M A R K E T B E AT
BRUSSELS Office Q3 2020 Economic Overview YoY Chg
12-Mo. Forecast
203,000 YTD Take-Up (sq m)
Economic data suggest that the post-lockdown rebound had been slightly stronger than expected earlier this year. GDP was revised up slightly to -7.8% in 2020, up from -8.7% previously estimated. The economy is expected to rebound in 2021 with an economic growth of 5.6%, with risks and uncertainties on the downside. Concerns about unemployment, however, remain high, putting pressure on consumer spending. Furthermore, total output and employment are not expected to return to pre-crisis levels before 2022. The unemployment rate, expected at 6.1% by the end of 2020, is forecasted to increase to 6.9% in 2021. CPI is expected to remain low at 0.8 in 2020 and 1.9 for 2021.
Letting Activity
7.25%
Around 76,000 sq m of take-up and 66 transactions were recorded on the Brussels office market in Q3. While take-up was well below the quarterly average of 100,000 sq m, the letting activity was not necessarily bad given the current circumstances. The total take-up YTD is around 203,000 sq m (200 transactions), mainly due to an historically low first quarter. The largest transaction of the quarter was recorded in the Belmont Court (Leopold) with the letting of the EEAS (13,300 sq m). Other notable transactions include the 6,400 sq m letting of TBWA in the Excelsiorlaan 77 (Airport) and the preletting of White & Case in the soon-to-be renovated The First (Leopold). When it comes to prime rents, CBD locations showed some resilience with the Leopold district still at 320€/sq m/year. Prime rents have increased to 275€/sq m/year in the Louise area following strong demand for qualitative office spaces. The North district, too, benefitted from an increase in prime rental values, currently found at 250€/sq m/year. The decentralised and peripheral areas, however, has seen prime values decrease to 175€/sq m/year. Weighted average rents for the year in Brussels reached an all-time high of 193€/sq m/year. Despite the expected uptick before the end of the year, the vacancy rate for the overall market has decreased this quarter to 7.25%.
Vacancy Rate
€320
Prime rent (€/sq m/year)
4.00% Prime yield
Investment Activity ECONOMIC INDICATORS Q3 2020 YoY Chg
12-Mo. Forecast
-7.8% GDP Growth Belgium
6.1% Unemployment Rate Belgium
0.8% Consumer Price Index (% change)
The investment activity in Brussels was quite decent with 320 MEUR (14 transactions) recorded this quarter, perfectly in line with the 10-year quarterly average. The total investment volume YTD has reached an exceptional EUR 2.74 bn with 57 transactions thanks to some remarkable transactions throughout the year. Even by disregarding the historic sale of the Finance Tower, the current investment volume YTD is above the annual average. While most large transactions are considered to be ‘pre-COVID’ deals, demand for office investments is still strong. This is especially true for core products in CBD locations, where prime yields are still at their lowest levels despite the economic downturn. Prime yields in decentralised districts and peripheral areas, however, have slightly increased (to 6.50%) due to current financing difficulties for riskier products. The LT prime yield is still found at 3.50%.
Outlook Some important letting transactions are still in the pipeline, especially in the CBD. Nevertheless, as forecasted, take-up was expected to decrease quite severely in 2020, regardless of the pandemic. A slightly stronger letting activity is expected for 2021, but still below the annual average. The arrival of new office schemes and the negative effects of the health crisis should lead to an increase in vacancy before the end of the year. Prime rental values, however, are expected to remain stable until 2021. The investment pipeline before 2021 is also promising and could give a final boost to the investment volume for the year. Competition is expected to remain strong for core assets but uncertainties relating to financing might disrupt some discussions. QUARTERLY TAKE-UP (in 000 SQ M)
INVESTMENT VOLUME (MEUR, LHS) AND PRIME YIELD (RHS)
600
3.000
7,00%
500
2.500
6,00%
400
2.000
300
1.500
200
1.000
100
500
0
0
5,00%
Source: Oxford Economics 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.
2010
2011
2012
2013 Q1
2014 Q2
2015 Q3
2016
2017
Q4
2018
2019
2020
4,00% 3,00% 2,00% 1,00% 0,00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD Volume
Prime Yield
M A R K E T B E AT
BRUSSELS Office Q3 2020 MARKET STATISTICS 2020-2022 UNDER CONSTRUCTION (SQM)
PRIME RENT (€/sq m/year)
PRIME YIELD
93,300
48,000
€320
4.00%
10,800
216,000
€250
4.10%
5,000
6,000
209,000
€250
5.00%
4.2%
2,500
15,400
3,000
€275
4.25%
26,000
4.3%
-
4,600
-
€195
5.50%
2,632,000
296,000
11.3%
6,700
23,500
-
€175
6.50%
2,115,000
360,000
17.0%
26,200
49,300
71,000
€175
6.50%
13,423,000
970,000
7.25%
76,000
202,900
547,000
€320
4.00%
INVENTORY (SQM)
AVAILABILITY (SQM)
VACANCY RATE
Q3 2020 TAKE-UP
YTD TAKE-UP
Brussels (Leopold)
3,357,000
104,000
3.1%
33,200
Brussels (Centre)
2,363,000
70,000
3.0%
2,400
Brussels (North)
1,483,000
77,000
5.2%
Brussels (Louise)
873,000
37,000
Brussels (Midi)
600,000
Brussels (Decentralised) Brussels (Periphery)
SUBMARKET
Brussels (Overall)
KEY LEASE TRANSACTIONS Q3 2020 PROPERTY
SUBMARKET
TENANT
SQ M
TYPE
Belmont Court
Leopold
EEAS
13,300
Letting
ART Building
Leopold
Confédération Construction
7,200
Purchase
Excelsiorlaan 75-77 The First Keiberg III
Airport
TBWA
6,400
Letting
Leopold
White & Case
4,800
Pre-letting
Airport
Penthouse Business Center
4,000
Purchase
CÉDRIC VAN MEERBEECK Head of Research Belgium & Luxembourg +32 477 98 11 83 cedric.vanmeerbeeck@cushwake.com NIGEL BELLER Research Analyst +32 473 94 36 30 nigel.beller@cushwake.com
*Renewals not included in leasing statistics
cushmanwakefield.com
KEY SALES TRANSACTIONS Q3 2020 PROPERTY
SUBMARKET
SELLER / BUYER
Volume (in MEUR)
Yield
Blue Tower
Louise
Befimmo / Goldman Sachs
112
5.30%
Walloon Brabant
MC2 Development / Belfius Insurance
39
4.80%
Leopold
Blue Colibri / Confédération Construction
35
N/A
South
Boghosslan / AG Insurance & Real Estate
28
N/A
ING HQ (Walloon Brabant) ART Building Brussels Green park
KEY CONSTRUCTION COMPLETIONS YTD 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
Spectrum
Centre
Meet District, BIO, Allia
16,500
Deka / Ghelamco
Quartz
Leopold
EFTA
9,000
Cofinimmo
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