Economic normalisation expected in 2023
2022 was an unusual year from every point of view. The economy has been severely hit with inflation at highest levels since decades, sky-high energy prices and rising interest rates to try to fight running consumer price index
Economic conditions have suffered throughout the year 2022 in the aftermath of the conflict in Ukraine. While GDP held up well last year, price pressures have reached a high and a recession is looming. As a result, GDP growth is expected to stand around 0.5% in 2023 according to the National Bank of Belgium. The Belgian economic outlook is thus mitigated for this year while public debt could continue to deepen if any adjustments is taken by the authorities. Successive interest rates hikes also weigh on the public debt.
The unemployment rate declined these last three years but is expected to increase as from 2023 and to reach 6.2% according to the latest forecasts released by Moody’s. Unemployment is expected to rise faster in Wallonia than in Flanders. It should remain relatively stable after 2023, around 6.5% to 6.7% up to 2026.
Inflation remains high, namely due to an increase in food and services inflation since the beginning of the year. This is fueling fears of inflation becoming entrenched while energy inflation is now strongly negative. While the headline Belgian consumer price index should decline throughout 2023, high and rising underlying price pressures remain a big worry.
170€ Prime rent (EUR/sq m/year) 12-Mo. Forecast YoY Chg 52K Take-up (Q1 2023) (000s sq m) 12-Mo. Forecast YoY Chg 5.80% Prime yield (%, 3/6/9 lease) 12-Mo. Forecast YoY Chg 0.46% 2023 GDP Growth 12-Mo. Forecast YoY Chg Economic Indicators Q1 2023 6.23% 2023 Unemployment Rate 5.94% 2023 Consumer Price Index Sources: Moody’s Analytics, BNB, Eurostat, Federal Planning Bureau, March 2023 Please note the economicdata can vary significantlyfrom one source to the other. Therefore,the figures provided should merelybe used as an indication or trend. BELGIUM
GDP Growth and unemployment rate Inflation rate -6% -4% -2% 0% 2% 4% 6% 8% 2018 2019 2020 2021 2022 2023 2024 2025 GDP Growth Unemployment Rate 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2018 2019 2020 2021 2022 2023 2024 2025
/ Regional Office Q1 2023
Low take-up on a national level…
For the first quarter of 2023, the level of take-up has been lower than the five-year average in the Belgian office market. The Brussels market has witnessed the lowest take-up since 2020, where it as below 50,000 sq m. The Regional office market witnessed a higher takeup (56,200 sq m) in Q1 2023 compared to 2022 (50,000 sq m), which results in an increase of approximately 12%.
Flanders witnesses a strong first quarter in 2023…
In the Flemish part of Belgium, the take-up has been resilient compared to other regions. The take-up for Q1 2023 stands at 50,440 sq m in Flanders. On a five-year average, Q1 2023 has witnessed more than 9% of take-up. Scrutinizing the Flemish cities, Ghent marks out with less transactions (18) but witnessed its highest take-up since more than ten years
The notable transaction in the Regional office market is in Ghent. The renewal of Zuiderpoort with 20,575 sq m to its new tenant, Regie Der Gebouwen. In Antwerp, 4,585 sq m is occupied by Trescal in the Nijverheidsstraat.
There were just three transactions in Wallonia that were noted. As a result, this has led to the lowest take-up in more than ten years.
Prime and average rents increase in Flanders…
The prime rents have followed the trend of the overall Brussels office market and have thus not increased in Q1 2023. The prime rent for Flanders remains at 170€/sq m/year and for Wallonia at 160€/sq m/year.
Fast-forwarding to the end of 2023, the prime rents are expected to increase due to the demand for high-quality offices.
The Weighted Average Rent has increased towards 133€/sq m/year in Flanders. On citylevel, Ghent has had the strongest impact due to its stronger occupier’s market. It witnessed an increase from 137€/sq m/year in 2022 to 144€/sq m/year in the first quarter of 2023.
Belgium Take-up Per Region, 000s SQ M
Flanders Take-Up Per District, 000s SQ M
Rents, EUR/SQ M/Year
BELGIUM / Regional Office Q1 2023 42% 57%
0 50 100 150 200 250 300 350 2018 2019 2020 2021 2022 Q1 2023
Flanders Wallonia Brussels
* Weighted AverageRent
Antwerp Ghent Mechelen Leuven
BELGIUM / Regional Office Q1 2023
Prime yields increase with little market evidence…
The investors are not out of the woods yet With the economic uncertainty, investors are still holding on to their wait-and-see approach. For the first quarter of 2023, no notable transactions were recorded in the Regional office markets.
The prime yield in Flanders has increased with +20 bps to 5 80% while the prime yield in Wallonia has remained on the same level since Q3 2022 at 7 00%
Pipeline in Flanders remains strong…
The new deliveries in Flanders in Q1 2023 stand at 11,000 sq m. The new deliveries are Zuidpoort G in Mechelen for 6,200 sq m and Arto in Antwerp for 4,800 sq m. Together with the strong take-up, the market seems favorable for 2023.
In the following quarters in 2023, 78,000 sq m is expected to be delivered. In Ghent, 47,200 sq m is in the pipeline This consists for example of 18,000 sq m in Upoffiz, 9,500 sq m for the Vlaams Instituut van Biotechnologie and 5,000 sq m in Keizerpoort In Antwerp, Montevideo will be delivered and provide 10,195 sq m of office space.
Between 2024 and 2030, 275,000 sq m of office space is expected to be delivered, of which 129,400 sq m in Antwerp and 43,300 sq m in Ghent.
Mechelen and Leuven together will see 101,900 sq m of new office spaces Some notable deliveries are Bioscience Toren (27,000 sq m) in Leuven and MALT (17,900 sq m)
Promising pipeline in Wallonia…
In 2023, close to 120,000 sq m should be delivered In Namur, 75,500 sq m of new offices is expected to be delivered this year. The Palais de Justice (34,600 sq m) and AXS (39,000 sq m) are expected to be delivered. Liège and Charleroi both account for more than 40,000 sq m of the expected pipeline.
More than 200,000 sq m is expected to be delivered between 2024 and 2030 in Wallonia. This includes the Left-Side Business Park – Ohrizons (23,000 sq m) and Projet Georges Lemaître (24,000 sq m).
Flanders Pipeline, 000s SQ M
Wallonia Pipeline, 000s SQ M
Prime Yields
-3,00% -1,00% 1,00% 3,00% 5,00% 7,00%
0 100 200
0 20 40 60 80 100 120 140 Liège Namur Charleroi Pipeline Wallonia
Prime yield Flanders Prime yield Wallonia OLO-10Y
Antwerp
Ghent Mechelen Leuven Pipeline Flanders
BELGIUM / Regional Office Q1 2023
Market Statistics
Key Lease Transactions Q1 2023
REGION MARKET STOCK (SQ M) AVAILABILITY (SQ M) VACANCY RATE Q1 2023 TAKE-UP (SQ M) 2023-2025 PIPELINE (SQ M) PRIME RENT (€/sq m/year) PRIME YIELD Flanders Antwerp 2,215,000 116,700 5.27% 20,755 153,200 170 5.80% Ghent 1,122,300 31,200 2.78% 25,595 90,465 170 5.80% Leuven 585,200 17,600 3.01% 2,565 60,115 155 7.00% Mechelen 269,500 n.a n.a 1,525 48,580 160 7.50% Wallonia Liège 562,100 13,900 2.47% 725 103,115 160 7.20% Namur 545,000 6,900 1.28% 180 93,650 160 7.25% Charleroi 499,600 7,500 1.51% 635 123,150 145 7.50% PROPERTY MARKET TENANT SQ M TYPE Zuiderpoort Ghent Regie Der Gebouwen 20,575 Renewal Nijverheidsstraat - Antwerp Antwerp Trescal 4,585 Letting Antwerp Ring Center Antwerp Woonhaven Antwerpen 1,935 Letting AG Vespa Mechelen AG Vespa 1,610 Letting Singel Building Antwerp Solutions 1,410 Letting
Cédric VAN MEERBEECK
Head of Research & Marketing | Belgium & Luxembourg
+32 2 629 02 86 cedric.vanmeerbeeck@cushwake.com
Oscar DE GROOTE Research Analyst | Research Belgium
+32 478 05 38 71 oscar.degroote@cushwake.com
Maximilien MANDART
Head of Occupier Services | Belgium
+32 476 24 08 02 Maximilien.mandart@cushwake.com
Michael DESPIEGELAERE
Head of Capital Markets | Belgium & Luxembourg
+32 476 82 08 59 michael.despiegelaere@cushwake.com
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
©2022 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.
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