BRUSSELS / Office Q2 2023

Abundance of projects with significant pre-let occupancy

By the mid-year mark, no less than 55,000 sq m of (re-)developed office space had been delivered on the Brussels market, including Royale Belge and Science 12, two projects that have already achieved pre-let transactions at record rents. Furthermore, more than 87,000 sq m are expected to be delivered by the end of the year.

In the medium term, more than 370,000 sq m are currently under construction and should be entering the market, with more than half being already pre-let. Tenants are in strong demand for new buildings as energy and environment requirements become more stringent.

On the other hand, in an uncertain context, tenants are also renegotiating their leases and adopting a wait-and-see attitude. As a result, we could observe a longer commercialisation process for ongoing projects with a potential negative impact on the vacancy rate.

An ever-lower vacancy rate

Despite the steady increase in developments, the vacancy rate continued to fall in the second quarter of the year, reaching a new threshold of 7.3%. The ongoing decreasing vacancy is mainly by a high number of residential conversion projects

The vacancy rate remained stable in all districts, except for the Periphery. Indeed, the various districts have witnessed a significant drop in vacancy as a result of the high level of activity.

Although a considerable number of projects are expected to enter the market empty in the near future, the vacancy rate will likely remain stable or slightly grow as demand for ESG buildings continues to surpass supply.

Growing trend of conversions

The decrease in vacancy is mostly due to the significant number of conversion projects. Indeed, more than twenty buildings totalling over 200,000 sq m of office space have been pulled out of stock and are now being converted into residential space due to more stringed energy regulations.

At the same time, there are redevelopment projects with mixed-use concepts, such as retail and residential accommodation. A noteworthy example is the rehabilitation of the European Commission's office portfolio, which, in addition to renovating office spaces, should result in the construction of 650 residences in the Leopold district.