MARKETBEAT
Q3 2023
MARKETBEAT BELGIUM / Regional Office Q3 2023
134K
YoY Chg
12-Mo. Forecast
Take-up YTD (000s sq m)
180€
YoY Chg
12-Mo. Forecast
Prime rent (EUR/sq m/year)
6.50%
YoY Chg
12-Mo. Forecast
Prime yield (%, 3/6/9 lease)
A slow ride in 2023 and early 2024 Given the global economic condition, Belgium’s economy is in for a slow ride for 2023 and early 2024. A range of factors, including high core prices, tighter borrowing conditions, still-low consumer sentiment, and business competitiveness weigh and will continue to weigh on growth. The GDP experienced a modest 0.1% quarter-on-quarter growth, and the projected annualized growth is estimated at 0.91%. The Belgian economy is anticipated to undergo a gradual expansion, with a projected GDP growth of approximately 1.7% in 2024 and exceeding 2.5% in 2025. Nevertheless, there is a higher-than-anticipated public deficit in Belgium, amounting to an additional EUR 1.2 billion in 2024. Given the recent surge in interest rates and the upcoming 2024 elections, this deficit could potentially impede the Belgian recovery. Without a doubt, inflation has been the most significant driver of economic conditions. After reaching a peak of 12% last year, the ECB has had to persist in tightening its policy. In September, the ECB implemented its tenth consecutive rate hike, bringing rates to 4.5%, marking the highest level since euro launch. As a consequence, Belgium’s inflation rate took several steps back in the past months. As of September, the consumer price index decelerates from 4.09% to 2.39% in September, this is the lowest level since July 2021. Meanwhile, in 2023, the unemployment rate remains under 6%, but it is projected to rise to 7% by the close of 2024, and further to 7.2% in 2025. From the start of 2023, business courts have declared 7,163 bankruptcies, marking a 9.5% increase compared to the corresponding period last year, albeit 5.3% lower than in 2019. Job losses in 2023 have totalled 20,090, reflecting a 30.4% surge from the figures in 2022.
Economic Indicators Q3 2023 YoY Chg
12-Mo. Forecast
0.91%
GDP Growth and unemployment rate
Inflation rate
8%
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2023 GDP Growth
5.90%
2023 Unemployment Rate
4.40%
2023 Consumer Price Index
6% 4% 2% 0% -2% -4% -6%
Sources: Moody’s Analytics, BNB, Eurostat, Federal Planning Bureau, September 2023 Please note the economic data can vary significantly from one source to the other. Therefore, the figures provided should merely be used as an indication or trend.
20 18
20 19
20 20 GDP Gro wth
20 21
20 22
20 23
20 24
Un empl oymen t Ra te
20 25
2018
2019
2020
2021
2022
2023
2024
2025
MARKETBEAT BELGIUM / Regional Office Q3 2023
Challenges persist in Flemish occupier market Following a relatively subdued first half of the year in terms of demand, the Flemish occupier market continued in a similar vein with a lacklustre performance in the third quarter. Take-up amounted to just over 40,000 sq m in Q3, bringing the year-to-date total to 134,000 sq m. Nonetheless, there were noteworthy transactions in this quarter, including the lease of 8,440 sq m of space at Delaware in the new Upoffiz project in Ghent, as well as the acquisition of 5,300 sq m at LIGO in Antwerp for owner-occupation. Even with these two transactions, which are the largest of the year, demand remains below average, experiencing a 20% decline compared to the five-year average.
Increased deliveries anticipated in the coming years Following a dynamic first half, which witnessed the introduction of 30,000 sq m of new office space, the momentum continued in the third quarter with an additional 10,000 sq m. The fourth and concluding quarter is poised to maintain this high level of activity, with an estimated 60,000 sq m of new projects slated for completion, including various speculative developments. The commercialisation of projects such as Upoffiz in Ghent is bolstering the demand in Flanders, which has been relatively modest. The forthcoming years, marked by a surge in deliveries, are expected to stimulate an uptick in take-up in Flanders.
Flanders take-up per district (000s sq m) 350 300 250 200 150 100 50 20 18
20 19
20 20
Antwe rp
Ghen t
Prime rents are poised to keep climbing in the upcoming months, potentially reaching 185€/sq m/year as the new prime rent for the Antwerp office market by the close of 2024. Other markets should follow a similar trend, with prime rents expected to rise.
20 23
Mech ele n
120 100 80 60 40 20 -
ESG continue to exert upward pressure on prime rents
Despite a decrease in activity, prime rents have remained on an upward trajectory. This particular transaction underscores the growing significance of ESG factors in shaping the future of corporate office spaces.
Le uven
20 22
Flanders pipeline (000s sq m)
20 23
Although prime rents have held steady in the majority of submarkets, there has been a significant uptick in Antwerp. Notably, Q8 has recently secured a lease for 3,500 sq m in Intervest's new Greenhouse development.
20 21
Bui lt
20 24 Antwe rp
Ghen t
20 25 Le uven
20 26 Mech ele n
Flanders rents (EUR/sq m/year) € 200 € 180 € 160 € 140 € 120 € 100
20 18 Antwe rp Mech ele n
20 19
20 20 20 21 Ghen t Flan ders avg .
20 22
20 23 Le uven
MARKETBEAT BELGIUM / Regional Office Q3 2023
A year of subdued activity in Wallonia Following an exceptionally subdued first half of the year on the occupational market, marking the lowest demand in 20 years, the third quarter maintained a similar trend with a recorded take-up of 8,361 sq m across eight transactions. This brings the total take-up in Wallonia to 13,479 sq m. Examining the transactions in detail, it becomes evident that the market's demand is being chiefly steered by the public sector. Notably, the two most substantial transactions of the quarter, accounting for 70% of the demand, were orchestrated by public sector entities. Specifically, the federal police have recently finalized a lease agreement for 3,500 sq m in Tour Paradis in Liège, while the SPGE has acquired 2,317 sq m in Namur Office Park for its own operational needs. Charleroi stands out as the market experiencing the most pronounced impact from this reduced activity, with only one transaction recorded this year. This was Acerta, which let 635 sq m in Parc d’affaires Espace Sud.
A year of deliveries in Wallonia’s office landscape Following a dynamic first half of the year in terms of new office space additions, with a substantial 20,000 sq m delivered, the third quarter continued this trend, contributing an additional 30,000 sq m. The fourth and final quarter is anticipated to be equally bustling in terms of activity, with a projected 80,000 sq m of new projects set to be completed, encompassing various speculative deliveries. Notable among these are Legia Park B, a 14,000 sq m project in Liège, and AXS Namur, a 39,000 sq m project in Namur.
Reduced activity hampers prime rents growth The reduced activity in Wallonia is also influencing rental growth. Despite the significant surface area delivered this year, the prevailing cautious sentiment on the occupational market is impeding rental growth observed in other regions of the country. The highest prime rents can be found in Liège and Namur, both at 160€/sq m/year, while Charleroi maintains a steady prime rent of 145€/sq m/year. Average rents have likewise remained consistent at 131€/sq m/year, which can be attributed, in part, to the subdued activity.
Wallonia take-up per district (000s sq m) 140 120 100 80 60 40 20 20 18
20 19
20 20
Li ège
20 21
Na mur
20 22
20 23
Ch arle roi
Wallonia pipeline (000s sq m) 160 140 120 100 80 60 40 20 20 23
20 24 Bui lt
20 25 Li ège
Na mur
20 26
20 27
Ch arle roi
Wallonia rents (EUR/sq m/year) € 170 € 160 € 150 € 140 € 130 € 120 € 110 € 100
20 18 Li ège
20 19 Na mur
20 20
20 21 Ch arle roi
20 22
20 23 Wall oni a avg.
MARKETBEAT BELGIUM / Regional Office Q3 2023
The end of interest rate hikes? As time passes, the European Central Bank persistently raises interest rates. With the tenth consecutive hike this quarter, ECB interest rates have now reached 4.5%, marking their highest point since the introduction of the euro. Consequently, prime yields have once more been adjusted upward, and it is projected that by the end of Q3, they theoretically stand at 6.50% in Flanders and 7.50% in Wallonia for standard leases. Yet, as Christine Lagarde, President of the ECB, asserts, ECB interest rates have reached levels that will make ‘a substantial contribution to the rapid return of inflation to the target’, this may be the peak for rates in drive to bring down stubborn inflation. Consequently, prime yields might experience further ascension in the upcoming months, but it is anticipated that a plateau will be reached in 2024.
Resilience in the investment market Amid challenging conditions, the investment market maintained its activity levels throughout the summer. The third quarter witnessed a notable surge, with an increase of almost 150 MEUR. Despite prime yields continuing their upward trajectory, a significant transaction, Reactr's acquisition of Blue Towers in Ghent for 85 MEUR, marked a record amount for the year. While overall volumes remain somewhat subdued, there are several deals in the pipeline, potentially leading to a 400 MEUR surge in investment volumes. These include the sales of the Brody and QRS portfolios, as well as Intervest, among others.
Prime yields 8.00 % 7.00 % 6.00 % 5.00 % 4.00 % 3.00 % 20 18
20 19
20 20
20 21
Flan ders
20 22
Q3 23
Wall oni a
Annual investment volumes (MEUR) 70 0
12
60 0
10
50 0
8
40 0
6
30 0
4
20 0
2
10 0 0
0 20 18
20 19 Flan ders
20 20
20 21
20 22
Wall oni a
20 23
# of dea ls
Glide path to clearer skies After the ECB's latest interest rate hike in September, marking one in a series of increases, the correction in CRE, which started in mid-2022, persists. According to Cushman & Wakefield’s forecasting, the European Central Bank (ECB) will pause after the recent hike, bringing it to 4.5% in the September 2023 meeting. The increases in interest rates and ongoing credit tightening is expected to be sufficient to slow the economy and bring inflation back to target, allowing both the ECB and the National Bank of Belgium (NBB) to pivot in Q3 2024. Simultaneously, commercial property values are predicted to decline further, ultimately experiencing a total peak-to-trough decrease of 25-35% by mid-2024.
Office property index value 12 0 10 0 80 60 40 20 0 20 21
20 22 Base lin e
20 23 Up side
20 24
20 25 Do wnsi de
MARKETBEAT BELGIUM / Regional Office Q3 2023 Market Statistics REGION
Flanders
Wallonia
MARKET
STOCK (SQ M)
AVAILABILITY (SQ M)
VACANCY RATE
Q3 2023 TAKE-UP (SQ M)
TAKE-UP YTD (SQ M)
UNDER CONSTRUCTION (SQ M)
PRIME RENT (€/sq m/year)
PRIME YIELD
Antwerp
2,342,662
123,261
5.26%
20,608
57,017
72,017
180
6.50%
Ghent
1,094,997
37,496
3.42%
14,279
30,510
86,589
170
6.50%
Leuven
574,715
19,276
3.35%
1,405
5,514
55,900
155
7.25%
Mechelen
283,688
n.a.
n.a.
6,242
10,215
32,600
160
7.25%
Liège
567,883
13,459
2.37%
5,175
9,183
35,740
160
7.50%
Namur
549,598
11,833
2.15%
3,186
3,661
95,762
160
7.50%
Charleroi
499,580
8,560
1.71%
-
635
58,000
145
7.75%
Key Lease Transactions Q3 2023 PROPERTY
MARKET
TENANT
SQ M
TYPE
UPOFFIZ
Ghent
Delaware
8,440
Letting
Stuivenbergplein
Antwerp
LIGO
5,300
Purchase
Greenhouse Collection
Antwerp
Q8
3,573
Letting
Tour Paradis
Liège
Police Judiciaire Fédérale
3,500
Letting
The Sage
Antwerp
Eriks
2,519
Letting
BUYER / SELLER
VOLUME (MEUR)
YIELD
Key Investment Transactions Q3 2023 PROPERTY
MARKET
Blue Towers
Ghent
Reactr / Ghelamco
85
8.00%
Eiermarkt building
Antwerp
Katoen Natie / SFPD
45
-
Benjamin DEVIE Research Analyst | Belgium & Luxembourg +32 492 11 35 10 benjamin.devie@cushwake.com Cédric VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 cedric.vanmeerbeeck@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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