M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2021
12-Mo. Forecast
YoY Chg
Belgian economic growth returning as expected to pre crisis level. Economic growth is set to increase to 5.54% which means that the GDP is around pre-crisis levels after which growth levels will stabilise to 2.64% in 2022 and 2.85% in 2023.
217K Take-up sq m (YTD)
The unemployment rate peaked at 6.17% in the third quarter and should be expected to decline in the last quarter of 2021 and stabilise around 5.74% in 2022 and 2023. In most private sectors, employment grew substantially in 2021, including up to 4.5% for R&D sector representing 4,000 new jobs. However, the banking & insurance sector continues to reduce its workforce reaching 44.5k jobs by the end of 2023.
165 Prime rent, (EUR/sq m/year)
5.25%
Core inflation in Belgium stands at 1.68% in Q3 2021 as recently forecast. It is projected at 1.12% in 2022 and 0.70% in 2023.
Prime yield (3/6/9 lease)
Predicting the return to the office. According to Cushman & Wakefield’s Predicting the return to the office report1, in Europe 40% of the workforce had returned to the office as of September, and it is expected that the majority will return in early 2022 with potential positive impact on the office occupational market.
ECONOMIC INDICATORS Q3 2021 YoY Chg
12-Mo. Forecast
1. https://www.cushmanwakefield.com/en/insights/predicting-the-return-to-the-office
5.54% 2021 GDP Growth
6.17% 2021 Unemployment Rate
1.68% Consumer Price Index Source: Moody’s Analytics, BNB, Eurostat , September 2021
EVOLUTION RATE OF EMPLOYMENT BY SECTOR
GDP GROWTH AND UNEMPLOYMENT RATE 10%
6%
8%
4%
6% 2%
4% 2%
0%
0%
-2%
-2%
-4%
-4% 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.
-6%
-6%
2016
2017
2018
2019
2020
2021
-8% 2015
2016
2017
2018
GDP Growth Source: Moody’s Analytics, September 2021
2019
2020
2021
2022
Unemployment Rate
2023
Financial and insurance activities Public administration Scientific activities Other activities Source: Moody’s Analytics, September 2021
2022
2023
M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2021 Large Grade A spaces boost Flanders’ office recovery. Gauging from take-up figures, it would appear the pandemic did not hit Flanders office markets as hard as it has elsewhere. Indeed, a respectable figure of 44,000 sq m in Q3 adds to the confidence ensuing from Flanders’ best H1 on record in terms of take-up. As a result, 2021 levels after Q3 are superior to a complicated 2020. Digging deeper into these figures reveals more than a handful of transactions over 1,000 sq m, almost all of which related to Grade A spaces. Chief among these was an 11,000 sq m pre-letting by Dematic in the Campus West project in Antwerp over several phases – a strong vote of confidence for the peripheral Linkeroever district. This is followed by a 5,600 sq m pre-letting by co-working operator Silversquare in the Antwerp Tower, currently under construction, and where the office component has just been acquired by Befimmo. In Ghent, it’s still full speed ahead for Banimmo’s Networks Gent project, with another pre-letting this quarter – in this instance, more than 3,000 sq m for IT company iO.
FLANDERS TAKE-UP PER DISTRICT, 000s SQ M
400 300 200 100 0 2017 Antwerp
2018
2019
Ghent
2020
Mechelen
Q1-Q3 2021 Leuven
FLANDERS NEW DEVELOPMENTS AND PIPELINE, 000s SQ M
300
Strong Flanders pipeline over next two years can ensure healthy dynamic. As is often the case in Flanders, the above transactions indicate high demand for well-located Grade A spaces. This explains the increased pipeline of buildings which will be added to the stock over the next couple of years, many of these spaces already have found their future occupiers, but a healthy number of available spaces can ensure market turnover in the medium term. Indeed, many occupiers are rethinking their workplace strategies post-pandemic, and even if this can signify a reduction in the spaces they occupy, well thought-out (e.g., ventilation, layout, etc.) new builds will be crucial in this regard.
200 100
0
Antwerp
Ghent
Mechelen
Leuven
Pipeline Flanders
FLANDERS RENTS, EUR/SQ M/YEAR
Stable prime rents in Flanders with possible increases ahead. The most expensive prime rents in Flanders are still found in Antwerp and Ghent, both level on EUR 165/sq m/year. There are some indications that these levels may increase in a not-so-distant future on the back of strong demand for qualitative spaces. Indeed, the developers of certain projects under development are considering going well beyond current prime rental levels. Average weighed rents return to pre-pandemic levels (EUR 128/sq m/year) establishing a return to normality in Flanders.
180 160 140 120 100 2017 2018 Antwerp Leuven Flanders average
2019
2020 Q3 2021 Ghent Mechelen
M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2021 Quiet Q3 in Wallonia led by Charleroi, and a key occupier. Overall take-up for Wallonia in Q3 amounted to 7,500 sq m, bringing the current 2021 total to more than 43,000 sq m. As indicated in the take-up chart, there is substantial ground to be made up by the end of the year in order to be close to the level encountered in 2020. The Charleroi office market led activity in Q3 with more than 3,000 sq m thanks to a 2,900 sq m pre-letting by the Forem, which will install some co-working facilities in the FGTB’s old offices, Boulevard Emile Devreux 3638, currently undergoing redevelopment by Immo Moury. The Forem was a key driver of market activity this quarter, having also extended by 2,400 sq m in Namur Office Park (Namur). Aside from the above it was a quiet Q3, with very few other deals recorded. In total after three quarters, 28 deals have been recorded in Wallonia, against 35 at the same point in 2020. This reduction in the number of deals clearly explains the decrease in activity, which would have been more severe were it not for key large deals such as Ethias’ 15,000 sq m pre-letting earlier this year. Nevertheless, this comes as no surprise, as the Walloon governement, an important occupier on this market, completed moves related to its new occupier strategy last year, leaving a vacuum in terms of demand from the public sector.
Substantial (speculative) pipeline in Wallonia. The pipeline for the coming years is substantial, with 290,000 sq m extra to be added to the stock by 2024, including a good deal speculatively, such as the Rivage (17,000 sq m) and Oh!rizons (23,000 sq m) buildings in Left Side Business Park, Charleroi or the office buildings around the Standard de Liège stadium (more than 10,000 sq m) in Liège. As in Flanders, a sufficient amount of new Grade A spaces can entice occupiers to leave older offices behind in favour of more efficient offices.
WALLONIA TAKE-UP PER DISTRICT, 000s SQ M
150 100 50 0 2017
2018
Liège
2019 Namur
2020
Q1-Q3 2021
Charleroi
WALLONIA NEW DEVELOPMENTS AND PIPELINE, 000s SQ M
150 100 50 0
Liège
Namur
Charleroi
Pipeline Wallonia
Stable Walloon prime rents, highest in Liège and Namur. The highest prime rents are to be found in Liège and Namur, both EUR 160/sq m/year, while Charleroi is at EUR 145/sq m/year, having increased earlier this year.
WALLONIA RENTS, EUR/SQ M/YEAR
Wallonia’s average weighted rent is EUR 135/sq m/year but is likely higher in reality given that rents on some key Grade A deals have not been communicated.
160
180
140 120 100 2017
2018
Liège Charleroi
2019
2020
Q3 2021
Namur Wallonia average
M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2021 Weaker Q3, but no lack of investment demand for regional office products. A lowly EUR 5 million in regional office market investments was recorded in Q3 – the lowest quarterly level since mid-2018. Nevertheless, no amount has thus far been communicated on this quarter’s main transaction – Befimmo’s acquisition of the office component (5,600 sq m) of Matexi’s Antwerp Tower, currently under development. Therefore, by conservative estimates it is fair to assume the actual total invested in Q3 is closer to EUR 20 million.
ANNUAL INVESTED VOLUMES, EUR M
800
35 30 25 20 15 10 5 0
600 400 200
This brings the current total for Flanders and Wallonia office investments in 2021 to more than EUR 235 after three quarters – a level already superior to the annual total for 2018 most recently.
0
2017
2019
2020
Wallonia regional markets Flanders regional markets
With many developments nearing completion, many a keen eye will be cast by interested parties, should these products come to market. Indeed, demand on this front is not lacking.
Q1-Q3 2021
PRIME YIELDS
7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00%
Q1 2017 Q2 2017 Q3 2017 Q4 2017 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
Prime yield compression is on the cards. Prime yields continue to remain stable – 5.25% in Flanders and 6.75% in Wallonia. Compressions to a level closer to 5.15% at the very least are foreseen next year in Antwerp and Ghent. This is the result of constant pressure and strong appetite for the assets which could come to the market in the next couple of years.
2018
Prime yield Flanders
Prime yield Wallonia
M A R K E T B E AT
BELGIUM REGIONAL Office Q3 2021 MARKET STATISTICS REGION
MARKET
BUILT STOCK (SQ M)
AVAILABILITY (SQ M)
VACANCY RATE
Q3 2021 TAKE-UP
2021-2024 PIPELINE (SQ M)
PRIME RENT (EUR/SQ M/YEAR)
PRIME YIELD
Antwerp
2,210,000
232,000
10.50%
33,000
198,000
165
5.25%
Ghent
1,103,000
44,000
3.95%
5,600
119,000
165
5.25%
Leuven
564,000
n.a.
n.a.
1,300
36,000
150
6.50%
Mechelen
324,000
n.a.
n.a.
700
39,000
150
6.50%
Liège
515,000
26,000
5.06%
2,000
110,000
160
6.75%
Namur
528,000
36,000
6.79%
2,300
85,000
160
6.75%
Charleroi
486,000
11,000
2.19%
3,200
95,000
145
7.00%
Flanders
Wallonia
KEY OCCUPIER TRANSACTIONS Q3 2021 PROPERTY
MARKET
TENANT
SIZE (SQ M)
TRANSACTION TYPE
Campus West Antwerp Tower
Antwerp
Dematic
11,000
Pre-letting
Antwerp
SilverSquare
5,600
Pre-letting
Networks Gent
Ghent
iO
3,200
Pre-letting
Devreux 36-38
Charleroi
Forem
2,900
Pre-letting
Uilenbaan 90
Antwerp
Eight Lakes Group
2,400
Purchase
Namur
Forem
2,300
Extension
Namur Office Park
SHANE O’NEILL Associate Director | Research Belgium +32 2 510 08 33 shane.oneill@cushwake.com CÉDRIC VAN MEERBEECK Head of Research & Marketing | Belgium & Luxembourg +32 2 629 02 86 cedric.vanmeerbeeck@cushwake.com
cushmanwakefield.com
*Renegotiations not included in leasing statistics
KEY SALES TRANSACTIONS Q3 2021 PROPERTY Antwerp Tower (offices)
SUBMARKET
BUYER / SELLER
SQ M
PRICE, EUR M
Antwerp
Befimmo / Matexi
5,600
n.a.
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.
©2021 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.