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2022, a year that was anything but normal
After two years of ups and downs, marked by the COVID-19 pandemic in 2020 and booming economic activity following the post-crisis rebound in 2021, one might have expected somewhat 2022 to be a regular year 2022 was an unusual year from every point of view yet
Economic conditions have suffered throughout the year in the aftermath of the conflict in Ukraine. Europe is significantly impacted due to its reliance on energy imports. To fight soaring inflation, the European Central Bank (ECB) have passed successive rate hikes. While GDP held up well this year, price pressures have reached a high and a recession is looming. As a result, GDP growth is expected to drop to 1.1% in 2023. However, we anticipate just a little slowdown because Europe has already managed to reduce Russian gas imports without disrupting activity and is expected to gain from the same post-pandemic improvements Given the lowered prospects of a major recession and sustained inflation, we now anticipate rises until May, with the ECB peaking at 3%.
Despite remaining above the ECB targets, inflation slowed in the last quarter of 2022 as the economy faltered. However, annual inflation has been revised upwards to a new threshold of 9.74%. According to the most recent forecasts, running inflation will continue in 2023, and the market should suffer a mild recession. Inflation level will decelerate to 7.40% in 2023 before broadly closing in on the ECB’s 2% target from 2024.
Despite a mild recession impacting the Belgian economy, the unemployment rate is expected to decline further next year to 5% before increasing again in the following years, according to Moody’s Analytics’ baseline scenario. Significant job growth is projected in the administration, personal services, and industry-R&D sectors during the next couple of years, while the banking, finance, and insurance sectors are expected to employ fewer people.
FLANDERS / Regional Office Q4 2022
Robust take-up with demand for high quality
Despite a minor (5%) decline in the total take-up for Flanders from the previous quarter, demand has continued to outpace the average take-up with 53,000 sq m recorded. The latter takes the total for 2022 in Flanders to 189,000 sq m.
Antwerp led the fourth quarter by witnessing most transactions and contributed to the largest transactions in Flanders In Antwerp, VDAB lets both 9,000 sq m in Copernicus and 2,750 sq m in Campus West. Overall, the public sector reported the largest transactions, but the private sector has remained the dominant power.
The demand for high-quality remains a continuing trend throughout the year. In Q4, more than 40% of take-up took place in Grade A properties. Further increase of future-proof offices will drive the demand and the take-up in Flanders
Outstanding deliveries and a promising pipeline…
More than 100,000 sq m have been delivered so far in the fourth quarter, bringing the total number of deliveries for 2022 to 150,000 sq m. Both the private and public sector benefitted from the multiple deliveries since both recorded strong take-up in 2022.
Over 90,000 sq m were delivered in Antwerp. The largest developments being the Post X (50,000 sq m), the Gerechtshof (23,000 sq m), and the Nationale Bank (6,400 sq m)
In the rest of Flanders, the LTG Building (2,700 sq m) was delivered in Ghent. Mechelen and Leuven witnessed no new deliveries in Q4.
Over 120,000 sq m are expected to be delivered by 2023. Upoffiz in Ghent, Montevideo Westkaai and Blue Gate in Antwerp are one of the key deliveries that are expected for 2023. Besides, the pipeline should be able to meet the demand towards high-quality offices
Prime and average rents increase in Flanders
The delivery of MG Square in Ghent caused the regional office prime rent to rise to EUR 170/sq m/year. The increase is further exacerbated by the demand for high-quality offices and the lack of immediate availability in future-proof developments.
The average weighted rent in Flanders has witnessed a slight increase from EUR 129/sq m/year in 2021 to EUR 132/sq m/year in 2022
Rents, EUR/SQ M/Year
Antwerp Ghent Mechelen Leuven Flanders average
Flanders Take-up Per District, 000s SQ M Flanders Pipeline, 000s SQ M FlandersA quiet year for take-up in Wallonia
The take-up for Wallonia was slightly more than 6,300 sq m in Q4, bringing the total to 27,000 sq m for 2022. This result is the lowest level since 2015 (26,000 sq m), which supports our prediction of Wallonia experiencing a quiet year.
Only nine transactions were recorded in Q4 and which accounts for less than 20% of the transactions for 2022 None of those transactions consisted of a take-up higher than 1,000 sq m. This confirms that Q4 witnessed anything but a dynamic market in Wallonia.
A highly promising pipeline…
The new deliveries for Q4 in Wallonia was poor. Only Liège witnessed a delivery of 2,000 sq m additional offices. The latter brings the total deliveries of 2022 to 66,000 sq m, which is well above the five-year average of 58,000 sq m.
The delivery of 65,000 square meters in Namur, with AXS for 28,500 sq m, followed by 25,000 sq m in Liège, makes the pipeline for 2023 very promising Although the pipeline is promising, it should be noted that due to the muted demand in take-up, it could lead to an increase in vacancy rates.
Over the period 2024-2026, the pipeline for Wallonia is supposed to remain at a higher pace In Charleroi, 75,000 sq m will be delivered This contains the Left Side Business Park which will account for 23,000 sq m Only the city of Namur will have a quieter pipeline in over this period
Increased share of Grade C properties
The prime rent in Wallonia remains at EUR 160/sq m/year and have not witnessed any increase. The prime rents can be found in both Namur and Liège and is likely to increase with the upcoming pipeline.
On the other hand, the weighted average rent in Wallonia continues its decline, approaching EUR 129 per square meter per year. The property grade is the primary reason of this.
Q4 is no different to Q3 with the increase in take-up of Grade C properties. In Q4 the sheer weight of Grade properties has surpassed 70%, against 60% in Q3
