M A R K E T B E AT
BRUSSELS Office Q1 2022 12-Mo. Forecast
YoY Chg
78,247
YTD Take-Up (sq m)
Inflation reaches 39-year high.
7.94%
Inflation in Belgium climbs to 8.22% in the first quarter of 2022, a record since 1983. In February 2022, the Russian invasion of Ukraine pushed global energy prices sky-high. With the conflict showing no signs of ending, and EU restrictive measures against Russia, energy prices will continue to drive inflation in Belgium. Combined with the fact that consumer spending should increase depending on the inflation after a record year of savings, inflation is set to rise.
€320
A period of uncertainty is taking place with the crisis in Ukraine and if it continues, Belgian growth could be affected.
Vacancy Rate
Prime rent (€/sq m/year)
Rising growth and falling unemployment rate.
3.60% Prime yield
The Belgian economy is forecasted to grow 2.7% in 2022. This is expected to slow down and stabilise at 2.2% for the next two years and slow down further to 1.1% in 2025. This growth is associated with an increase of the employment rate. The unemployment rate decreased to a level of 5.5% in the first quarter and should be expected to decline further and stabilise around 5.2% by the end 2022 and 4.9% in 2023.
ECONOMIC INDICATORS Q1 2022
2.67%
YoY Chg
12-Mo. Forecast
2022 GDP Growth
5.49%
2022 Unemployment rate
8.22%
2022 Inflation
Source:Moody’s Analytics, BNB, Eurostat, March 2022
GDP GROWTH AND UNEMPLOYMENT RATE
INFLATION RATE
8%
9.0%
6%
8.0% 7.0%
4%
6.0%
2%
5.0%
0%
4.0%
-2%
3.0%
-4% Please note the economic data can vary significantly from one source to the other. Therefore, the figures provided should merely be used as an indication or trend.
2.0%
-6% 20 16
20 17
20 18
20 19
GDP Gro wth
20 20
20 21
20 22
20 23
20 24
Un empl oymen t Ra te
20 25
1.0% 0.0% 2016
2017
2018
2019
2020
2021 in fl ation
Sources: Moody’s Analytics, BNB, Eurostat, March 2022
Sources: Moody’s Analytics, BNB, March 2022
2022
2023
2024
2025
M A R K E T B E AT
BRUSSELS Office Q1 2022 Letting activity during Q1 in line with the five-year average.
TAKE-UP BY QUARTER (000s SQ M) 60 0
In Q1, 78,000 sq m of take-up was recorded on the Brussels office market which is consistent with the five-year quarterly average. Due to the period of uncertainty caused by the war in Ukraine, the occupational market is experiencing hesitation and sluggishness from occupiers.
50 0 40 0 30 0
Public and non-profit sectors contribute to 36% of the activity.
20 0 10 0
The public and non-profit sectors contributed some 28,500 sq m across eleven deals, led by a 11,500 sq m letting by the International Trade Union Confederation in AG Real Estate’s City Center on Boulevard du Jardin Botanique in the Centre district.
0 20 18
20 19
20 20 Q1
Q2
Q3
20 21
20 22
Q4
PUBLIC AND PRIVATE TAKE-UP (000s SQ M)
Carrefour Belgium and Bridgestone drove the activity for the private sector with a 7,400 sq m pre-letting and a 5,600 sq m letting respectively in the Corporate Village. Both of these deals took place in the booming Airport district, to which we have dedicated a recent district report¹.
60 0 50 0 40 0
Sustainability is now mandatory.
30 0 20 0
For the coming months, occupiers’ space reductions will contribute to increase the vacancy rate to 8.5% globally for Brussels. However, the reconcentration of occupiers in the highest quality buildings will contribute to increase the gap in vacancy rates between Grade A buildings on the one hand and Grade B and C on the other hand.
10 0 0 20 18
20 19 Priva te
20 20 Pub lic
20 21
DISTRIBUTION OF THE VACANCY BY GRADE
For Brussels overall, only 110,000 sq m are currently available in Grade A buildings. The Airport district is already witnessing a huge need for ESG-proof solutions as there are almost no immediate vacancies of a decent size in Grade A assets.
10%
1,090,500 sq m
24%
66%
1 : https://www.cushmanwakefield.com/en/belgium/insights/brussels-office-districts Grade A
Grade B
Grade C
20 22
M A R K E T B E AT
BRUSSELS Office Q1 2022 68% of the pipeline for 2022 is currently pre-let.
OFFICE PIPELINE (000s SQ M) 25 0
An important development pipeline is foreseen for the coming years. Just for 2022, more than 100,000 sq m will enter the market, with 33,250 sq m on a speculative basis, the biggest ones being the Park 7 in the Airport district, the Belnine in the Leopold district or the Strombeek BP in the Ring. In the longer term, another 100,000 sq m of new spaces are under construction and could enter the market empty.
20 0 15 0 10 0 50
In addition to these developments currently under construction, some important projects have or are about to get their building permits and could be launched in the short term. However, the crisis in Ukraine, rising inflation and construction costs could be a source of delay for some of these.
0 20 22
20 23
VACANCY RATE (%)
Vacancy rate on the rise for 2022. At the end of Q1, the vacancy rate stands at 7.94%, a slight increase compared to Q4 2021. Speculative projects, combined to the existing and future subleases and space reductions will lead to further increases of the vacancy rate. By 2023, the vacancy rate could reach 8.3% before experiencing a new decrease as the office market will adapt to its new paradigm. By the end of 2025, the vacancy rate should stand at 8%.
20 24 Pre-l et
20 25
20 26
Avai lab le
11 % 10 % 9% 8% 7% 6% 5%
20 25
20 24
22
20 23
1 Q
20 21
20 20
20 19
20 18
20 17
20 16
20 15
PRIME RENTS (in EUR/SQ M/YEAR)
As competition for the best buildings and best locations remains high, prime rents could slightly rise in the coming years. In the Leopold district, prime rents are expected to rise in the coming years to reach €325/sq m/year by the end of 2022 and could even reach €330/sq m/year in 2025.
35 0
In the Louise and Airport districts, new developments such as The Louise and The Wings tend to drive the rents upwards. Prime rents could reach new levels of €290/sq m/year and €185/sq m/year by 2023 – against respectively €275/sq m/year and €175/sq m/year currently.
20 0
30 0 25 0
15 0
CBD
De central ised
20 25
20 24
20 23
20 22
20 21
20 20
20 19
20 18
10 0 20 17
No changes of the prime rents were recorded in Q1, it still stands at €320/sq m/year in the Leopold district.
4%
20 16
General increase of prime rents awaited in the coming years.
Peri phe ry
M A R K E T B E AT
BRUSSELS Office Q1 2022 Slow start of the year on the investment market.
OFFICE INVESTMENT VOLUMES BY QUARTER (MEUR) 4,00 0
In the first quarter of 2022, roughly 455 MEUR has been invested on the Brussels office market, which is the weakest first quarter since 2015. The period of uncertainty due to the conflict in Ukraine led some investors to adopt a wait-and-see position. A large transaction boosts the first quarter figure. Indeed, Immobel have been selected by Proximus as preferred candidate to the acquisition and the renovation of Proximus’ new headquarters. A 185 MEUR sale-and-leaseback transaction, representing more than 40% of the total investment volume in Q1.
Prime yield stable at 3.60%.
3,50 0 3,00 0 2,50 0 2,00 0 1,50 0 1,00 0 50 0 0 20 18
20 19 Q1
Q2
20 20 Q3 Q4
20 21
20 22
After a period of compression in the past few years, prime yields remain stable since last quarter and stands to 3.60% for buildings with standard lease terms in Q1. Long-term prime yields still stand at a level of 3.20% and record no further compressions in this quarter. Although competition for the best assets is increasing and generally applying pressure on yields, rising construction costs and interest rates limited the compression of prime yields this quarter.
The war in Ukraine, a decisive factor for the Economy and Real Estate.
PRIME OFFICE YIELDS IN BRUSSELS (%) 6% 5% 4% 3% 2%
Indeed, according to Moody’s Analytics, if the war drags on, global economic growth could be reduced by 1% and inflation increased by a further 2.5% in the coming months.
1%
The different scenarios forecast a rise in government bonds from 1.5% to 2.5% by the end of 2025, therefore narrowing the spread between government bonds and office yields. However, prime office yields are expected to be more resilient and should stabilise or witness only a slight increase in the coming years.
-1%
Prime
LT Prime
20 25
20 24
20 23
20 22
20 21
20 20
20 19
20 18
20 17
20 16
0%
20 15
In February 2022, Russian invasion of Ukraine pushed the already high inflation to a record level in Belgium. If the conflict persists, the global economy could be severely affected.
10 y. Bon d
M A R K E T B E AT
BRUSSELS Office Q1 2022 MARKET STATISTICS STOCK (SQM)
AVAILABILITY (SQM)
VACANCY RATE
Q1 2022 TAKE-UP
UNDER CONSTRUCTION (SQM)
PRIME RENT (€/sq m/year)
PRIME YIELD
Brussels (Leopold)
3,372,958
117,387
Brussels (Centre)
2,469,552
102,081
3.48%
7,021
91,294
€320
3.60%
4.13%
20,957
77,643
€260
Brussels (North)
1,645,608
3.90%
114,756
6.97%
-
91,505
€230
Brussels (Louise)
4.90%
875,282
40,529
4.63%
5,702
28,000
€275
Brussels (Midi)
4.10%
605,903
19,011
3.14%
1,096
-
€195
5.25%
Brussels (Decentralised)
2,589,797
299,939
11.58%
9,149
78,000
€200
6.25%
Brussels (Periphery)
2,166,419
396,775
18.31%
34,322
81,183
€175
6.00%
13,725,519
1,090,478
7.94%
78,247
447,625
€320
3.60%
SUBMARKET
Brussels (Overall)
KEY LEASE TRANSACTIONS Q1 2022 PROPERTY
SUBMARKET
TENANT
SQ M
TYPE
City Center
Centre
Intrenational Trade Union Confederation
11,500
Letting
Corporate Village Bayreuth
Airport
Carrefour Belgium
7,400
Pre-letting
Airport Garden
Airport
Bogaerts International School
6,125
Letting
Airport
Bridgestone Europe
5,570
Letting
Corporatenot Village Aramis *Renewals included in leasing statistics
CÉDRIC VAN MEERBEECK Head of Research and Marketing | Belgium & Luxembourg +32 477 98 11 83 cedric.vanmeerbeeck@cushwake.com BENJAMIN DEVIE Research Analyst | Belgium & Luxembourg +32 495 11 35 10 benjamin.devie@cushwake.com
KEY INVESTMENT TRANSACTIONS Q1 2022 PROPERTY
SUBMARKET
SELLER / BUYER
Volume (in MEUR)
Proximus Towers
North
Proximus / Immobel
185
Regent 43-48
Centre
Deka / Tristan + Whitewood
85
Everegreen
North-East
Cofinimmo / Matexi
23
The Royal 138
Centre
HIH Real Estate / Eaglestone
23
The Crescent
South
Nextensa / DES NV
23
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