions.

Cofinimmo and Aedifica in particular, have built huge portfolio positions in this market. Other notable players are financial institutions and insurance companies such as KBC, Belfius, Ethias and Ageas.

“Nursing home operators prefer to sell off the real estate component in their business model“ Nursing homes are popular investment assets.

Investors appreciate the high occupancy rate (often 100%) and the long-term, secured cash flows (lease contracts of 27-30 years).

With most properties located in dense residential areas, investment decisions are also based on expected future asset appreciation.

In addition, the fact that most elderly home operators receive subsidies also ensures the sustainability of rents. The flip side of the coin is that the heavily-regulated nature of the sector offers little scope for upward rental revisions.

With less subsidies coming through and the future development potential of licensed beds being uncertain, investment opportunities are becoming more limited. Elderly home properties trade at yields of 5.25 to 7%. Insurance companies have been particularly aggressive buyers in the recent past, with REITs being more conservative and creative buyers.

Pieter PAEPEN Senior Director, CBRE Valuation

Elderly homes investment volume

BELGIUM REAL ESTATE SHOWCASE 2016 63

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REAL ESTATE DEVELOPMENT & INVESTMENT - NEW MARKET ASSISTED LIVING

Alliance for the development of s CORES Development was founded in 2006 and positions itself as ‘Urban Landscapers’, focused on the development and execution of concepts for urban-based projects. It is

noticeable how recent large-scale projects also include adapted residences for seniors.

We talk to Sophie Deprez, chief commercial officer.

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Sophie Deprez, Chief Commercial Officer at CORES Development

e were relatively late in getting involved with the market for assisted living” begins Sophie Deprez. “However, we did make a good study of the market in order to be sure that we had a really relevant offer”. This means that any potential locations are thoroughly screened up front. What kind of official or unofficial assisted residences are already on offer in the area?

What needs are anticipated for assisted living, based on the local population? What types of residence would be ideal – 1, 2 or 3 bedrooms – and what would be the most appropriate surface area per residence?

Sophie Deprez: “There is no point just building for the sake of it. Building a recognised service flat is very different to building a traditional apartment building and it is necessary to meet

“Building a recognised service flat is very different to building a traditional apartment building and it is necessary to meet the requirements of the Commission for Well-Being, Public Health and Families”

the requirements of the Commission for WellBeing, Public Health and Families. There needs to be a market and we also aim to keep our offer at an affordable level. Too many frills can hinder sales. These not only affect the rate charged to those who use the residence, but also put off investors who are looking for the best return on an appropriate rate”.

Service partnership for the real estate developments

‘Groen Zuid’ is a new residential estate in Hoboken focused on sustainable and affordable living in green surroundings and aimed at a range of buyers, including single first-time buyers, young families and seniors. The site extends to 7 hectares. CORES Development has sold part of the domain to the care association Zorgbedrijf Antwerpen, which is building both serviced flats and a retirement and care home. There will be three blocks, designed by Crepain Binst Architecture and containing 120 senior flats. In this new estate CORES Development is also planning 480 residential units including 40 serviced flats.

Sophie Deprez: “Real estate is our core business. We aim for long-term quality in our buildings. Related services are essential for assisted residences, and these are guaranteed thanks to the close collaboration with ASSIST, an organisation which specialises in providing customised services focused on allowing people to live independently for as long as possible at all stages in life”.

CORES Development has its own management committee, this being a legal requirement in the case of recognised serviced flats. As far as the Groen Zuid project is concerned, ASSIST is involved in the management committee and provides the basic service required by law.

ASSIST also offers residents a very extensive range of ‘à la carte’ services.

The ‘Cadiz’ project, located at Oostkaai at the Kattendijk dock and designed by POLO Architects and Meta Architect Agency, is

64 BELGIUM REAL ESTATE SHOWCASE 2016

of serviced flats

De Weverij project in Sint-Niklaas, with its 40 serviced flats out of a total of 200 apartments.

nearing completion. Besides some top of the range apartments, aimed at those with plenty of purchasing power, CORES Development has also anticipated 48 serviced flats. Half of these serviced flats were already sold within two weeks of them coming on sale!

Sophie Deprez: “Our partner in this project is GZA (GasthuisZusters Antwerpen), who are also to operate a closed residential care home on the complex. Its 116 rooms are spread across two floors in the lower part of the building, on the side facing Napelsstraat”.

Mixed-living district

“We certainly do not view assisted living in isolation, but instead as part of a bigger project” stresses Sophie Deprez. “Groen Zuid and Cadiz are both an illustration of this, as is our De Weverij project in Sint-Niklaas, with its 40 serviced flats out of a total of 200”.

Ideally there is a mix of generations, a site where children, parents and grandparents live close by, without actually living together.

“You could say a kind of LAT relationship

between the various generations” indicates Sophie Deprez. “We see generations living close to each other as a possible trend in the future. It makes life more pleasant for all concerned and certainly helps people to live independently for as long as possible. In addition, it allows all generations to enjoy spacious, communal and green surroundings”.

Buy or rent?

CORES Development always puts its serviced flats up for sale. It is all about a sales transaction and not about real estate certificates. It is also possible to rent an assisted residence through the management committee. “The management committee arranges everything for investors and those using the residences” explains Sophie Deprez. “Many regions have long waiting lists and the serviced flats will certainly not be empty for long. Those investing benefit from lower levels of VAT– 12% instead of 21% - and are exempt from the tax on real estate.

They can be sure of greater returns than traditional residential real estate”.

Eduard CODDÉ

Service partner for project developers ASSIST helps people at all stages of life to be able to live independently and as comfortably as possible ‘at home’, as residents of a recognised assisted flat. Assist focuses on providing an affordable and high quality service tailored to each individual.

As an organisation ASSIST supports project developers by operating and providing services to those living in both official and unofficial assisted residences. ASSIST and its partners operate in compliance with the Assist Approved Label, developed in partnership with the cabinet of Jo Vandeurzen, the Minister of Well-Being, Public Health and Families.

BELGIUM REAL ESTATE SHOWCASE 2016 65

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PROPERTY MANAGEMENT ENVIRONMENTAL ASSESSMENT & CERTIFICATION

A wider and deeper spectrum for BREEAM NC 2016 On March 28th, the new BREEAM environmental certification scheme for new constructions – BREEAM INTERNATIONAL NEW CONSTRUCTION 2016 (NC 2016) – replaced the

previous scheme which had been used by the market for three years. As a continuation of BREEAM International NC 2013, it now completes the range of certifications with

BREEAM INTERNATIONAL REFURBISHMENT AND FIT-OUT (RFO 2015) for the renovation

and fit-out of buildings, launched last year. Our team of assessors has taken a close look at this reference, in order to provide an overview of what has changed, compared to previous versions.

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aunched in the United Kingdom in 1990, BREEAM has become one of the most widely used environmental certification systems in the world. It is the most widely used in Europe, and in Belgium, where 33 new buildings have received final BREEAM certification and 36 projects an intermediary certificate.

BREEAM promotes the use of high energy and environmental performance, by going beyond the regulations and rules in force in this domain.

As these are constantly evolving, the certification system evolves at the same time, in order to always stand apart. This evolution helps the construction sector move forwards, and challenges property developers, encouraging them to construct buildings which respond to the challenges of the moment (environmental, climactic, sanitary, ecological etc.).

New options for evaluating a building

By contrast with previous BREEAM scheme, BREEAM NC 2016 numbers three evaluation options: ‘Fully fitted’, ‘Shell and Core’ and ‘Shell only’. While the first of these enables buildings which are ready to be used immediately to be evaluated, the other two

STAGE

SCHEME

New Construction

BREEAM Int. New Construction 2016

Fit-Out

BREEAM Int. Refurbishment and Fit-Out 2015

enable buildings to be certified without taking account of how they made be finished for tenants. In these cases, a second certification based on BREEAM RFO 2015 can complete the NC 2016 evaluation, by evaluating the fitouts of the future tenants. As a result of this, it is no longer necessary for developers to have recourse to a ‘Green Lease Agreement’ if they only wish to certify their buildings in the ‘Shell and Core’ or ‘Shell only’ state. Depending on the option selected, the certification can include all or part of the following elements: the structure, the building envelope, the building servicing installations, the lifts, the fit-out of the common areas, etc.

New types of building assessable with BREEAM

Along with residential buildings, offices, retail and industrial buildings, other types of buildings can be certified by BREEAM NC 2016. Certification has been extended to hotels, residential institutions (rest homes, student residences etc.) and to educational establishments (schools, universities…).

BREEAM Bespoke is still able to be envisaged for ‘non-standard’ buildings such as prisons, cinemas, conference centres etc.

ASSESSMENT OPTION

Fully Fited

Shell & Core

Shell & Only

Local Services Interior Design

Core Services Local Services Interior Design

Hadrien Vandenbroucke, Energy & Environmental Engineer BREEAM International Assessor B4F | Building for the future

BREEAM New Construction 2016 numbers three assessment options

BELGIUM REAL ESTATE SHOWCASE 2016 67

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PROPERTY MANAGEMENT ENVIRONMENTAL ASSESSMENT & CERTIFICATION

Integrated conception process

In order to be able to follow the guidelines of a construction project, the ‘Management section’ of the certification process has been completely reorganised. Each criterion now refers to a key phase of the project (from conception to use, and not forgetting construction) and includes demands specific to each phase. One of the

promoting an ‘Indoor Air Quality Plan’, drawn up by an expert. Through his study, he advises the conception team in its design and its choice of materials, in order to eliminate pollutants (such as volatile organic components, NOx, SO2 and others) at source to maintain the quality of the air during the building’s use.

Recommendations are made to the contractors

“To minimise both needs in terms of primary energy, and greenhouse gas emissions, BREEAM concentrates more on the passive conception and design of a building“ objectives of this reorganisation is to integrate into the project, as early as possible, right from the programming or sketch stage, an environmental process bringing together a panel of experts (acoustics, ecology, contractor…).

In order to guide and advise the project developers on sustainability and environmental aspects, BREEAM recommends including in the team an expert in the domain of sustainability. This expert now wears the ‘Sustainability Champion’ hat, the equivalent of BREEAM AP in the previous version.

The life-cycle cost approach to the project was already dealt with in previous versions.

BREEAM now grants a supplementary credit if this phase is handled at the programming stage, the stage at which the decision-making power is strongest, and enables maximum benefit to be gained over the long term.

Ensuring the quality of the interior climate

A focus is put on minimising pollution of the air inside the buildings, particularly through

to avoid soiling ventilation equipment during the work-site phase.

And finally, the procedures for carrying out a flush-out(1) and for measuring the air quality (to be undertaken before the building is occupied), are to be put in place via the ‘Indoor Air Quality Plan’. The new reference is also more demanding where emissions of volatile pollutants is concerned, pollutants inherent to finishing products (paint, varnish, floor coverings etc.). New components such as formaldehydes and certain cancerous substances are now to be limited, in addition to the emissions limitations to be adhered to for volatile organic components. In order to be in line with international norms in force, testing and evaluation procedures for measuring interior air quality after the construction phase, have also been revised.

Climate change

The scheme has equipped itself with criteria aiming at reducing the impact of climate change on the building. For example, the structure and the envelope of the building

Evolutions within BREEAM International NC 2016

(1) Flush-out: purging the air of the building has to be carried out after construction and before occupation of the building, in order to eliminate pollutants (organic volatile components or other pollutants inherent to finishing materials), and any foreign matter which may have accumulated in the ventilation system during construction, etc.

68 BELGIUM REAL ESTATE SHOWCASE 2016

• • • • • •

Certification according to level of finishing Broadening of building types More significant impact of the integrated conception process Reinforcement of criteria involving interior environment quality Climactic issues taken into account Optimisation of the environmental impact of materials and waste • Adaptation of the scoring system

“New concepts appear to minimise the environmental impact of materials used and of waste“ have to be subject to a risk analysis, enabling situations which could harm the construction to be avoided, and sustainable solutions to be integrated. Supplementary credits are also attributed when a holistic approach to the effects of global warming is adopted. In this case, particular attention is paid to issues such as flooding, thermal comfort, energy consumption etc. in order to minimise needs in terms of primary energy and emissions of greenhouse gases, BREEAM insists more than before on passive design (location, climate, orientation, construc-tion method, natural lighting…) and on passive cooling. This all results in the whole of the conception of the building being the priority, and not just the use of low carbon emissions systems.

Sustainability of the equipment and the construction elements

Thorough conception of those zones subject to high levels of use was already an evaluation criterion in previous versions. From now on, the field of application of this is enlarged.

The foundations, the load-bearing structure and the exterior envelope are examples of new elements to be taken into account. For each of these, environmental effects and the effect of the degradation of the materials on their durability will be evaluated, such as for example the effect of sunlight, temperature variations, corrosion…

Environmental impact of the materials

New concepts have been introduced to minimise the environmental impact of materials used, and of waste: • Material efficiency > Objective: to design a robust and sustainable building while minimising its needs in primary energy along with minimising the production of waste during the dismantling/demolition of the building. During the whole of the conception and construction of the building, opportunities for a rational use of materials have to be identified.

• Functional adaptability > Objective: right from the conception stage, study possibilities for renovating the building or converting it to another use.

• Waste use > extra importance is accorded to demolition waste, for which results are expected in terms of not sending it to landfill sites. This new element puts the emphasis on demolition audits to be carried out as far upstream of the project as possible.

This enables the project designers to be involved more on what happens to waste, and to encourage them to move towards re-use, recycling or other forms of valuecreation favoured by a circular economy.

• Recognition of EPD’s > the recognition of Environmental Product Declarations (EPD) which enables an objective approach to product origin of the materials and of their carbon footprint.

Following this brief analysis, it can be observed that in general terms, the overall approach remains similar to the previous version.

Nevertheless, given the evolution of regulations (such as, for example, the Building Energy Performance in Belgium – PEB), the demands of BREEAM have been reinforced in line.

On top of this, BREEAM NC 2016 has adopted a new weighting system which enables better adaptation of the scores by country and by evaluation option.

This evolution demands new studies to be carried out and new notions to be integrated ever earlier into projects, particularly at the conception and programming phase. It is therefore advantageous to designate a sustainability expert at a very early stage, and to establish a clear time-line(2) for the certification procedure, and to involve in good time those specialists who can introduce the best sustainable and economic solutions to the project.

Hadrien VANDENBROUCKE Energy & Environmental Engineer BREEAM International Assessor B4F | Building for the future

(2) Read the article ‘Time-line for environmental certification’ on this subject, available at www.b4f.eu BELGIUM REAL ESTATE SHOWCASE 2016 69

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PROPERTY MANAGEMENT BUSINESS CASE ‘STAY OR LEAVE ?’

Tenant and landlord fully support 1 The Hendrik Conscience building at Koning Albert II laan, Brussels, belongs to AXA

Belgium and houses the Flemish Ministry of Education and Training. Checking the user’s real-estate needs compared to the building’s properties is an ongoing task for facility and/or real-estate management.

Focusing on BREEAM Excellent

“Sustainability is a key word in the Flemish Government’s real-estate policy. Recycling buildings to improve them and ensure that they remain useable in the future is fully in line with our sustainability policy.”

Frank Geets, Administrator-General of the Facility Management Agency

A

building serves the life of the user” says Frank Geets, AdministratorGeneral of the Facility Management Agency. “The building no longer met our current expectations in terms of sustainability, but as the Flemish Government, we prefer the North District of Brussels because of the excellent access by virtually all forms of public transport.

No fewer than 90% of the users in the Hendrik Conscience building come by train!”

The lease on the Hendrik Conscience building did not expire until 2023, but in March 2015, owner AXA Belgium put forward a proposal for a thorough renovation of the building with a view to improving its sustainability and introducing the new way of working. In practical terms, the aim of this far-reaching renovation was to bring the building up to date. In return, a nine-year extension on the lease was expected, from 2023 to 2032. An open communication procedure with owner AXA Belgium was set up and this ultimately led to a 100% partnership and a win/win situation for both parties.

70 BELGIUM REAL ESTATE SHOWCASE 2016

The Flemish Ministry for Education and Training is to remain in the Hendrik Conscience building until 2032 while AXA Belgium will bear the cost of the major conversion work. The Flemish Government gave the go-ahead for this at the end of 2015 and the contract was signed at the end of January 2016. Frank Geets: “The building will be modified in phases so that it can remain operational. So there is no question of temporarily relocating to another site.”

Sustainability is a key word in the Flemish Government’s real-estate policy. One example of this is the new Flemish administrative centre, VAC Brussel, on the Tour & Taxis site, which when complete will be able to claim to be the biggest passive office building in Belgium.

Recycling buildings to improve them and ensure that they remain useable in the future is fully in line with this sustainability policy. What is more, it is a prime example of using tax revenue in an economically responsible manner.

AXA Belgium shares this same philosophy and aims to have its entire real-estate portfolio certified with the highest possible BREEAM label by 2020. “There is a lot of vacant property in the Brussels Noordwijk and we want to deal with that by optimising our buildings” comments Johan Pillaert, Key Account Public Sector at Axa Im Real assets. “The favourable location of the North District remains an attractive element in terms of business economics.”

The Hendrik Conscience building is now around 15 years old and the far-reaching renovation will earn it BREEAM Excellent’ label.

The main focus in order to obtain this label is the technical installations, including passive cooling, as well as acoustic comfort.

“The new VAC Brussel complex is going for an A-energy performance label, which is extremely difficult to obtain for existing office premises like the Hendrik Conscience building, particularly given the fact that the building envelope, for instance, is not being modified” Frank Geets admits. “Nonetheless, that’s our goal for the highest possible percentage of the total surface.”

rt 100% partnership Architectural rejuvenation cure

The plan developed by the two parties together includes both architectural adaptations and a complete refurbishment. The entrance to the building is being repositioned and redesigned to create more openness. The ground and first floors are intended to be a public space, set out as a meeting centre.

The company restaurant will close temporarily, but this is being offset by a pop-up unit and a new sandwich bar that will be completed by that time. The project is being carried out under the joint responsibility of both parties, paying strict attention to the schedule drawn up.

Attractive working environment

The renovation of the Hendrik Conscience building also provides an opportunity for the transition to the New way of working for public servants. That means, among other things, giving up individual workstations in favour of an open-plan layout.

At the moment, around a thousand people work in the Hendrik Conscience building. After the renovation work, the capacity will increase to 1,600 workstations. Each workstation will cover an average net surface area of 12.5m².

Frank Geets: “The quality of the working environment that we offer our staff was the top priority when developing the renovation concept. The entire phase plan for the renovation was discussed with the staff and this resulted in a workstation relocation arrangement.”

With a view to ensuring that it remains as operational as possible, the total office space is being divided into 16 zones.

“To support the continuity of the work, the building site and the office area will be strictly separated,” Johan Pillaert explains. “The site section is only accessible directly from outside to take out construction rubble and bring in materials. This approach was inspired by the renovation/extension of shopping centres and other office buildings in our portfolio.”

The Hendrik Conscience building has two underground levels, used for parking and archives. This project does not include any plans to extend the parking and archive capacity. Frank Geets: “The education department has to keep teachers’ dossiers for 20 years after their death! The aim is to evolve towards a department for centralised archiving for the Flemish Government outside the centre of Brussels.”

The renovated Hendrik Conscience building is to set an example in terms of ICT. In addition to a cable and wireless IT network, mobile phone network cover will be provided throughout the entire building (4G). DECT telephony will no longer be used. Instead, ‘unified communications’ will ensure that all forms of communication reach the right staff member.

The Hendrik Conscience building is the Flemish Government’s second largest office building in Brussels, after the VAC. Frank Geets: “The intention is to evolve from six to three locations, which should be feasible as a number of lease contracts expire from 2023”.

Eduard CODDÉ

The ground and first floors are intended to be a public space, set out as a meeting centre.

Inner courtyards will serve as terraces for staff in the summer.

BELGIUM REAL ESTATE SHOWCASE 2016 71

NEW → The best and most innovative realisations in terms of the conception and interior layout of office space,

workplaces/2016 /nl/

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with a list of the principal suppliers taking part in the www.profacility.be/ best-workplaces/ 2016/nl/

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PROPERTY & WOKPLACE MANAGEMENT BENCHMARK

Occupier cost - Belgium decreasing but still expensive Each year, Colliers International publishes a European ‘Occupier Cost index’ benchmark

for offices. This shows the full cost of each workstation per FTE within a building, taking into account every cost centre involved with employing a person. The index published

end of last year took data from 3,500 buildings in 29 countries. In Belgium, costs are decreasing slightly.

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his research reveals that the total cost of each workstation in Belgium in 2015 amounted to €11,759, a 2% decrease from the figure of €12,107 obtained in 2014.

Colliers (previously AOS Studley) has been publishing this figure for ten years, and has seen a total decrease of 19% over the period.

The figures are adjusted for inflation. However, in the neighbouring Netherlands, the figure has plummeted by a full 15% over just the past two years, and now represents only three quarters of the cost in Belgium.

The data

The highest proportion of the cost – a little over half, or 58% to be precise – is accounted for by ‘Space and Infrastructure’. In the view of Colliers International Belgium Real Estate Director Jeroen Govers, the fact that this cost centre has hardly changed during the year, is a result of opportunities to renegotiate rentals being missed. He says that the opportunity is not just to decrease the rental level itself, but also the space occupied, and service contracts.

This can potentially lead to a decrease of 1015% within this cost centre.

The next largest cost centre is, unsurprisingly, ‘People and Organisation’. This represents 37% of the whole, and Belgium is handicapped by its infamously high salary costs, which are substantially higher than in neighbouring countries. Nevertheless, Belgian companies managed to improve by 7.8% in this category during 2015, compared to the previous year.

Facility Management

Though only representing a very small proportion of the whole – 5% in Belgium – this category, known as ‘Central Functions’ in the nomenclature of Colliers, is rapidly increasing.

This cost centre goes hand in hand with elements such as making the building more sustainable, optimising energy use and waste, and avoiding risks by undertaking evacuation exercises and so on.

Colliers International points out that though small, this cost centre has increased by 25% in Europe on average, but is worse in Belgium.

Cost reduction

Looking for cost reductions in all of the areas so far mentioned – rents, space use, optimised FM costs – are all solutions which Colliers International recommends. Where sustainability is concerned, the firm says that less attention is paid, because solutions are believed to be expensive and limited. Companies prefer to spend more on employee comfort, better furnishings, better ICT support, and a better work-life balance.

Read the full report and analysis.

Download the article on www.profacility.be/biblio > 15/03/2016

Where Belgium stands The 9th place (out of 29) occupied by Belgium in Colliers International’s European ranking in terms of the most expensive occupier costs, may not seem too catastrophic, but some of the numbers clearly give food for thought: Most expensive country: Switzerland Belgium European average: Least expensive country: Bulgaria

€17,862 €11,759 €8,443 €2,513

As is the case with all mathematical analyses, the top figure and the bottom figure can be disregarded. But that still leaves a rather expensive gap between the two middle figures in our table…

BELGIUM REAL ESTATE SHOWCASE 2016 73

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WORKPLACE MANAGEMENT

Measuring the value of a work environment, not its cost Calculating the real cost of work environments can be done by a financial and accoun-

ting study. Measuring their value – in other words determining their contribution to employee performance – is not easily quantifiable. The British company Leesman has created tools to achieve this through auditing.

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ith some 145,000 respondents, Leesman’s database is set to become Europe’s largest resource for ongoing workplace assessment.

The Leesman organisation offers a wide range of qualitative and quantitative audit services allowing boards of directors, project managers, interior designers, property professionals and management consultants to immediately access reliable performance data.

With more than 1,000 workplaces surveyed since the summer of 2010, Leesman wants to pinpoint exactly what makes more efficient environments stand out: what services and infrastructures do these companies use?

What are they doing that the other companies are not? To find out, the organisation set up the Leesman+ recognition programme at the start of the year. To date, only 4% of large organisations surveyed, i.e. work environments with more than 100 respondents, achieved a score of 70 or over out of 100 in terms of workplace efficiency. By gathering more data on these infrastructures, Leesman aims to highlight the common features that contribute to their high scores.

Working towards efficiency benchmarking in Belgian workplaces

At the start of the year, the Antwerp-based technology company MCS entered into partnership with Leesman.

More specifically, the Leesman Index is an independent analysis tool in the form of an electronic survey that allows employees to share their impressions about their work environment and indicate how well designed it is in order for them to carry out their tasks.

As an official partner of Leesman, the Antwerp company, which also provides workplace and building management advice, will apply the method to workplace transformation projects in which it is involved. MCS will combine the feedback from the Leesman survey together with data from other tools such as connected sensors permanently measuring parameters such as the use of space, indoor climate and energy consumption, or the instant feedback from users about the quality of services or the work environment, which is collected through a mobile application.

By combining methods, both companies acquire a valuable database that allows building and workplace managers to make the best use of the available space and design work environments that promote productivity while meeting the needs to employees.

For further details, download the report on www.profacility.be/biblio > 05/10/2015.

The work environment of the new ISS headquarters in Soborg, Denmark has achieved one of the highest scores in the Leesman index.

BELGIUM REAL ESTATE SHOWCASE 2016 75

WORKPLACE MANAGEMENT

WWW.PROFACILITY.BE/BIBLIO

Concept and design of future workspaces At the moment, the way that companies and organisations operate is more diversified

than ever. Office furniture manufacturer and designer Kinnarps conducted a study

highlighting the current trends in the conception and design of efficient work environments that allow talented employees to be recruited and retained.

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he authors of this study indicate behavioural and organisational changes in today’s working world, based on which they have drawn conclusions and issued certain recommendations.

Wellness is the new green

Since careers are getting longer, companies should therefore ensure the well-being of employees so that they remain operational and effective for as long as possible. Office ergonomics is thus becoming psychological as well. Promoting movement, varying light and colours, including background music in certain places… companies are investing in personalised interiors that encourage movement and creativity while constantly meeting the needs of employees. These interiors must also be achieved within the framework of inclusive design. With the change in the sphere of work and the increase in the pension age, up to four different generations can therefore find themselves working in the same company.

As a result, the design and layout of the workplace should address the needs of each age group without discriminating or favouring the needs of one group over another.

“Techiture” : the influence of technology on architecture

The pop-up of mailboxes, instant messages, smartphones, and social media are all demands that prevent us from working effectively and create what we call “tech fatigue”.

Understanding that this hyper-connectivity is a real issue with real consequences for welfare is undoubtedly a major factor in the creation of work environments, which are increasingly based on domestic environments where technology is deliberately less visible. This is known as “techiture”.

Micro-multinationals or the elimination of borders

Over the last twenty years, technology has involved at an intense pace, revolutionising working conditions for most of us. Working remotely with colleagues located in other departments, places and cultures, organising video-conference meetings, opting for satellite offices or co-working spaces are all elements that will be the norm in the future. Therefore, the main challenge for architects and designers of office interiors is the creation of an environment that incorporates the company’s culture and values, necessary for any sense of belonging, while the very notion of the workplace dissipates.

For more in depth reading, download the article “Inclusive design for future workspaces”, which can be downloaded from www.profacility.be/biblio >15/10/2015 or download the full report “Designing the workplace and the living space in a diverse decade” available on request via www.kinnarps.com/trend

76 BELGIUM REAL ESTATE SHOWCASE 2016

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SMART & GREEN BUILDING SOLUTIONS

Double skin, triple function Produce energy, regulate the amount of incoming sunlight, pay attention to the finishing and create an aesthetically pleasing facade… These are the three functions

expected of the ‘Building Integrated Photovoltaics’ designed by ISSOL for the new building in the Negundo complex in Tournai.

Negundo 4

A

Negundo 4 smart building in figures: Active double skin façade • 3 facades (the largest SE facing, the 2 smaller SW and NE) • Active façade surface area: 1,100 sq. m.

• Installed power: 60 kWc • Estimated production: 36 MWh/year • Injection of 8 kVa at each level (5 levels, 5 electric meters) Roofing • Installed power: 20 kWc • Estimated production: 18 MWh/year • Injection into common areas (covering the requirements of common equipment)

ctive façade’ is the way this recent, but not entirely new, concept is described. Not entirely new because it has already been used by its designer and manufacturer ISSOL, in particular for the emblematic building of Bruxelles Environnement, inaugurated on the Tour & Taxis site in January of last year. More precisely, we are talking of ‘Building Integrated Photovoltaics’, a technical and architectural conception which integrates photovoltaic elements structurally within the building, and not as an addon accessory. The next realisation of this type

by ISSOL, based in the Verviers region, will be put into practice in June of 2016 in the new Negundo District of Tournai Business Park.

The inter-communal association for economic development – IDETA – has been developing a complex of buildings here since 2010, designed with energy optimisation as a major priority.

The fourth chapter of this complex will house the prolongation of the e-campus dedicated to internet professions, a sector which is undergoing strong development at Negundo.

Negundo 4 will be controlled by centralised management tools for electricity, heat and water involving all of the buildings in the complex. An emergency thermal liaison between Negundo 4 and Negundo 3 is in particular scheduled, in the form of a tempo-

rary back-up for one of the heat pumps of Negundo 4. As is the case for its neighbours, the new building will make use of renewable energies: geo-thermal, sun and wind energy.

Revenues in energy, revenues in image

“Occupants will be able to expect annual revenues of € 25 – 35 per square meter, according to the orientation”, explains Laurent Quittre, the founder of ISSOL. “But the revenue in terms of the image of the company should not be ignored, even if it is difficult to quantify.

This is indeed the first priority of our clients: a good-looking façade which visibly displays the commitment of the company in terms of responsible use of energy. And at the moment, 80% of our projects are facades. Our job is no longer just an installer of photovoltaic panels, but a façade designer. Our products are generally prescribed by the architects or asked for by the client, but we are unable to be categorised when it comes to calls for tender – clients don’t know whether to call us façade engineers or photovoltaic installers – and they don’t know how to compare us. Especially as our active facades are always around 150 -200 Euros per square meter more expensive than the other systems. So we may be excluded from the outset. However, our facades generate recurrent income over ten years or so, with a return on investment in under eight years…”

Patrick BARTHOLOMÉ

78 BELGIUM REAL ESTATE SHOWCASE 2016

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THE CITY IS WORTH LIVING IN

Full of contrasts and faced with multiple challenges, the city is alive and kicking. It’s become a symbol of a dynamic and progressive civilization. The world now counts almost 3.3 billion urban dwellers; that’s 4.5 times more than in 1950. And projections suggest that by 2030, over 60% of the world’s population will live in towns and cities.

The city is also worth reading about

develop a variety of dense and mixed projects in urban centres and near communication hubs.

Atenor gives city lovers, no matter whether they live or work there, buildings that are both adapted to harmonious communal living and their evolving expectations.

As a real-estate developer, Atenor is particularly attentive to the evolution of urban life. Active, as we are, in its inevitable and necessary transformation, Atenor continues to

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