BELGIUM / Industrial Q4 2023
Diminishing inflation and anticipated central bank interest rate decline YoY Chg
12-Mo. Forecast
278 (L) 362 (SI) Take-up (Q4 2023) (000s sq m)
YoY Chg
12-Mo. Forecast
67€ (L) 67€ (SI)
While the forecasts for the last quarter still anticipated GDP growth of less than 1% and persistent inflation exceeding 4%, the situation appears to be improving, with a decrease in inflation allowing for an upward revision of GDP growth in the last quarter of the year, resulting in an annual growth of 1.48%. However, some trends persist and are expected to impact the Belgian economy in the coming months. The Belgian economy is expected to gradually expand, with a projected GDP growth of approximately 1.6% in 2024 and exceeding 1.8% in 2025 1. However, there is a higher-than-anticipated public debt deficit in Belgium. While high inflation allowed for a reduction of the government debt ratio in 2022, at unchanged policy, government debt would increase over the next decade, reaching about 120% of GDP by 2030 23. Inflation now stands at around 3%, far from the 10.6% recorded in October 2022, indicating that inflation has ultimately been only transitory. However, the possibility of an inflation resurgence remains a concern. Moreover, underlying inflation, which excludes volatile prices of food and energy, still persists. So, yes, central bank interest rates are expected to decrease in 2024, but perhaps more slowly than anticipated by financial markets, as structural inflation is expected to persist.
Prime rent (EUR/sq m/year)
YoY Chg
12-Mo. Forecast
5.25% (L) 6.95% (SI) Prime yield (%, 3/6/9 lease)
L: Logistics / SI: Semi-industrial
The forecast for the industry & manufacturing is should be positive as from 2024 on and the forecast transportation & communication has slightly worsened again compared to 2022
Economic Indicators Q4 2023 YoY Chg
Meanwhile, in 2023, despite challenging economic conditions, the unemployment rate remained below 6%, but it is projected to sharply rise to 7% by the end of 2024, a level expected to persist for the next three years. The substantial increase in bankruptcies this year, coupled with a decline in employment linked to more stringent financing conditions and an unpredictable economic environment, is expected to account for the upward trend in the unemployment rate in the upcoming years.
12-Mo. Forecast
GDP Growth, GVA Growth: Industry & Manufacturing And Transport & Communication
Inflation
1.48%
10%
2023 GDP Growth
10%
- 3.1% (M) 2.8% (T)
8%
2023 Manufacturing (M) and Transport (T) GVA Growth
6%
3.97%
4%
-5%
2%
-10%
2023 Consumer Price Index
5% 0%
2018 Sources: Moody’s Analytics, BNB, Eurostat, Federal Planning Bureau, December 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.
0% 2019
2020
2021
2022
2023
2024
2025
2026
2019
2020
2021
2022
2023
GDP Growth Manufacturing GVA growth Transportation and storage GVA growth
2024
2025
BELGIUM / Industrial Q4 2023
Difficult climate, robust market
Take-up, 000s SQ M
In retrospect, 2023 has proven to be resilient in terms of take-up. The yearly take-up recorded below the cap of 2,000,000 SQ M. Although the take-up remains lower than the previous two years, 2023 is anything but bad. In comparison to other markets, 2023 has been a strong and robust year, coming in less than 10% below the five-year average.
3.000
The final quarter of 2023 witnessed the strongest take-up recorded. 740,000 SQ M was recorded in both markets, which reflects nearly 40% of the total take-up of 2023.
2.500 2.000 1.500 1.000 500 0 2018
Slower than usual market, but resilient The logistic letting market suffered the most among the industrial markets. 2023 recorded 730,675 SQ M of take-up, which is around 20% below the five-year average. In addition, 2023 was the slowest year in both take-up and number of deals since 2017. Over 50% of the take-up (375,000 SQ M) in 2023 was recorded in the fourth quarter, which resulted in a stable market. Although the take-up levels remain at the lower hand, the demand remains high, and the availability remains around 1%. Furthermore, of the 37 deals recorded, 23 accounted for surfaces of 10,000 SQ M or more indicating the need for large properties.
2019
2020 Logistics
2021
2022
2023
Semi-Industrial
Take-up: Logistics per region, 000s SQ M 1.500
120 100
1.000
80 60
500
40 20
Semi-industrial leads the way The semi-industrial witnessed it strongest year, after 2021, in terms of take-up. Nearly 1,220,000 SQ M was recorded in 2023, which is only 15% lower than record year 2021. On a regional level, both Flanders and Brussels have witnessed one of highest take-up levels in a decade. Brussels leads the way with over 250,000 SQ M, which has not been witnessed since a decade. The general trend for semi-industrial properties has also been confirmed for 2023. Properties between 500 and 1,000 SQ M have been of the most desired by tenants and thus accounted for over 50% of the total transactions of 2023. The fourth quarter of 2023 witnessed 362,275 SQ M of take-up, which also represents the strongest quarter for the year. Flanders remains the most active market with 247,000 SQ M. Although Flanders remains the most active one, Brussels remains also one of the most desired, despite the limited availability. Brussels witnessed a strong final quarter with 86,000 SQ M recorded.
0
0 2018 Flanders
2019
2020
2021
Brussels (Incl. Brabants)
2022
2023
Wallonia
Deals (RHS)
Take-up: Semi-Industrial per region, 000s SQ M 1.600
1.500
1.400 1.200 1.000
1.000 800 600
500
400 200 0
0 2018 Flanders
2019
2020
2021
Brussels (incl. Brabants)
2022 Wallonia
2023 Deals (RHS)
BELGIUM / Industrial Q4 2023
Logistic Prime Rent in Belgium Stabilizes; Antwerp surges in Q4
Logistics Rents, EUR/SQ M/YEAR
After five consecutive increases, the prime rent for logistics in Belgium have finally stabilized at 68 EUR/sq m/year. Although the prime rent has always been in the Brussels area, Antwerp has finally been able to catch up. The latter was recorded in the key transaction of the fourth quarter of 2023. Namely, the 23,185 SQ M pre-letting by Fiege in Prologis Park Boom II which was signed at 68 EUR/sq m/year. Two other notable transactions were the 62,100 sq m by Eutraco in MG Park Big Bear and the 32,380 sq m letting by Martin Mathys in Gosselin-WDP Genk Project.
70
60 50 40 30
20 10 0 2018
Next to the prime rent, the average weighted rent for logistic properties has once more increased towards 55 EUR/sq m/year, coming from 53 EUR/sq m/year. The primary factor driving this rise in rental prices is the increasing demand from tenants. Due to a shortage of available properties, tenants are compelled to opt for different options, thereby influencing the overall average rent.
2019
2020
Prime
2021
2022
2023
Mobile average weighted
Semi-Industrial Rents, EUR/SQ M/YEAR 80 70
Semi-Industrial Prime Rent peaks in 2023 Amidst Strong Market The semi-industrial prime rent has ceased increasing after five consecutive increases, much like the logistic prime rent. The prime rent for semi-industrial has topped at 68 EUR/sq m/year for 2023. The semi-industrial letting market has performed very strongly in 2023, which explains the increasing rent prices. In general, both semi-industrial and logistic properties are in high demand but due to the different need in surface, semi-industrial ones keep on being highly favored by Belgian entrepreneurs and existing companies. Even though many companies faced bankruptcy in 2023 (over 6,200 in Flanders), over 100,000 companies see the light of day every year, which raises the demand for business units across Belgium. The mobile average weighted rent witnessed another increase. The average rent peaked at 52 EUR/sq m/year, coming from 47 EUR/sq m/year at the end of 2022. The significant role of semi-industrial properties cannot be questioned. Small and medium enterprises (SMEs) remain a major factor in Belgium economy – SMEs accounted for over two thirds of all jobs in 2022 – and need more spaces, preferably, between 1,000 and 5,000 sq m.
60
50 40 30 20 10 0 2018
2019
Prime
2020
2021
2022
Mobile average weighted
2023
BELGIUM / Industrial Q4 2023
Macro-economic outlook seems positive
Prime Industrial Yields
In the last quarter of the year, the real estate investment market slowed down even while inflation kept going downward. Since yield corrections always have a period of delay with the financial markets, near the end of 2023, prime rates were revised upward once more.
8%
However, despite encouraging forecasts for the near future, central bankers are still concerned about a possible resurgence of inflation, especially since underlying inflation remains persistent. Therefore, even though central bank interest rates are expected to decrease in 2024, they are unlikely to decrease as quickly as financial markets expect, and certainly not as quickly as they increased in 2023.
2%
6% 4%
0%
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
-2%
Logistics
Semi-industrial
OLO-10Y
Final prime yield increase for 2023 Again, there has been a minor but noticeable increase in prime yields in the semi-industrial and logistical markets. At 6.95% (+25bps), the semi-industrial prime yield has increased. The logistics prime yield increased from 4.75% at the start of 2023 to 5.25% (+25bps) at the end of the year.
Belgium Industrial Interest Rates vs OLO-10Y
The market seems to look favorable for companies. Loans to non-financial companies have stabilized and even dropped in September. The interest rates are starting to stabilize but inflation is not out of the woods just yet. Uncertainties or any challenges can still happen but are to be less likely to hit the investment markets as hard as it did.
376 MEUR in Semi-Industrial and Logistic Transactions The combined investment in semi-industrial and logistic transactions reached 16 million euros in the last quarter of 2023, contributing to a total investment of 376 million euros for the year (193 million euros in logistics and 183 million euros in semi-industrial properties). The semi-industrial market witnessed a robust performance in 2023, resulting in the strongest year, after 2022, for over a decade. It should be noted that the semi-industrial and logistic markets have been the markets that have witnessed the least impacted by the setback of overall demand in the commercial real estate markets, reflecting a dynamic and diversified investment landscape.
Annual Invest Volumes, MEUR 1200
50
1000
40
800
30
600
20
400
10
200 0
0 2018
2019 Logistics
* Loans under 1M EUR with long-term fixed interest (<5 years)
2020
2021
Semi-industrial
2022
2023 # deals (RHS)
BELGIUM / Industrial Q4 2023 Market Statistics STOCK (SQM)
SUBMARKET
Flanders Brussels (incl. Brabants) Wallonia
Q4 2023 TAKE-UP (SQ M)
2023 TAKE-UP (SQ M)
PRIME RENT (EUR/sq m/year)
PRIME YIELD (%)
20,325,000 (L)
339,150 (L)
629,100 (L)
68 (L)
5.25 (L)
11,807,000 (SI)
246,900 (SI)
797,350 (SI)
68 (SI)
6.95 (SI)
2,473,000 (L)
38,400 (L)
63,000 (L)
68 (L)
5.25 (L)
3,723,000 (SI)
86,100 (SI)
212,075 (SI)
68 (SI)
6.95 (SI)
3,934,000 (L)
0 (L)
39,375 (L)
55 (L)
5.30 (L)
2,916,000 (SI)
29,250 (SI)
165,175 (SI)
59 (SI)
7.35 (SI)
L: Logistics SI: Semi-Industrial
Key Lease Transactions Q4 2023 PROPERTY
BUILDING TYPE
MARKET
OCCUPIER
SIZE (SQ M)
TRANSACTION TYPE
MG Park Big Bear
Logistic
East Flanders
Eutraco
62,100
Letting
Heat 21
Logistic
Kempen
Lidl
43,400
Letting
Ex-Milcobel – Gosselin project
Logistic
Antwerp
Gosselin Group
39,230
Letting
WDP project - Bosdel
Logistic
Kempen
Martin Mathys
32,380
Letting
Prologis Park DC II
Logistic
Mechelen-Willebroek
Fiege
23,185
Pre-letting
Key Investment Transactions Q4 2023 PROPERTY
MARKET
PURCHASER
SELLER
Price, EUR M
TRANSACTION TYPE
Logistic
Limburg
Tristan Capital Partners | Whitewood
Liebaert Invest
10
Investment
Terstraetenweg 37
Semi-Industrial
Kempen
Vinya Plastics
Game Mania
3,15
Investment
Leo Bakelandstraat 3
Semi-Industrial
Antwerp
Private investor
ATAG
2,50
Investment
Oosterring 12
BUILDING TYPE
Oscar DE GROOTE Research Analyst | Belgium & Luxembourg +32 478 05 38 71 oscar.degroote@cushwake.com
Bart VANDERHOYDONCK Head of Industrial Agency | Belgium +32 510 08 09 bart.vanderhoydonck@eur.cushwake.com
Michael DESPIEGELAERE Head of Capital Markets | Belgium & Luxembourg +32 476 82 08 59 michael.despiegelaere@cushwake.com
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION ©2024 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. acy.
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