Q3-2019 | Industrial Market Snapshot | Belgium

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Industrial Market Snapshot Third Quarter | 2019

MARKET INDICATORS

Overview

Market Outlook

Belgian GDP is set to grow by 1.2% this year and 1.1% in 2020. Private consumption should remain relatively dynamic, but the outlook for exports and investment remains clouded due to global trade tensions, Brexit concerns and recession risks in Germany. The unemployment rate stands around 5.7% and should remain around this level. Inflation is expected at 1.7% this year and forecasted to decelerate to 1.5% in 2020.

Prime Rents:

Forecasts remain stable both for semi-industrial and logistics into next year.

Prime Yields:

Semi-industrial prime yields have a stable outlook having just decreased by 10 bps. The overall logistics prime yield will not shift for the foreseeable. Logistics developments are consistently turnkey in Belgium.

Supply: Demand:

Semi-industrial demand should remain stable and robust but might be impacted by a weakening economic sentiment. Strong logistics momentum may further improve with the traditional end of year activity increase.

Occupier focus

Prime Industrial Rents – September 2019 LOGISTICS LOCATION

€ SQ.M YR

US$ SQ.FT YR

Brussels

58.0

6.08

Antwerp

48.0

Liège

43.0

Genk

GROWTH % 1YR 5YR CAGR 0.0

5.2

5.03

6.7

0.9

4.51

10.3

3.6

43.0

4.51

2.4

2.5

MANUFACTURING LOCATION

€ SQ.M YR

US$ SQ.FT YR

Brussels

60.0

6.29

0.0

0.0

Antwerp

57.0

5.98

3.6

0.7

Liège

45.0

4.72

0.0

2.4

Ghent

35.0

3.67

0.0

-3.6

Genk

45.0

4.72

12.5

4.6

GROWTH % 1YR 5YR CAGR

Prime Industrial Yields – September 2019 LOGISTICS LOCATION (FIGURES ARE GROSS, %)

CURRENT Q

LAST Q

LAST Y

10 YEAR HIGH LOW

Brussels

5.25

5.25

5.50

7.75

5.25

Antwerp

5.25

5.25

5.50

7.75

5.25

Liège

6.20

6.35

6.80

8.25

6.20

Genk

6.20

6.35

6.70

8.25

6.20

With respect to the yield data provided, in light of the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.

Recent performance

Yields

Yield - Country Average Rental Growth - Prime 9.00%

Yield - Prime Rental Growth - Country Average 30.0% 20.0%

7.00%

10.0% 5.00%

0.0%

3.00%

-10.0% Sep-09 Sep-11 Sep-13 Sep-15 Sep-17 Sep-19

Semi-industrial take-up in Q2 was somewhat below average with 180,000 sq m recorded, including 114,000 sq m in Flanders, 43,000 sq m in Wallonia and 24,000 sq m in the Brussels Region. Logistics demand continues to impress with 204,000 sq m, led by a strong Q3 for Flanders in particular with 158,000 sq m. This figure was especially attributable to a 60,000 sq m pre-letting by Barry Callebaut for their GDC in Lokeren (Scheldeland). This outstanding transaction is one of the top 10 largest deals this century and underlines the importance of domestic demand for the Belgian logistics market. Additionally, this year is also already the fourth best since the year 2000 in terms of take-up with a total of 784,000 sq m after three quarters.

Investment focus Investments in industrial property in Q3 were quite subdued having barely totalled EUR 10 million with one deal apiece for logistics and semi industrial. Both deals are notable for being owner occupation transactions.

Outlook The semi-industrial market can attract a broad enough range of occupier type to remain resilient despite deteriorating fundamentals. The sheer volume of logistics occupier activity this year should attract investors looking at alternative asset classes.

Rental growth (y/y)

BELGIUM

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. ©2019 Cushman & Wakefield LLP. All rights reserved.

Shane O’Neill Senior Research Analyst Avenue des Arts 56, 1000 Brussels Tel: +32 2 510 08 33 shane.oneill@cushwake.com cushmanwakefield.com