M A R K E T B E AT
BELGIUM Retail Q3 2021 YoY Chg
12-Mo. Forecast
Belgian economy should continue to recover in 2022
342,000 sq m
The economic growth is expected is set to rise to 5.54% this year, which means that the GDP will be around pre-crisis levels at the end of 2021. Economic growth should stabilise to 2.64% in 2022 and 2.85% in 2023.
1,550 €/sq m/y.
Unemployment rate is forecasted at 6.17% this year and should stabilise around 5.75% in 2022 and 2023. It is expected that a lot of temporarily unemployed people will resume work in the coming months 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.
2021 YTD Take-up
High Street Prime Rent
4.35%
Core in flation in Belgium is projected at 1.68% in 2021, with further decrease to 1.12% in 2022 and 0.70% in 2023.
High Street Prime Yield Source: Cushman & Wakefield
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.
BELGIAN ECONOMIC INDICATORS 2021 FORECASTS YoY Chg
5.54%
12-Mo. Forecast
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). Consumers are more confident regarding Belgian economic perspectives and the evolution on the employment market. Savings are at historically high and could then benefit to the retail sector in the coming months. Household are also confident regarding their own financial conditions with a potential positive impact on the retail sales.
2021 GDP Growth GDP GROWTH AND UNEMPLOYMENT RATE
6%
15
4%
10
2%
5
0%
0 -5
-2%
-10
-4%
-15
-6%
-20
-8% 20 17
20 18
20 19
20 20
20 21
20 22
20 23
-25 09-21
01-21
05-21
09-20
01-20
05-20
09-19
01-19
05-19
09-18
01-18
05-18
Un empl oymen t Ra te
09-17
GDP Gro wth
01-17
-30 05-17
20 16
09-16
20 15
01-16
Source: Moody’s Analytics, September 2021
20
05-16
Consumer Price Index
25
8%
09-15
1.68%
10 %
01-15
Unemployment rate
05-15
6.17%
CONSUMERS’ CONFIDENCE INDEX
M A R K E T B E AT
BELGIUM Retail Q3 2021 The occupational market to a record year. Despite challenges, the retail occupational market is still at full speed with a robust Q3. Indeed, 110,000 sq m of take-up has been recorded, setting the total for 2021 to an impressive 342,000 sq m despite the unprecedented economic climate. Close to 680 deals are observed since the start of the year, which demonstrates retailers’ willingness to continue their expansion. There is no doubt that 2021 will outperform 2020 and could even be the best year ever recorded in terms of take-up.
TAKE-UP BY QUARTER (000s sq m) 45 0 40 0 35 0 30 0 25 0 20 0 15 0 10 0
Robust activity recorded in every market segment, Out of Town set to new ecord in 2021.
50 0 20 15
Out of Town retail continues to record robust activity with more than 224,000 sq m of take-up observed since the beginning of the year which is already the second best year ever. This represents 65% of the total letting activity. More than 220 deals contribute to these performances. Year-to-date, 72,000 sq m of take-up is recorded in the High Street segment (313 deals). Even if still below average, we feel an exponential recovery in the High Streets segment, thanks to Food & Beverage operators willing to continue their expansion. 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”.
20 16
20 17 Q1
In 2021 so far, Flanders records a strong activity (210,000 sq m of take-up), one of the best level since 2017. 2021 should be the best year of the decade for the retail market in Flanders. Several drivers could explain this trend, namely the opening of recent schemes such as Malinas but this could also be linked to a better vaccination rate observed in Flanders than in the two other regions of the country. At the end of Q3, discussions about the implementation of a COVID Safe Ticket in Brussels and Wallonia were not ended yet. Depending on the constraints imposed and/or the sectors concernet, this could weigh on the footfall and attractivity of some cities or Regions and favour a more robust activity in Flanders.
20 19 Q4
20 20
20 21
20 20
21 YTD
TAKE-UP BY SEGMENT (000s sq m) 45 0 40 0 35 0 30 0 25 0 20 0 15 0 10 0 50 0 20 15
20 16
20 17
Out o f Town
Flanders performing better, probably as a result of a better vaccination rate
20 18 Q2 Q3
20 18
Hi gh Street
20 19
Sho ppi ng Ce ntre
TAKE-UP BY REGION (000s sq m) 10 0% 80 % 60 % 40 % 20 % 0% 20 15
20 16
20 17
Brusse ls
20 18 Flan ders
20 19 Wall oni a
20 20
21 YTD
M A R K E T B E AT
BELGIUM Retail Q3 2021 Footfall evolutions show positive signs of recovery. According to information collected by our partner MyTraffic, footfall across regions are witnessing a positive recovery since the ease of containment measures in April 2021. However, different evolutions are observed in Brussels than in Wallonia and Flanders. Indeed, according to latest figures available, footfall in Flanders and in Wallonia isaround 80% of the pre-COVID levels while footfall in Brussels is still 50 to 60% lower.
FOOTFALL INDEX (Base = 100 in January 2020) 12 0 10 0 80 60 40 20 0 20 2 20 0-0 2 1 20 0-0 2 2 20 0-0 2 3 20 0-0 2 4 20 0-0 2 5 20 0-0 2 6 20 0-0 2 7 20 0-0 2 8 20 0-0 2 9 20 0-1 2 0 20 0-1 2 1 20 0-1 2 2 20 1-0 2 1 20 1-0 2 2 20 1-0 2 3 20 1-0 2 4 20 1-0 2 5 20 1-0 2 6 20 1-0 2 7 20 1-0 21 8 -0 9
Different policies in the coming weeks and months could have an important impacts n the frequentation of some specific places though this should be only temporary.
New slight decrease of the prime rents in High Streets, though positive outlook expected.
For the High Streets segment, the COVID-19 outbreak reinforced the correction observed since 2017 with successive decreases observed. Prime rents for the High Street segment decreased from 1,600 to 1,550 EUR/sq m/year in Q3. According to our forecasts, they should rise again 2023 to reach their pre-COVID levels i 2024Cor 2025. In the Shopping Centre segment, prime rents remained stable since March 2020 at 1,150 EUR/sq m/year. Stability is expected in the coming months and a slight though continuous increase is also awaited as from mid2022. 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.
Wall oni a
Flan ders
Source: MyTraffic.io
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 1 Q 9 1 20 Q 2 2 Q 0 3 2 Q 0 4 2 Q 0 1 2 Q 1 2 2 Q 1 3 2 Q 1 4 21 20 22 20 23 20 24 20 25
Prime rental levels have all been impacted by the COVID-19 crisis. However, the evolution is different depending on the segment concerned.
Brusse ls
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
M A R K E T B E AT
BELGIUM Retail Q3 2021 225 MEUR invested so far in 2021, record low expected for 2021
INVESTMENT VOLUME BY SEGMENT (in MEUR)
Conversely to the occupational market which is at full speed since January 2021, activity on the investment market remains very low. A low 50 MEUR has been recorded in Q3 2021, bringing the total of the year to a record low 225 MEUR. However, some bigger transactions are still expected to find a positive outcome before year-end, which should give a boost to the retail investment market.
2 500
Investment volumes so far demonstrate the regearing of investors towards Out of Town (140 MEUR invested since January 2021) as in contrast to High Streets (85 MEUR). No Shopping Centres transactions have been observed this year. The Out of Town retail market is going full steam ahead, which is having a positive effect on the investment market while some investment transactions are still recorded in some High Streets of the country (namely in the Steenstraat, the Chaussée d’Ixelles or the Schuttershofstraat).
1 000
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.
2 000 1 500
50 0 0 20 15
20 16 Out o f Town
20 17
20 18
Hi gh Street
20 19
20 20
21 YTD
Sho ppi ng Ce ntre
PRIME YIELD BY SEGMENT 7%
In Q3, a new slight correction of the prime High Street yield has been observed in Belgium, coming from 4.25% to 4.35%. We still forecast further correction towards 4.4% before year-end. In the longer term, prime yield for the High Street segment is expected to remain stable at 4.4%. In the Shopping Centres, prime yields also increased by 10bps, standing currently at 4.75%. Though we lack comparables (no investment transactions recorded since 2020), we foresee a further rise to 4.8% in the short term and a stabilisation at this level for the coming years. Conversely, the Out of Town segment remains stable at 5.60% since 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).
6% 5% 4% 3% 2% 1% 0% -1% 20 15 20 16 20 17 20 18 20 1 Q 9 1 20 Q 2 2 Q 0 3 2 Q 0 4 2 Q 0 1 2 Q 1 2 2 Q 1 2 2 Q 1 3 2 Q 1 4 21 20 22 20 23 20 24 20 25
New slight increase of the prime yields observed in Q3. Further corrections still expected.
Out o f Town
Hi gh Street
Sho ppi ng Ce ntre
10 y. Bon d Yiel ds
M A R K E T B E AT
BELGIUM Retail Q3 2021 New retail in fast expansion, namely thanks to new concepts and newcomers. Changing consumers’ habits, growth of online retail, willingness to do things rather than belong things changed drastically the retail landscape. Since the COVID-19 outbreak, F&B operators are the most active in the letting market, followed by Deco, DIY and Household retaiers. Footwear & leisure industry is also recording strong performances while the Fashion, Health & Beauty and Accessories sectors are witnessing mitigated performances, with brands deciding to reduce their footprint across Belgium. However, in all the retailers’ typology we see numerous newcomers entering Belgium on a proactive and structured way or conversely on a more opportunistic way to test the market. This participates to the strong performances of the letting market in 2021.
EXPANDING AND REDUCING RETAILERS’ TYPOLOGY 0
20
40
60
80
10 0
12 0
F&B Fashi on De co, D IY & Hou seho ld Spo rts, Sportswe ar & L eisu re He alth & Beau ty Sup ermarke t
CEDRIC VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 / cedric.vanmeerbeeck@cushwake.com
Di scoun te r Ele ctro & Tele com Jew elry & Accessori es
cushmanwakefield.com
Digital native brands willing to enter the market. According to latest available figures, online retail sales increased by 7% in 2020 to reach more than EUR 8.8bn. This represents close to 15% of the total retail sales in Belgium. However, our latest figures suggest that digital native brands enter the physical retail market on averag two years after their online opening, with potential positive impact on the take-up. If only 6% of these brands have more than 10 stores, 68% of them have one to two retail units. The most represented sector are fashion, glasses and accessories.
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.
These brands enter the physical retail market to maximise their turnover. These figures and trends confirm once more that an omnichannel strategy will be key for the success of retailers in a new retail era.
©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.