M A R K E T B E AT
BELGIUM Retail Q3 2020 YoY Chg
12-Mo. Forecast
201,000sq m 2020 YTD take-up
1,600 €/sq m/y.
ECONOMY: Recent evolutions of the pandemic could worsen the economic climate Economic data suggest the Belgian economy will be severely hit in 2020 with a GDP decline around 7.8%. The economy is expected to rebound in 2021 with an economic growth of 5.6%, though risks and uncertainties on the downside remain high due to the current evolution of the sanitary crisis. Concerns about unemployment remain high while consumer confidence is at its lowest level over the last two years, putting pressure on consumer spending. In this context, total retail spending are set to decrease in 2020 compared to 2019 with a direct impact on the turnovers of retailers. And the recent evolution of the COVID-19 crisis with a strong increase of cases observed across Belgium will undoubtedly have a negative impact on the economy.
High Street Prime Rent
LETTING MARKET: Rental corrections continue as the activity is on the downside
4.00% High Street Prime Yield Source: Cushman & Wakefield
BELGIAN ECONOMIC INDICATORS Q3 2020 YoY Chg
12-Mo. Forecast
-7.8% GDP Growth
Year-to-date, roughly 201,000 sq m of take-up is recorded on the Belgian retail market, a 15% decrease compared to the same period last year. Main streets and shopping centres suffer more than the out-of-town retail though encouraging signs are currently observed with footfalls on a continuous upward since the end of the lockdown. However, they are still below last year levels and important disparities exist between cities and/or shopping centres. Fashion sector is more impacted than the others. Actually, we observe a rise in the sports & leisure segment as well as in the food sector. But more than ever, the retail sector is a question of knowledge and specificities. As examples, Uniqlo just opened in September its second flagship store on the Porte de Namur during the pandemic while Coolblue decided earlier this year to open a physical store on the avenue Louise. Prime rents recorded a new 5 to 10% decrease during Q3 all across Belgium in the high streets sector, standing at 1,600 €/sq m/year both for the Meir and Rue Neuve (but all the Belgian high streets are impacted). After the decreases observed in Q2, shopping centres and out of town prime rents remain stable, respectively at 1,150 € and 160 €/sq m/year. However, these global trends hide important disparities as depending on the locations, the surfaces, the retail segments and other factors, rental levels can dive by 30% to 50% compared to 3 years ago. PRIME RENTS (EUR/ SQ M / YEAR
INVESTMENT (MEUR, LHS) AND PRIME YIELDS (%, RHS)
0.8% Consumer Price Index (% change) Source: Oxford Economics, Eurostat, Federal Planning Bureau
2200
2.500
250
2.000
230
1800
7,0% 6,5%
2000
6,0% 5,5%
1600 210
1400 1200
190
1000 800
170
600
Out of Town retail
Unemployment rate
Main streets and Shopping Centre
6.1%
1.500
5,0% 4,5%
1.000
4,0% 3,5%
500
3,0% 0
400
2,5%
150
200 0
130
Main streets
Shopping centre
Out of Town Retail
Investment volumes
High street
Shopping centre
Out of Town
M A R K E T B E AT
BELGIUM Retail Q3 2020 INVESTMENT MARKET: Lower investment volumes and yields on the upward Year-to-date, around 450 MEUR have been invested on the Belgian retail market. This is 25% below the same period last year. The most important deals of the quarter are the acquisition by Union Investment of the Primark store along the chaussée d’Ixelles in Brussels for 40 MEUR and the purchase of the Shopping Flemalle by Pertinea for 30 MEUR. Even if investors are more and more cautious for bigger volumes and shopping centres investment files, the retail investment market remains active when convenience stores, mixed-use projects and smaller volumes are concerned. However, prime yields increased in the high streets and shopping centres segment, respectively standing at 4% and 4.4% at the of Q3 as a result of growing concerns about vacancy rates, lower footfall and activity and decline in rental perspectives. Conversely, prime yields are staying stable in the out of town retail at 5.25%.
OUTLOOK: More than ever, retail will be a question of location, flexibility, market knowledge and omnichannel strategies The COVID-19 crisis accelerate the reshaping of the retail industry. The growing shift towards online retail, changing consumers’ patterns, demographic shifts… are constraining retailers to better understand their customers, to reinvent themselves and to develop omni-channel strategies. However, the physical store is set to survive as it is part of consumers’ engagement and online sales are just a complement to a physical store.
CEDRIC VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 / cedric.vanmeerbeeck@cushwake.com
In the medium-term, retailers will namely need to embrace environmental considerations (both in their products and the shaping of their stores) and new technologies to adapt to the new generations. On the other side, investors could probably propose more flexibility in their lease contracts or spaces to adapt to a new normality. If we forecast further slight decrease of the rents and rise of the yields in the coming months, this situation is not to stay as the market should recover gradually as from the beginning of 2022.
cushmanwakefield.com
MARKET STATISTICS Q3 2020 SUBMARKET
PRIME RENT (EUR/SQ M/YEAR)
PRIME YIELD (%)
HIGH STREET
1,600
4.00%
160
5.25%
1,150
4.40%
OUT OF TOWN RETAIL SHOPPING CENTRE
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.