Q2 2022 | Industrial Marketbeat | Belgium

M A R K E T B E AT

BELGIUM Industrial Q2 2022 Inflation still on the rise, although decelerating recently.

YoY Chg

12-Mo. Forecast

686 (L) 544 (SI) Take-up (YTD) (000s sq m)

Inflation in Belgium climbed again in April and in May 2022. As a result, inflation is currently expected to reach a sky high 8.3% for the whole year 2022, before decelerating sharply as from 2023 to finally reach finally the ECB objective of 2% by 2024.

Recent political evolutions show no signs of a short-term resolution of the Ukrainian crisis. Furthermore, growing tensions between China and Taiwan could potentially have an important impact on the global economy in the medium term. With rising uncertainties, central banks across the globe have taken the decision to increase interest rates to fight inflation, with a negative effect on public debt and a potential negative output for the economy.

60 (L) 63 (SI) Prime rent, (EUR/sq m/year)

4.00 (L) 5.80 (SI)

In these challenging times, GDP growth has been revised downwards and should stand at around 2.15% for 2023, and continue to decelerate (though remaining positive) up to 2025. This could potentially weigh on the unemployment rate which is still expected to decrease by the end of 2023 to reach 5% in Belgium before rising again to 5.6% by 2025.

Prime yield (%, 3/6/9 lease) L: Logistics SI: Semi-industrial

Industrial (2.2%) and Transport (6.2%) growth should outperform the Belgian GDP growth rate in 2022, providing solid fundamentals for semi-industrial and logistics real estate markets. From 2023 onwards they should decelerate at a similar rate to the GDP.

ECONOMIC INDICATORS Q2 2022 YoY Chg

12-Mo. Forecast

Uncertainties will certainly continue to shape the year 2022.

2.15% 2022 GDP Growth

2.2% (I) 6.2% (T) 2022 Industry (I) and Transport (T) GVA Growth

8.30% 2022 Consumer Price Index Sources: Moody’s Analytics, BNB, Eurostat, FederalPlanning Bureau, June2022 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.

GDP GROWTH, GVA GROWTH: INDUSTRY & MANUFACTURING AND TRANSPORT & COMMUNICATION (%)

EXPECTED INFLATION UP UNTIL 2025

10.0

9.00%

8.0

8.00%

6.0

7.00%

4.0

6.00%

2.0

5.00%

0.0

4.00%

-2.0

3.00%

-4.0

2.00%

-6.0

1.00%

-8.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 GDP Growth Industry and manufacturing GVA Growth Transport and communication GVA Growth Sources: Federal Planning Bureau, June 2022

0.00% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Inflation Sources: Moody’s Analytics, BNB, Eurostat, June2022

M A R K E T B E AT

BELGIUM Industrial Q2 2022 Strong semi-industrial momentum – second best H1 ever recorded.

Semi-industrial take-up in Q2 amounted to 313,000 sq m, meaning 2022 had the second most dynamic H1 in our records (544,000 sq m), only behind what was a record 2021.

While Flanders leads take-up with 174,000 sq m in Q2, Wallonia recorded more than double its five-year average with 110,000 sq m; Brussels registered 29,000 sq m.

Regarding Wallonia, which has already surpassed its activity in the whole of 2020 and 2021, there have been a pair of deals superior to 10,000 sq m, let alone the usual 5,000 sq m bracket in this sector. Indeed, the largest deal this quarter was recorded in Hainaut: a 37,000 sq m purchase in Châtelet. In total, a dozen deals above 5,000 sq m were registered across the country in Q2.

SEMI-INDUSTRIAL TAKE-UP PER REGION, 000s SQ M 1,600 1,400 1,200 1,000 800 600 400 200 0

1,500 1,000 500 0 2018 Flanders Wallonia

The owner-occupier trend remains strong, corresponding to 50% of take-up in Q2. Indeed, SMEs and familyowned business often find the chance to own their property appealing from a financial point of view.

Nevertheless, there was also a large pre-let of note: Konings nv will occupy 30,000 sq m in Intervest Offices & Warehouses’ Genk Green Logistics (a semi-industrial deal despite the name of the project).

2019

2020

2021

H1 2022

Brussels (incl. Brabants) Deals (RHS)

Stable rents before an expected increase at close of the year.

Prime rents are expected to be revised upwards by the end of the year. However, they currently remain stable at EUR 63/sq m/year in Brussels’ Flemish Brabant district. In Flanders, the prime rent is EUR 51/sq m/year, and in Wallonia it is at a level of EUR 45/sq m/year.

Average weighted rents are at EUR 45/sq m/year and should also increase, owing to the pressure of development costs.

SEMI-INDUSTRIAL RENTS, EUR/SQ M/YEAR 65 60 55 50 45 40 35 30 25 2018

2019 2020 2021 H1 2022 Semi-industrial prime Mobile weighted avg semi-industrial

M A R K E T B E AT

BELGIUM Industrial Q2 2022 Q2 ranks among top five logistics quarters of take-up on record.

During Q2, logistics occupier demand maintained its remarkable course which will likely make 2022 a vintage year. Indeed, close to 459,000 sq m of take-up was registered across 19 deals, bringing the H1 total to 686,000 sq m. The significance of this is important, as this quarter ranked among the top five most dynamic ever recorded in our numbers, despite a noted absence of activity in the Brussels and Brabants region (where available supply is difficult to come by), and despite the increased costs of developing new warehouses in the current inflationary context.

Large deals across occupational sectors in Flanders and Wallonia.

The high number of above-average deals was striking, with close to a dozen transactions which were superior to 20,000 sq m. In particular, the announcement by DSV of its development of a new 100,000 sq m in the port of Ghent is one for the books. The temperature-controlled building will expand the capabilities of its health cluster in Ghent. Staying in the health sector, Yusen Logistics will be letting 39,000 sq m from a new warehouse developed by MG Real Estate in the Namur district (Parc Crealys) for GSK’s logistics hub. The retail sector’s presence was also keenly felt thanks to Colruyt’s future development of 37,000 sq m in Lessines (Hainaut), and e-commerce specialist 3PL Bleckmann intensifying its presence in East Flanders by a further 36,000 in MG Crosswoods in Kruisem.

LOGISTICS TAKE-UP PER REGION, 000s SQ M 1,500

120

1,000

80

500

40

0

0 2018

2019

2020

2021

Flanders Wallonia

H1 2022

Brussels (Incl. Brabants) Deals (RHS)

LOGISTICS NEW DEVELOPMENTS AND PIPELINE, SQ M 800,000 600,000 400,000

A very dynamic year for new deliveries.

The fact that all the aforementioned large deals relate to warehouses which are still to be delivered is symptomatic of a cautious approach by developers as well as the issue of a shrinking available land supply.

The pre-let/turnkey pipeline is nevertheless very dynamic on the back of several years of healthy demand. A total of 885,000 sq m will have been delivered by the end of this year, making 2022 the most important year for logistics deliveries since 2013.

Logistics prime rent due for an increase.

The overall prime rent is stable at EUR 60 but should be in for an increase by the end of the year due to increased demand, higher development costs, not to mention the fact that rents still have ground to make up on before reaching the heights of Belgium’s neighbouring countries.

200,000 0

Flanders

Brussels

Wallonia

Pipeline

LOGISTICS RENTS, EUR/SQ M/YEAR 70 60 50

Despite this, the average weighted rent remains stable at EUR 45/sq m/yea, while also being due for a likely increase in the close future.

40 30 20 10 0 2018

2019

Logistics prime

2020

2021

H1 2022

Mobile weighted average logistics

M A R K E T B E AT

BELGIUM Industrial Q2 2022 2022 is already the best year in industrial investments.

Two significantly large deals and a handful of more regular deals meant EUR 200 million were invested in semi-industrial (EUR 122 million) and logistics (EUR 78 million) properties during Q2. This brings the total in 2022 to EUR 747 million, meaning that at the half-way stage, Belgian industrial property has already recorded its best year as far as invested volumes are concerned.

ANNUAL INVESTED VOLUMES, EUR M 800

50 40

600

30 400

0 2018

2019

2020

Logistics

2021

Semi-industrial

H1 2022 # deals (RHS)

PRIME INDUSTRIAL YIELDS 8.00% 7.00% 6.00% 5.00% 4.00%

Logistics

Semi-industrial

Q2 2022

Q1 2022

Q4 2021

Q3 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Q2 2019

Q1 2019

3.00%

Q4 2018

It is furthermore expected that prime yields should increase by the end of the year due to the inflationary context.

0

Q3 2018

Yields to increase.

Prime yields remain stable at 5.80% (semi-industrial) and 4.00% (logistics). It should be noted that investments in logistics assets with longer term leases are increasingly becoming the norm as investors seek a degree of safety, given that warehouses are often tailored to occupiers’ requirements (as underscored by the weak number of speculative logistics developments).

10

Q2 2018

The top deal in Q2 was WP Carey’s purchase of Greenyard’s site in Bree in a sale & leaseback operation which will see Greenyard remain on the basis of a 20-year triple-net lease. Alternative locations are also growing more popular, as underlined by Intervest Offices & Warehouses’ purchase of 15 hectares of land under concession, which includes a 73,000 sq m site under development in the Maritime Logistics Zone of Zeebrugge – an area which will be looking to benefit from the recent merger between the ports of Zeebrugge and Antwerp.

20 200

Q1 2018

Since the pandemic, interest in this asset class has increased substantially, with logistics benefitting from increased (international) occupier interest, thereby becoming much more interesting to investors, including those looking to branch out from more traditional asset classes.

M A R K E T B E AT

BELGIUM Industrial Q2 2022 MARKET STATISTICS REGION

BUILT STOCK (SQ M)

Q2 2022 TAKE-UP (SQ M)

H1 2022 TAKE-UP (SQ M)

PRIME RENT (EUR/SQ M/YEAR)

PRIME YIELD (%)

LT PRIME YIELD (%)

Flanders

19,859,000 (L) 11,037,000 (SI)

258,000 (L) 174,000 (SI)

478,000 (L) 304,000 (SI)

51 (L) 60 (SI)

4.00 (L) 5.80 (SI)

3.50 (L)

Brussels (incl. Brabants)

2,405,000 (L) 3,471,000 (SI)

1,500 (L) 29,000 (SI)

6,000 (L) 52,000 (SI)

60 (L) 63 (SI)

4.00 (L) 5.80 (SI)

3.50 (L)

Wallonia

3,824,000 (L) 2,713,000 (SI)

200,000 (L) 110,000 (SI)

202,000 (L) 188,000 (SI)

45 (L) 52 (SI)

4.15 (L) 6.20 (SI)

3.50 (L)

L: Logistics SI: Semi-industrial

KEY OCCUPIER TRANSACTIONS Q2 2022 PROPERTY

BUILDING TYPE

DSV Kluizendok

Logistics

Weerts Garocentre (phases I and II)

Logistics

Yusen Logistics GSK Logistics Hub Colruyt DC Lessines 2nd phase Avenue Paul Pastur 400

Semi-industrial

MG Crosswoods

Logistics

MARKET

OCCUPIER

SIZE (SQ M)

TRANSACTION TYPE

East Flanders

DSV

100,000

Development

Hainaut

Weerts Supply Chain

70,000

Development

Logistics

Namur

Yusen Logistics

39,000

Pre-letting

Logistics

Hainaut

Colruyt

37,000

Development

Hainaut

Aciers Grosjean

37,000

Purchase

East Flanders

Bleckmann

35,000

Pre-letting

*Renegotiations not included in leasing statistics

KEY INVESTMENT TRANSACTIONS Q2 2022 PROPERTY

Greenyard Bree Lingang Logistics Zeebrugge – phase 1

SUBMARKET

BUYER / SELLER

SQ M

PRICE, EUR M

Limburg

WP Carey / Greenyard Logistics Belgium

174,000

93

West Flanders

Intervest Offices & Warehouses / Lingang

73,000

78

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 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION ©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.

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