M A R K E T B E AT
BELGIUM Retail Q1 2022 YoY Chg
136,000 sq m Q1 2022 Take-up
1,550 €/sq m/y. High Street Prime Rent
4.35%
High Street Prime Yield Source: Cushman & Wakefield
-
12-Mo. Forecast
Inflation and uncertainties will shape 2022 and 2023. Inflation in Belgium climbs to 8.2% in the first quarter of 2022, a record since 1983. In February 2022, 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 is set to increase after a record year of saving and their willingness to go out and travel, inflation will remain at high levels in 2022. After the COVID-19 outbreak, a new period of uncertainties began with the crisis in Ukraine. Belgian growth could be affected despite a robust first quarter of 2022,with a GDP growth around 2.7%. Growth is expected to slow down and stabilise at 2.2% for the next two years and slow down further to 1.1% in 2025. The unemployment rate decreased to a level of 5.5% in the first quarter and is expected to decline further and stabilise around 5.2% by the end 2022 and 4.9% in 2023. This is due to a lot of temporarily unemployed people have resumed work in the early of 2022.
BELGIAN ECONOMIC INDICATORS YoY Chg
12-Mo. Forecast
2.7% 2022 GDP Growth
5.5% Unemployment rate
8.2% Consumer Price Index Source: Moody’s Analytics, March 2022
GDP GROWTH AND UNEMPLOYMENT RATE
CONSUMERS PRICE INDEX 9%
8%
8%
6%
7%
4%
6% 5%
2%
4%
0%
3%
-2%
2%
-4%
1% 0%
-6% 20 16
20 17
20 18
20 19
GDP Gro wth
20 20
20 21
20 22
20 23
20 24
20 25
2016
2017
2018
2019
2020
Un empl oymen t Ra te
Sources: Moody’s Analytics, BNB, Eurostat, March 2022
Sources: Moody’s Analytics, BNB, March 2022
2021
2022
2023
2024
2025
M A R K E T B E AT
BELGIUM Retail Q1 2022 A record start tot the year on the retail occupational market.
TAKE-UP BY QUARTER (000s sq m) 500
Despite growing uncertainties and rising inflation, the retail occupational market witnesses a record start to the year with 136,000 sq m of take-up already observed in Belgium (and 210 deals). These exceptional figures follow the strong recovery observed in 2021 with 481,000 sq m of take-up. Retailers are still implementing their post-COVID strategy, some on a strong expansion (especially Out-of-Town retailers and Food & Beverage operators), while others are rather optimising their previous locations. Out-of-Town Retail is driving activity with more than 98,000 sq m of take-up recorded in 2021 (72% of the activity) thanks to significant deals done by food retailers (namely Lidl and Jumbo) and household furnitures retailers (X2O, Impermo and Jysk) amongst others. Shopping centres also record robust activity, namely thanks to the comeback of Peek & Cloppenburg (4,500 sq m) in Belgium, more specifically in the renovated Westland Shopping Centre. Fnac also decided to open a new 2,600 sq m store in the W Shopping Centre.
400 300 200 100 0 2015
2016
2017
2018
Q1
Q2
2019 Q3
2020
2021
2022
Q4
DISTRIBUTION OF THE NUMBER OF DEALS BY SEGMENT 100 % 80%
In the high Streets segment, the year started pretty decently with 25,000 sq m of take-up and around 100 deals. Notable transactions namely took place in Antwerp with the lettings of JD Sports (Meir 32), Nike Rise (1,300 sq m) or JBC on the Bruul 67 in Mechelen.
60% 40% 20%
Online retail sales reached new summit in 2021.
Despite this exponential growth, online retail is not a threat and has rather to be considered as a catalyst to increase retail sales and turnover should retailers implemented an omnichannel strategy. Benefitting from a “halo effect”, retailers could potentially increase their total retail sales by 5 to 10% combining a strong online strategy and an experience store.
2015
2016
2017
Out-of -Town
2018
2019
High St reet
2020
2021
Q1 22
Shopping Centre
ONLINE RETAIL SALES (EUR BN, LHS) and # ONLINE TRANSACTIONS (RHS) IN BELGIUM 14
160
12
140 120
10
100
8
80
6
60
4
40
2
20
0
0 2017
2018
2019
Online retail sales in B elgium
2020
2021
# online transaction
Millions
In 2021, a new threshold have been observed on the online retail sales across the country. Indeed, more than EUR 11.7bn has been spent all along 2021, confirming the exponential growth of e-commerce in Belgium. This is an increase of 33% compared to 2020 and online retail represents now around 15% of the total retail sales. More than 15 millions have been recorded, also a new record.
0%
M A R K E T B E AT
BELGIUM Retail Q1 2022 Footfall in the Shopping Centres continue to outperform High Streets. According to information collected by our partner MyTraffic, footfall across High Streets and Shopping Centres are still below pre-COVID 19 levels, though on a gradual recovery since April 2021.
FOOTFALL INDEX (Base = 100 in January 2020) 120 100 80
PRIME RENT BY SECTOR (EUR/SQ M/YEAR) 2250 2000 1750 1500 1250 100 0 750 500 250 0
250 230 210 190 170 150
High St reet
Shopping Centre
20 25
130 20 21 20 22 20 23 20 24
Benefitting from robust performances on the occupational market, prime rents are more stable in the Out-ofTown segment. They currently stand at 160 EUR/sq m/year and are expected to reach 170 EUR/sq m/year by 2024.
High St reet s
Source: MyTraffic Note: High Streets index based on 15 High Streets across Belgium; Shopping Centres Index based on 12 Shopping Centres across Belgium
20 19 20 20
In the Shopping Centre segment, prime rents stand at 1,150 EUR/sq m/year since the beginning of 2021. Stability is expected all along 2022 and a slight though continuous increase is also awaited as from 2023. They should stand around 1,250 EUR/sq m/year by 2025.
Shopping Centres
20 18
Prime rents for the High Street segment are now at 1,550 EUR/sq m/year. According to our forecasts, stability is expected all along 2022 and prime rental levels are expected to rise gradually to reach 1,575 EUR/sq m/year in 2023 and 1,650 EUR/sq m/year by 2025.
0
20 17
After the corrections observed due to thte COVID-19 oubreak, prime rents seem to have now staibilised since the second part of the year 2021.
20
20 16
Prime rents expected to remain stable all along 2022. Gradual increase awaited as from 2023.
40
01-20 02-20 03-20 04-20 05-20 06-20 07-20 08-20 09-20 10-20 11-20 12-20 01-21 02-21 03-21 04-21 05-21 06-21 07-21 08-21 09-21 10-21 11-21 12-21 01-22 02-22 03-22
In the High Streets segment, the situation is also enhancing since April 2021. However, for Belgium, the footfall level is now around 30% lower to pre-COVID, though very different situations are observed between Regions, with Brussels more impacted than Flanders and Wallonia. Situation should continue to rise in the coming months.
60
20 15
Shopping centres experienced a stronger recovery and recorded a footfall level similar to pre-COVID-19 in December 2021. Activity was lower in the beginning of 2022 though on the rise again in March 2022.
Out-of -Town
Note: High Street and Shopping Centre are to be read on the left axis, Outof-Town on the right-hand axis
M A R K E T B E AT
BELGIUM Retail Q1 2022 136 MEUR invested in Q1 22. Gradual recovery of the investment market expected in H2. Activity on the investment market remained subdued in Q1 2022 with 156 MEUR invested. Investment volumes highlights the continuous regearing of investors towards Out-of-Town assets as confirmed by the acquisition of the Shopping Fleron for 35 MEUR by a private investor or the purchase of the Gerdingen Park for 22 MEUR by Pertinea Property Partners. The robust market fundamentals of the segment and the presence of food retailers played a major role for investing in this asset class. In the High Streets of the country, small lot-size transactions have been observed in Q1, namley in Mechelen, Liège or Antwerp. Activity remains subdued in this market segment but is expected to increase as from H2 2022. We indeed forecast that investors’ interest will gradually grow for High Streets assets, following the gradual recovery of the occupational market. However, investors will remain cautious and focus on the best assets or best locations or decide to focus on mixed-use assets.
INVESTMENT VOLUME BY SEGMENT (in MEUR) 2 500
2 000
1 500
1 000
500
0 2015
2016
2017
Out-of -Town
Prime yields expected to remain stable in 2022 before a slight compression in 2023. After several corrections these previous months as a result of the COVID-19 outbreak and a gretaer investors’ cautiousness, prime yields in the different sectors are expected to reamin stable all along 2022. They currently stand at 4.35% in the High Street, 4.65% in the Shopping Centres and 5.60% in the Retai Parks.
2018
2019
High St reet
2020
2021
Q1 22
Shopping Centre
PRIME YIELD BY SEGMENT 7% 6% 5% 4% 3% 2% 1% 0%
20 25
20 24
20 23
20 22
20 21
20 20
20 19
20 18
20 17
20 16
-1% 20 15
As from 2023, we forecast gradual though light compressions of the prime yields in the different market segments as a positive result of a willingness to invest in the retail market, thanks to robust fundamentals on the occupational market.
Out-of -Town
High St reet
Shopping Centre
10y. Bond Yields
M A R K E T B E AT
BELGIUM Retail Q1 2022 Is there a link between consumers’ confidence and retail sales? After a continuous increase of the consumers’ confidence index thanks to the ease of containment measures in April 2021, consumers’ confidence is on the decrease since the end of 2021 and growing concerns regarding rising energy prices, high inflation and more recently war between Russia and Ukraine. Belgians are concerned about the economic outlook and more specifically, worried about their own spare capacity in the coming months. This could potentially wiegh on the evolution of retail sales as observed on the chart below. Indeed, in this uncertain context, we look at the correlation between consumers’ confidence and retail sales in Belgium over a long time period and we see a slight downside trend to retail sales during crisis period. However, the correlation is relative and we observe a certain resilience of the retail sales in Belgium. As such, the impact of the Ukrainian crisis coule only be limited.
CONSUMER CONFIDENCE INDEX (LHS) AND RETAIL SALES (BASE = 100 in 2015, RHS)
CEDRIC VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 / cedric.vanmeerbeeck@cushwake.com
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A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. ©2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.