Q1 2022 | Regional Office Marketbeat | Belgium

M A R K E T B E AT

BELGIUM REGIONAL Office Q1 2022 Inflation reaches 39-year high.

YoY Chg

12-Mo. Forecast

40K Take-up sq m (Q1 2022)

165

Inflation in Belgium climbs to 8.22% in the first quarter of 2022, a record since 1983. In February 2022, the Russian invasion of Ukraine pushed global energy prices sky-high. With the conflict showing no signs of ending, and EU restrictive measures against Russia, energy prices will continue to drive inflation in Belgium. Combined with the fact that consumer spending is set to increase after a record year of saving, inflation is set to rise.

Prime rent, (EUR/sq m/year)

A period of uncertainty is taking place with the crisis in Ukraine and if it continues, Belgian growth could be affected.

5.25%

Rising growth and falling unemployment rate.

Prime yield (3/6/9 lease)

The Belgian economy is forecasted to grow 2.67% in 2022. This is expected to slow down and stabilise at 2.17% for the next two years and slow down further to 1.11% in 2025. This growth is associated with an increase of the employment rate. The unemployment rate decreased to a level of 5.49% in the first quarter and should be expected to decline further and stabilise around 5.21% by the end 2022 and 4.94% in 2023. This is due to a lot of people who had been temporarily unemployed and have returned to the workforce in early 2022.

ECONOMIC INDICATORS Q1 2022 YoY Chg

12-Mo. Forecast

2.67% 2022 GDP Growth

5.49% 2022 Unemployment Rate

GDP GROWTH AND UNEMPLOYMENT RATE

INFLATION RATE 9.0%

8%

8.0%

6%

8.22% Consumer Price Index

7.0%

4%

6.0%

2%

5.0%

0% Sources: Moody’s Analytics, BNB, Eurostat, March 2022 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.

4.0%

-2%

3.0%

-4%

2.0%

-6% 2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

1.0% 0.0%

GDP Growth

Unemployment Rate

Sources: Moody’s Analytics, BNB, Eurostat, March 2022

2016

2017

2018

2019

2020

2021

Sources: Moody’s Analytics, BNB, Eurostat, March 2022

2022

2023

2024

2025

M A R K E T B E AT

BELGIUM REGIONAL Office Q1 2022 Lowest quarterly take-up in two years in Flanders.

The Flanders office market recovery noted in 2021 has not fully spilled over into 2022, as we record the lowest take-up since the outbreak of the COVID-19 pandemic in early 2020. Indeed, take-up in Flanders markets (i.e., Antwerp, Ghent, Leuven and Mechelen) totaled 34,500 sq m in Q1 – against a quarterly average of 56,000 sq m over the past five years.

Antwerp occupied top spot with 17,000 sq m, followed by Ghent (13,000 sq m), where the largest deal in Q1 was signed. Mechelen registered 2,300 sq m and Leuven 2,000 sq m.

The largest deal in Q1 was a 3,200 sq m by Artveldehogeschool in Alides’ The Platform (Gent Zuid district).¹ In stark contrast to the end of 2021, where nine out of the ten largest deals were linked to Grade A spaces, four out of five of the largest deals in Flanders during Q1 took place in lesser-grade buildings. No occupier type dominated proceedings in Q1, however the public sector was virtually absent.

This is only expected to be an outlier compared to overall trends. Indeed, as per our Outlook 2022 for the Regional Office Market², new quality offices will continue to drive take-up in Flanders, such is the scale of demand for Grade A spaces in particular.

FLANDERS TAKE-UP PER DISTRICT, 000s SQ M

400 300 200 100 0 2018 Antwerp

2019

2020

Ghent

2021

Mechelen

Q1 2022 Leuven

FLANDERS NEW DEVELOPMENTS AND PIPELINE, 000s SQ M

200 100

Speculative pipeline required for market to thrive.

A clear condition for needs to be met for demand to be met, and that is that new speculative products are regularly added to the stock (as opposed to turnkey projects only). Additionally, new developments must factor in occupiers’ ESG requirements. In absolute terms, the pipeline for the coming years is strong, particularly in Antwerp and Ghent² A highlight delivery this quarter was Intervest’s Greenhouse The Collection in Antwerp’s Singel district.

Absence of large Grade A take-up brings average Flanders rents down in Q1.

The Greenhouse The Collection delivery may soon drive the Antwerp prime rent to new higher levels, however in the meantime, prime rents remain stable (EUR 165/sq m/year in Antwerp and Ghent).

Average weighted rents are at EUR 124/sq m/year, a decrease on 2021, unsurprisingly given the absence of Grade A take-up among the larger deals this quarter.

0

Antwerp

Ghent

Mechelen

Leuven

Pipeline Flanders

FLANDERS RENTS, EUR/SQ M/YEAR

180 160 140 120 100

¹ See the last page of this report for a list of this quarter’s largest deals. ² For a list of speculative projects in Regional markets, see our Outlook 2022 for the Regional Office Market report.

2018 2019 Antwerp Mechelen Flanders average

2020

2021 Q1 2022 Ghent Leuven

M A R K E T B E AT

BELGIUM REGIONAL Office Q1 2022 A calm 2022 ahead for the Walloon office market.

WALLONIA TAKE-UP PER DISTRICT, 000s SQ M

Wallonia office take-up has been trending downwards for little over a year, with just under 5,000 sq m recorded in Q1, against a five-year quarterly average of 19,000 sq m. This is not unexpected, with few large deals expected to drive the market in 2022. In total, fewer than ten transactions were recorded across Charleroi, Liège and Namur.

Liège recorded the largest figure among Walloon markets in Q1 with a low 2,500 sq m.

150

Charleroi is expected to record one of the year’s key transactions by this summer, a large pre-letting by AVIQ and FAMIWAL (both Walloon public sector bodies) in the Ohr!zons tower, a 23,000 sq m project which will be delivered in the next couple of years in the emerging Left Side Business Park district. This should be one of the last large moves involving the Walloon public sector following an overhaul of its occupational strategy these past years.

Aside from the above, 2022 is expected to be a calm straightforward year in Wallonia, with no major emerging trends.

Meantime, the largest deal in Wallonia during Q1 was a 1,800 sq m letting by Securex in Portes de Liège.

Average deals were in the 300- 600 sq m bracket this quarter.

100 50 0 2018

2019

Liège

2020

Namur

2021

Q1 2022

Charleroi

WALLONIA NEW DEVELOPMENTS AND PIPELINE, 000s SQ M

150 100 50 0

Shift to turnkey projects expected.

With a lack of large deals on the horizon, developers’ focus should shift to turnkey- rather than speculative projects for the medium term, probably until the 2024 elections when new public sector occupation strategies may emerge.

As such, approximately 260,000 sq m are in the pipeline for Wallonia up to 2024. For a list of speculative projects, see our Outlook 2022 for the Regional Office Market report.

A key delivery in Q1 was IRET’s 10,000 sq m Namur Crosspoint, pre-let by Walloon governmental bodies.

Liège

Namur

Charleroi

Pipeline Wallonia

WALLONIA RENTS, EUR/SQ M/YEAR

180

Liège and Namur have Wallonia’s highest rents.

The highest prime rents are to be found in Liège and Namur, both EUR 160/sq m/year, while Charleroi is still at EUR 145/sq m/year, having increased earlier this year.

The average weighted rent has increased to EUR 139/sq m/year, although with it is too early to speak of any trends at this stage given the small number of deals recorded so far this year.

160 140 120

100 2018

2019

Liège Charleroi

2020

2021

Q1 2022

Namur Wallonia average

M A R K E T B E AT

BELGIUM REGIONAL Office Q1 2022 Zuiderpoort deal means 2022 has strong momentum.

Despite only six deals having been recorded in Belgian regional markets in Q1, 2022 has strong momentum with a total of EUR 199 million invested, twice the quarterly average.

This is the result of two key investments, with Blue Colibiri’s EUR 150 million acquisition of Zuiderpoort in Ghent head and shoulders above the rest. Zuiderpoort is an interesting regional asset thanks to its size (an above-average ticket) and tenancy profile which includes the public sector as an occupier among other reasons.

The second largest deal was Vastgoed Degroote’s acquisition of the Provinciehuis in the Urbis complex, also in Ghent, soon to be vacated by East Flanders public sector authorities.

ANNUAL INVESTED VOLUMES, EUR M

800

35 30 25 20 15 10 5 0

600 400 200 0 2018 Flanders

2019

2020 Wallonia

2021

Q1 2022 # deals (RHS)

We do not expect the volume recorded in Q1 to be matched for the remainder of 2022, nevertheless, other strong assets are bound to interest investors, not to mention potential large owner-occupier deals.

PRIME YIELDS

7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00%

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

Prime yields stable with a possible compression by the end of 2022.

Prime yields currently remain stable – 5.25% in Flanders and 6.75% in Wallonia. Nevertheless, compressions are forecast in both regions, and could reach 5.00% in Flanders by the end of 2022, a more interesting yield compared to Brussels, likely to be of interest to specialised local investors at the very least, and international investors in the case of larger tickets becoming available.

Prime yield Flanders

Prime yield Wallonia

M A R K E T B E AT

BELGIUM REGIONAL Office Q1 2022 MARKET STATISTICS REGION

MARKET

BUILT STOCK (SQ M)

AVAILABILITY (SQ M)

VACANCY RATE

Q1 2022 TAKE-UP

Q2 2022-2025 PIPELINE (SQ M)

PRIME RENT (EUR/SQ M/YEAR)

PRIME YIELD

Antwerp

2,234,000

228,000

10.22%

17,000

166,000

165

5.25%

Ghent

1,109,000

47,000

4.39%

13,000

87,000

165

5.25%

Leuven

564,000

n.a.

n.a.

2,000

36,000

150

6.50%

Mechelen

367,000

n.a.

n.a.

2,300

13,000

150

6.50%

Liège

525,000

23,000

4.36%

2,500

96,000

160

6.75%

Namur

545,000

35,000

6.51%

2,400

86,000

160

6.75%

Charleroi

484,000

10,000

2.06%

2,000

88,000

145

7.00%

Flanders

Wallonia

KEY OCCUPIER TRANSACTIONS Q1 2022 PROPERTY

MARKET

TENANT

SIZE (SQ M)

TRANSACTION TYPE

The Platform

Ghent

Arteveldehogeschool

3,200

Letting

Helder House

Antwerp

Caluwaerts Uytterhoeven

2,400

Purchase

Ghent

Kovag

2,200

Purchase

Deinsesteenweg 114 Portes de Liège

Liège

Securex

1,800

Letting

De Arend

Antwerp

Amoda

1,800

Letting

Tirou 185

Charleroi

Forem

1,700

Letting

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 Q1 2022 PROPERTY

SUBMARKET

BUYER / SELLER

SQ M

PRICE, EUR M

Zuiderpoort

Ghent

Blue Colibri / Ares Management

69,000

150

Provinciehuis

Ghent

Vastgoed Degroote / Provincie Oost-Vlaanderen

29,000

41

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.

©2022 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.