MARKETBEAT
Q4 2023
MARKETBEAT BELGIUM / Regional Office Q4 2023
249K
YoY Chg
12-Mo. Forecast
Take-up (000s sq m)
180€
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. YoY Chg
12-Mo. Forecast
Prime rent (EUR/sq m/year)
6.60%
Diminishing inflation and anticipated central bank interest rate decline
YoY Chg
12-Mo. Forecast
Prime yield (%, 3/6/9 lease)
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. 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.
Economic Indicators Q4 2023 YoY Chg
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.
12-Mo. Forecast
1.48%
GDP Growth and unemployment rate
Inflation rate
8%
10 % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
2023 GDP Growth
5.61%
2023 Unemployment Rate
6% 4% 2%
3.97%
2023 Consumer Price Index
0% -2% -4% -6%
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.
20 19
20 20
20 21 GDP Gro wth
20 22
20 23
20 24
20 25
Un empl oymen t Ra te
20 26
20 19
20 20
20 21
20 22
20 23
20 24
20 25
20 26
MARKETBEAT BELGIUM / Regional Office Q4 2023
Take-up is holding steady in Flanders Despite a marginal decline (8%) in total take-up in Flanders compared to the preceding year, the numbers remain consistent with the average observed since 2020. In Q4, nearly 87,000 sq m were recorded in the Flemish market, resulting in a yearly total surpassing 220,000 sq m*. The consistent trend throughout the year indicates a demand for high-quality assets, with Grade A buildings accounting for more than a third of activity in 2023. It is anticipated that this trend will persist and further fuel demand and take-up in Flanders, particularly as ESG requirements continue to tighten. Once again, Antwerp played a pivotal role in the Q4 activity, recording the largest transaction of the year. Specifically, SPF Pension (Belgian pensions administration) acquired the 9,500 sq m Copernicus for its own use. Overall, demand has been strong across all types of occupier sectors. Moving forward, public sector occupiers and services & consultancy firms should ensure activity over the next couple of years.
Flanders take-up per district (000s sq m) 350 300 250 200 150 100 50 20 18
20 19
20 20
Antwe rp
Ghen t
20 21 Le uven
20 22
20 23
Mech ele n
Flanders pipeline (000s sq m) 120
Healthy pipeline can make the recovery sustainable in Flanders The transactions mentioned above underscore the ongoing high demand for spacious and well-located Grade A properties in Flanders. This heightened demand is contributing to a growing pipeline of buildings set to join the market in the coming years. While many of these spaces have already secured future occupants, maintaining a healthy number of available spaces is crucial for sustaining market turnover in the medium term.
100 80 60 40 20 20 23 Bui lt
20 24 Antwe rp
20 25
Ghen t
Le uven
20 26 Mech ele n
Two-tier rental market Prime rents across different districts remained unchanged in the final quarter of 2023 and, overall, remained stable for the entire year, except for Antwerp, where the prime rent increased to 180€/sq m/year in Q3. While prime rents in top-tier buildings are increasing, the lack of activity in Grade B and Cbuildings is exerting downward pressure on average rents, resulting in a decline this year, to a level of 129€/sq m/year.
Flanders rents (EUR/sq m/year) € 200 € 180 € 160 € 140 € 120 € 100
*This figure covers all markets in Flanders
20 18 Antwe rp Mech ele n
20 19
20 20
20 21
Ghen t Flan ders avg .
20 22
20 23 Le uven
MARKETBEAT BELGIUM / Regional Office Q4 2023
Demand took a dive in Wallonia Following two years of significant decline in activity within the Walloon occupier market, 2023 continued this trend, marking the third consecutive year of decreasing take-up figures. Specifically, in Q4, only 7,300 sq m of take-up was recorded, bringing the annual total to 21,000 sq m, representing a nearly 37% decrease compared to the take-up in 2022. The public sector, which is keeping a low profile this year, contributes to the decline in activity. Over the 2012-2021 period, it enjoyed a colossal 41% share of take-up, equivalent to more than 26,000 sq m per year, against 34,000 for private sector occupiers. However, both sectors are below their historical averages in 2023, with only 5,800 sq m for the public sector and 15,000 sq m for the private sector.
Wallonia take-up per district (000s sq m) 140 120 100 80 60 40 20 20 18
20 19
20 20
Li ège
20 21
Na mur
20 22
20 23
Ch arle roi
Charleroi is the market experiencing the most significant impact from this decline in activity, with only two transactions recorded this year, totaling 1,200 sq m.
Wallonia pipeline (000s sq m)
Pipeline in Wallonia should be attractive to occupiers Similar to Flanders, the substantial influx of new Grade A office space may motivate occupiers to shift from older offices to more efficient ones. The upcoming year's pipeline is noteworthy, with over 100,000 sq m expected to be added to the market by the end of 2024, including speculative projects like Ohrizons (23,000 sq m) in the Left Side Business Park in Charleroi and Aquilis (10,000 sq m) in Namur.
160 140 120 100 80 60 40 20 20 23
Bui lt
Average rents under pressure The Walloon prime rent remained stable at 160€/sq m/year (in Liège and Namur) and could well increase in coming quarters, although demand is not as strong as in Belgium’s two other regions. On the flip side, the average weighted rent is on a downward trend at 125€/sq /year, compared to 130€/sq m/year in 2022, attributable to the limited activity.
20 24
20 25 Li ège
Na mur
20 26
20 27
Ch arle roi
Wallonia rents (EUR/sq m/year) € 170 € 160 € 150 € 140 € 130 € 120 € 110 € 100
20 18 Li ège
20 19 Na mur
20 20
20 21 Ch arle roi
20 22
20 23 Wall oni a avg.
MARKETBEAT BELGIUM / Regional Office Q4 2023
The upper threshold of yields reached (?) While inflation continued to decline in the last quarter of the year, the real estate investment market, on the other hand, continued to slow down. Corrections in yields always have a lag period with financial markets, which is why prime yields were revised upwards again at the end of 2023, and they stand at a theoretical level of 6.60% and 7.60% for Flanders and Wallonia, respectively, in Q4. 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.
Volumes fall but transactions rise In the last quarter of 2023, three transactions were closed within the different regional office markets, for which one the transaction details were not disclosed. The cumulative investment volume in Q4 reached 72 million euros, contributing to a total of 255 million euros for the year. In the face of this challenging economic environment, the regional investment market continues to attract investors. Despite an overall decline in volumes, the number of transactions is on the rise.
Prime yields 8% 7% 6% 5% 4% 3% 20 18
20 19
As public authorities set new net-zero goals for the real estate sector, environmental policies and socially responsible investment movements have led to an increase in prices of environmentally friendly products and services, a phenomenon known as ‘greenflation’. The green transition is likely to create additional pressure on structural inflation over the next decade due to factors such as ‘greenflation’. This transition will involve significant investments in decarbonization technologies and renewable energy sources, as well as the introduction of carbon taxes. All of this will leave a significant mark on medium-term inflation.
20 21
Flan ders
20 22
20 23
Wall oni a
Annual investment volumes (MEUR) 70 0
12
60 0
10
50 0
8
40 0
6
30 0
4
20 0
2
10 0 0
0 20 18
20 19 Flan ders
The energy transition comes with a price tag
20 20
20 20
20 21 Wall oni a
20 22
20 23
# of dea ls
MARKETBEAT BELGIUM / Regional Office Q4 2023 Market Statistics REGION
Flanders
Wallonia
MARKET
STOCK (SQ M)
AVAILABILITY (SQ M)
VACANCY RATE
Q4 2023 TAKE-UP (SQ M)
TAKE-UP YTD (SQ M)
UNDER CONSTRUCTION (SQ M)
PRIME RENT (€/sq m/year)
PRIME YIELD
Antwerp
2,350,033
130,781
5.57%
44,441
101,818
44,372
180
6.60%
Ghent
1,110,147
49,702
4.48%
10,226
40,736
62,049
170
6.60%
Leuven
574,715
27,789
4.83%
4,666
10,180
55,900
155
7.35%
Mechelen
283,688
n.a.
n.a.
8,794
19,009
31,300
160
7.35%
Liège
579,883
22,459
3.87%
6,304
15,587
20,000
160
7.60%
Namur
549,598
11,833
2.15%
450
4,111
56,762
160
7.60%
Charleroi
499,580
27,762
5.55%
660
1,295
58,000
145
7.85%
Key Lease Transactions Q4 2023 PROPERTY
MARKET
TENANT
SQ M
TYPE
Copernicus
Antwerp
SPF Pension
7,164
Purchase
Malt
Mechelen
Keyence International
7,000
Pre-letting
Den Helder
Antwerp
Helan
2,500
Purchase
Ubicenter
Leuven
Huawei
2,148
Letting
Koordekenshoef Haven 83
Antwerp
Group Peeters
1,560
Purchase
BUYER / SELLER
VOLUME (MEUR)
YIELD
Key Investment Transactions Q4 2023 PROPERTY
MARKET
Campus West
Antwerp
Ethias / Ghelamco
45
-
Mechelen Station
Mechelen
Royal Properties / Cofinimmo
27
9.20%
Benjamin DEVIE Research Analyst | Belgium & Luxembourg +32 492 11 35 10 benjamin.devie@cushwake.com Maximilien MANDART Head of Occupier Services | Belgium +32 476 24 08 02 Maximilien.mandart@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.
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