M A R K E T B E AT
BELGIUM Retail Q2 2021 YoY Chg
214,000 sq m
12-Mo. Forecast
Belgian economy will recover gradually in 2021 The economic growth is expected to be back on track thanks to the success of the vaccination campaign and the relaxing of constraining measures. Economic growth is set to increase to 5.5% which means that the GDP will be around pre-crisis levels at the end of 2021 after which growth levels will stabilise to 3.3% in 2022 and 1.6% in 2023.
2021 YTD Take-up
1,600 €/sq m/y.
Unemployment rate is forecasted at 5.8% this year and should peak in 2022 at around 6%. It is expected that a lot of temporarily unemployed people will resume work in the second half of 2021 or will be able to find new jobs. In some sectors there is even a shortage of workers and employers are having trouble filling in vacancies.
High Street Prime Rent
4.25%
High Street Prime Yield
Core in flation in Belgium is projected at 2.2% in 2021, 2.1% in 2022 and 1.8% in 2023. This is due to the fact companies are confronted with rising commodity prices which puts pressure on the price paid by the end consumer. Combined with the fact that consumer spending is set to increase after a record year of saving, inflation is set to rise.
Source: Cushman & Wakefield
BELGIAN ECONOMIC INDICATORS 2021 FORECASTS YoY Chg
12-Mo. Forecast
5.5%
The average disposable income of the household recorded a strong decrease in 2020, around 6%. The situation should be better as from 2021 with an average disposable income on the rise all along the period up to 2023. Consumer confidence is also on a strong upward despite recent fears around the Delta variant and currently stand at highest levels since 2015 (and even since 2007). Savings are at historically high and could then benefit to the retail sector in the coming months.
2021 GDP Growth GDP GROWTH AND UNEMPLOYMENT RATE
20
6%
15 10
4%
5
2%
0
0% -2%
-10
-4%
-15
-6%
-20
-8%
-25 05 -21
01 -21
09 -20
05 -20
01 -20
09 -19
-30 05 -19
Unemployment R ate
2023
01 -19
2022
09 -18
2021
05 -18
2020
01 -18
GDP Growth
2019
09 -17
2018
05 -17
2017
01 -17
2016
09 -16
2015
05 -16
Source: National Bank of Belgium and Eurostat, June 2021
-5
01 -16
Consumer Price Index
25
8%
09 -15
2.2%
10%
05 -15
Unemployment rate
01 -15
5.8%
CONSUMERS’ CONFIDENCE INDEX
M A R K E T B E AT
BELGIUM Retail Q2 2021 The occupational market at full speed despite unprecedented climate Following a record Q1 since 2016, the retail occupational market is still at full speed with more than 118,000 sq m of take-up observed in Belgium in Q2. As a result, close to 215,000 sq m of take-up is already recorded, which is impressive regarding the unprecedented economic climate. More than 400 deals are observed since the start of the year, which demonstrates retailers’ willingness to continue their expansion and confirms their confidence on the Belgian retail market.
Out of Town Retail continues to record robust performances, driven by new retail parks
TAKE-UP BY QUARTER (000s sq m) 45 0 40 0 35 0 30 0 25 0 20 0 15 0 10 0 50 0
Following a historically high Q1, Out of Town retail continues to record robust activity with more than 140,000 sq m of take-up observed since the beginning of the year. This represents 65% of the total letting activity. The presence of essential shops (supermarkets, food stores, but also DIY and garden centres) obviously boosted these performances, next to a strong activity of discounters such as Action. But these performances are also due to the recent activity observed in brand-new retail parks such as Malinas, La Couvinoise or La Paranthèse.
20 15
20 16
20 17 Q1
20 18 Q2
Q3
20 19
20 20
20 21
20 20
20 21
Q4
TAKE-UP BY SEGMENT (000s sq m)
Year-to-date, 44,000 sq m of take-up is recorded in the High Street segment (176 deals). This is slightly below average though on a rise compared to the year 2020. If footfall are still slightly below average as well, clients are coming back to city centres to enjoy and experience new retail formats or retail concepts which are emerging. Shopping centres’ activity currently stand at 30,000 sq m, mainly driven by F&B expansions and new leisure concepts. These recent expansions will also contribute to balance the commercial mix and reposition recent (or refurbished) shopping centres as a destination shopping. Clients will favour these destinations to benefit from leisure facilities to enjoy a “day-off”.
Footfall still below average, though on a positive evolution After following lockdowns and containment measures where footfall dropped dramatically, we observe a continuous upward trend since November 2020. Year-to-date, footfall are globally 10% below average levels (some streets or areas are more impacted than others however). Cross-borders figures show postive trends, as in the UK for example, we assisted to a massive come back in the city centre when lockdown ended. In Belgium, we should also see this evolution with positive trend and a willingness to come back to physical shop in the coming months.
45 0 40 0 35 0 30 0 25 0 20 0 15 0 10 0 50 0 20 15
20 16 Out o f Town
20 17
20 18
Hi gh Street
20 19
Sho ppi ng Ce ntre
M A R K E T B E AT
BELGIUM Retail Q2 2021
Prime rental levels have all been impacted by the COVID-19 crisis. However, the evolution is different depending on the segment concerned. For the High Streets segment, the COVID-19 outbreak reinforced the previous correction with successive decreases observed. Prime rents for the High Street segment stand currently at 1,600 EUR/sq m/year. According to our forecasts, they should record a new slight decrease in 2021 to reach 1,550 EUR/sq m/year. However, this decrease is expected to remain temporary as new rental growths are forecasted as from 2023. In the Shopping Centre segment, prime rents remained stable since March 2020 at 1,150 EUR/sq m/year. A second downward movement is expected in the second half of 2021. Slight increase are foreseen as from 2023. Conversely to the High Street and Shopping Centre, prime rents are more stable in the Out of Town segment. They currently stand at 160 EUR/sq m/year and are expected to remain stable all along 2021 and 2022. They should increase as from 2023, confirming the good health of the market segment as observed in take-up figures.
Less online retail sales, though more frequent purchases According to latest available figures, more than EUR 10bn of online retail sales have been recorded in Belgium in 2020, a 10% decrease compared to 2019. If less important in terms of volumes, probably as a result of economic recession and depressed consumers’ confidence, the latest report also confirms that online purchases are more frequent. On average, 15 purchases are made online for an average basket of 81 EUR (compared to 102 EUR in 2019). Furthermore, 200,000 people made their first online purchase in 2020 and it is quite clear that they will continue to do so in the coming months and years. According to our retailers’ survey done in May 2021, turnover in physical sotre were 20% below the 2019 level while online purchase record an increase. And retailers think that turnover will be on the rise in 2021 and 2022, driven both by online and offline sales. These figures and trends confirm once more that an omnichannel strategy will be key for the success of retailers in a new retail era.
PRIME RENT BY SECTOR (EUR/SQ M/YEAR) 22 50 20 00 17 50 15 00 12 50 10 00 75 0 50 0 25 0 0
25 0 23 0 21 0 19 0 17 0 15 0 13 0
20 15 20 16 20 17 20 18 20 19 Q 1 20 Q 2 20 Q 3 20 Q 4 20 Q En 1 2 d- 1 20 21 20 22 20 23 20 24 20 25
Prime rents negatively impacted in the short term, though the outlook is positive.
Hi gh Street
Sho ppi ng Ce ntre
Out o f Town R etail
Note: High Street and Shopping Centre are to be read on the left axis, OOTR on the right-hand axis
ONLINE RETAIL SALES, in EUR bn 12 10 8 6 4 2 0 20 15
20 16
Source: Statista.com
20 17
20 18
20 19
20 20
M A R K E T B E AT
BELGIUM Retail Q2 2021 Low volumes recorded on the retail investment market Conversely to the occupational market which is currently booming, activity on the investment market is at low level in H1 2021. Invested volumes stand around 170 MEUR year-to-date, far below average levels. In this unprecedented context, investors are adopting a more cautious approach as far as their investment strategy is concerned. Indeed, according to our latest survey (68 investors surveyed), only 37% of investors are still actively analysing retail opportunities, the remaining part is rather on a wait-and-see attitude or adopt an opportunisitc approach. Next to the mitigated market sentiment, investors believe there is a lack of interesting opportunities on the market which, combined with more difficult financing conditions, negatively impact the investment market.
INVESTMENT VOLUME BY SEGMENT (in MEUR) 2 500 2 000 1 500 1 000 50 0 0
Investment volumes so far demonstrate the regearing of investors towards Out of Town as in contrast to High Streets and Shopping Centres, which observed mixed performances, the Out of Town retail market is going full steam ahead, which is having a positive effect on the investment market. Investors are showing a growing interest in retail parks – especially when they include a food retailer.
20 15
20 16
20 17
Out o f Town
20 18
Hi gh Street
20 19
20 20
H1 2 1
Sho ppi ng Ce ntre
PRIME YIELD BY SEGMENT
Investors revise their pricing expectations, with an impact on prime yields. 7%
Prime yields in the High Street and Shopping Centres did not change in Q2, standing respectively at 4.25% and 4.65%. However, slight upward movement are expected before the end of the year in these two segments where yields should be found at 4.40% and 4.80%, confirming investors’ cautiousness fr these asset classes.
Investors revise their pricing expectations, with an impact on prime yields. Despite this mitigated image on the retail investment market, 85% of respondents to our investors’ survey are still willing to invest in retail in the coming months, especially in the best High Streets of the country, in convenience stores or in mixed-use properties. As good investment opportunities still exist, investment activity could peak up before year-end.
6% 5% 4% 3% 2% 1% 0% -1% 20 15 20 16 20 17 20 18 20 19 Q 1 20 Q 2 20 Q 3 20 Q 4 20 Q 1 2 En 1 d21 20 22 20 23 20 24 20 25
The Out of Town segment observed a slight correction in its prime yield, passing from 5.25% to 5.60% in Q1. No further changes are expected in this segment for the coming months and years as activity is at high level and investors are more and more focusing on this asset class. However, the sharpest yield observed in the Out of Town segment, when a food retailer is present, they are rather close to 5% (or even just below 5% in some specific cases).
Out o f Town Sho ppi ng Ce ntre
Hi gh Street 10 y. Bon d Yiel ds
M A R K E T B E AT
BELGIUM Retail Q2 2021 The physical retail is set to stay, though in very different formats. According to our latest retailers’ survey (79 respondents), 54% of the retailers are on the expansion in the next 12 months. Key factors for them are the location, the footfall and the rental levels. As such, the vast majority on expansive retailers focus on the Out of Town segment, followed by the High Street segment. Most of the retailers already had an online point of sales prior to the COVID-19 outbreak but majority of them want to strenghten online sales. An omnichannel strategy will thus be reinforced by most of the retailers in the coming months. As such, the physical retail unit is set to stay, though in very different formats. The physical retail will indeed focus more and more on the clients’ experience while promoting social and environmental concerns, both in the retail unit as well as in the product range. Click & collect, immersive experience, virtual and augmented reality will be a full part of the future retail experience for customers.
Customers’ engagement will change the retail landscape The retail market will be increasingly defined by the customers’ engagement in the coming months and years. Depending on their time, needs, societal concerns, customers will decide to spend a day out to shop / to enjoy leisure or at the other hand of the scale, will decide for a fast pick-up in a convenience store or choose for local shopping. As a consequence, there is a need for the landlord and the retailer to understand the customers’ requirements in the defintion of the retail unit and/or retail concept. In this context, data (namely demographic) is increasingly key in the understanding of the clients.
CEDRIC VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 / cedric.vanmeerbeeck@cushwake.com
cushmanwakefield.com
Food & Beverage sector is in fast expansion The Food & Beverage sector experienced a strong (r-)evolution over these last years, with an important internationalisation (F&B concepts aiming to make discovering new tastes and cultures) and a gourmetisation (willingness to promote something else than just fast food). The recent reopening of cafés & restaurants confirm the willingness of customers to spend sometimes out. As a result, spending on eating out are forecasted to increase by more than 50% by the end of 2026. With this figure in mind, we understand the fast deployment of new concepts, mainly focusing on new casual, healthy and bio concepts.
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.