M A R K E T B E AT
BRUSSELS Office Q4 2020 ECONOMY: Belgian economy severely hit in 2020. A rebound is still foreseen in 2021. YoY Chg
12-Mo. Forecast
264,000 2020 Take-Up (sq m)
2020 was an extraordinary year in every respect. The global pandemic caused by COVID-19 had a significant impact on the global and local economy, affecting all sectors of activity. Lockdown, mandatory teleworking, and repeated closures of shops and restaurants were amongst the keyword of 2020. Rising unemployment, decrease in business and consumers’ confidence are observed. The impacts on the various players and sectors of the real estate industry have been manifold and will contribute to reshape the office landscape in 2021 and after.
LETTING MARKET: The worst year over the last 20 years. With only 60,000 sq m of take-up recorded in Q4, the year 2020 post a total activity of 264,000 sq m, the lowest level observed over the last 20 years. This quarter, activity was driven by the 8,000 sq m letting of WPP Group Services in the Victoria Regina Tower, the 7,900 sq m letting of Bruxelles-Fomation in the Gare Maritime or the relocation of Puilaetco in the Souverain 23-25. This iconic mixed-use redevelopment attracted its first tenant, confirming the willingness of tenants to (re-)locate in qualitative buildings, offering a multitude of complementary services to the office. Despite this low level of activity, prime rents remain very stable in the Leopold district at 320€/sq m/year and experienced increases in several other districts, namely the Louise and the North areas, respectively at 275€ and 250€/sq m/year. Further increases are expected in some districts in 2021 though the prime rents in the Leopold should remain at 320€/sq m/year. Vacancy rate hit a historically low 7.2% at the end of Q3 and remained at this level in Q4. Situation should worsen in 2021 and 2022 as close to 200,000 sq m of speculative surfaces are expected to enter the market. Complementary, we observe a growing share of grey spaces entering the market as tenants tend to decrease their occupied spaces and could have some difficulties to fins subtenants in a challenging market.
7.19% Vacancy Rate
€320
Prime rent (€/sq m/year)
4.00% Prime yield
INVESTMENT MARKET: More than EUR 3.5bn invested, a new record for the Brussels office market . ECONOMIC INDICATORS Q4 2020 YoY Chg
12-Mo. Forecast
-6.7% GDP Growth Belgium
5.6% Unemployment Rate Belgium
0.4% Consumer Price Index (% change)
A high 770 MEUR were invested in Brussels in Q4, bringing the total of the year to an historic EUR 3.5bn, thanks to remarkable transactions all over the year. In Q4, the most significant deals were the purchase of the Euroclear headquarter in the North district for around 170 MEUR, the acquisition of the headquarter of Total along the rue de la Loi or the acquisition of the First in the Leopold district. This forward-funding transaction is to be pointed out as the yield is close to 3.6%. Appetite for office investments is still strong. However, the pandemic and the subsequent economic turmoil, contribute to a shift of investors’ focus and cautiousness. Core products in CBD locations where prime yields are and will remain at historically low levels in the coming months. The LT prime yield is still found at 3.50%.
OUTLOOK: Towards a reshaping of the office market. The pandemic has caused a dramatic change in our structures and the way they operate. Working from home has risen sharply and, according to our latest international reports. Overall, hybrid working (in which the employee works part of the time in the office and the other part from home or some other location) is set to more than double in the years ahead. In Belgium, over 55% of employees expect to see the way they work become more flexible2. The office market is entering a new age that will see big changes to the way offices are used, the workplace will become more important for creativity and innovation, collaboration and corporate culture. While the actual impact is difficult to estimate accurately in terms of figures, for Brussels take-up is likely to decrease in the years ahead and stabilise at around the 300,000 to 320,000 sq m mark, on average, rather than the 400,000 sq m recorded annually over the past 5 to 10 years.
QUARTERLY TAKE-UP (in 000 SQ M)
INVESTMENT VOLUME (MEUR, LHS) AND PRIME YIELD (RHS)
600
4.000
6,50% 6,00%
500 3.000
5,50%
400 Source: NationalBank of Belgium, December 2020 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.
5,00%
2.000
300
4,50%
200
4,00%
1.000 100
3,50% 0
0 2010
2011
2012
2013 Q1
2014 Q2
2015 Q3
2016
2017
Q4
2018
2019
2020
3,00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Volume
Prime Yield
M A R K E T B E AT
BRUSSELS Office Q4 2020 MARKET STATISTICS 2021-2022 UNDER CONSTRUCTION (SQM)
PRIME RENT (€/sq m/year)
PRIME YIELD
101,000
44,000
€320
4.00%
15,000
172,000
€250
4.10%
17,000
23,000
120,000
€250
5.00%
4.6%
2,000
18,000
-
€275
4.25%
26,000
4.1%
-
4,000
5,000
€195
5.50%
2,632,000
296,000
11.3%
9,000
33,000
-
€175
6.50%
2,117,000
351,000
16.6%
20,000
70,000
106,000
€175
6.50%
13,545,000
974,000
7.19%
60,000
264,000
447,000
€320
4.00%
INVENTORY (SQM)
AVAILABILITY (SQM)
VACANCY RATE
Q4 2020 TAKE-UP
TAKE-UP 2020
Brussels (Leopold)
3,365,000
105,000
3.1%
8,000
Brussels (Centre)
2,378,000
80,000
3.3%
4,000
Brussels (North)
1,562,000
76,000
4.8%
Brussels (Louise)
876,000
40,000
Brussels (Midi)
615,000
Brussels (Decentralised) Brussels (Periphery)
SUBMARKET
Brussels (Overall)
KEY LEASE TRANSACTIONS Q4 2020 PROPERTY
SUBMARKET
TENANT
SQ M
TYPE
Victoria Regina Tower
North
WPP Group Services
8,200
Pre-letting
Gare Maritime – Tour & Taxis
North
Bruxelles-Formation
7,900
Letting
Excelsiorlaan 44-46
Airport
Digital Office Centre
6,000
Purchase
Souverain 23-25
South
Puilaetco Deway
4,500
Pre-letting
Industrielaan 4
Ring
Puratos
2,800
Purchase
CÉDRIC VAN MEERBEECK Head of Research and Marketing | Belgium & Luxembourg +32 477 98 11 83 cedric.vanmeerbeeck@cushwake.com
*Renewals not included in leasing statistics
KEY INVESTMENT TRANSACTIONS Q4 2020 PROPERTY Cabesa (Euroclear HQ)
cushmanwakefield.com
SUBMARKET
SELLER / BUYER
Volume (in MEUR)
Yield
North
AXA IM / Savills Investment Management
173
N/A
Total Headquarter
Leopold
Petrofina / Immobel
115
N/A
Portfolio
Leopold
Befimmo / Swiss Life Asset Management
108
4.60%
North
Intégrale / Cofinimmo
100
4.00%
Toaster | IBGE Headquarter
KEY CONSTRUCTION COMPLETIONS 2020 PROPERTY
SUBMARKET
MAJOR TENANTS
SQ M
Mobius I (Allianz Tower)
North
Allianz
26,000
Allianz / Immobel
Manhattan Center
North
Spaces, Baker Mckenzie, Yara
41,000
Victory Advisors
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 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.
OWNER / DEVELOPER
Gare Maritime
North
Bruxelles-Formation, Accenture…
45,000
Extensa Group
Tweed
Centre
DLA Piper, Fiscalité.Brussels, Spaces…
16,000
AG Real Estate / Macan
©2020 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.