Q3-2019 | Retail Market Snapshot | Belgium

Page 1

BELGIUM

Retail Market Snapshot Third Quarter | 2019

Overview

Market Outlook

Latest figures show that economic climate will be mitigated in late 2019 and 2020 with a GDP growth revised on the downward, both globally and in Belgium. Subdued consumer confidence, online retail, new consumers’ habits… remain the key drivers of the observed shift in the retail landscape.

Prime Rents:

Prime Yields:

Supply:

Demand:

Downward trend observed, especially for the bigger surfaces and/or secondary locations. Prime locations are also under pressure. Prime yields increased for the second time in a row in the high streets sector while they slightly compressed in the out of town retail segment. Development pipeline on the downside due to rising uncertainties. Opportunities still exist for new formats, hybrid or mixed-use schemes. Demand is on the decrease, especially for the largest spaces and secondary locations.

Occupier focus With around 250,000 sq m of take-up recorded since the beginning of the year, the Belgian retail sector remains behind the performances observed in 2018. This downward movement is observed in the different retail segments.

Prime Retail Rents – September 2019 HIGH STREET SHOPS

€ SQ.M YR

US$ SQ.FT YR

Brussels

1,850

194.0

0.0

Antwerp

1,900

199.3

-5.0

1.7

Liege

950

99.6

-2.6

-2.0

Ghent

1,275

133.7

-1.9

-3.8

Bruges

1,000

104.9

-2.4

-2.8

Hasselt

1,100

115.4

-2.2

0.9

€ SQ.M YR

US$ SQ.FT YR

GROWTH % 1YR 5YR CAGR

Brussels

160

16.8

0.0

-0.6

Antwerp

165

17.3

0.0

1.9

CURRENT Q

LAST Q

LAST Y

10 YEAR HIGH LOW

Brussels

3.50

3.30

3.15

5.25

3.15

Antwerp

3.50

3.30

3.15

5.25

3.15

Liege

5.15

4.95

4.75

6.00

4.65

Ghent

4.15

3.95

3.95

5.50

3.75

Bruges

4.15

3.95

3.95

5.50

3.95

Hasselt

4.75

4.65

4.65

5.75

4.65

CURRENT Q

LAST Q

LAST Y

10 YEAR HIGH LOW

Brussels

5.40

5.50

5.25

6.50

5.25

Antwerp

5.15

5.25

5.25

6.50

5.15

CURRENT Q

LAST Q

LAST Y

10 YEAR HIGH LOW

4.50

4.50

4.10

5.50

OUT OF TOWN RETAIL (STAND ALONE RETAIL UNITS)

GROWTH % 1YR 5YR CAGR 1.1

Prime Retail Yields – September 2019 HIGH STREET SHOPS (FIGURES ARE NET, %)

OUT OF TOWN RETAIL (STAND ALONE RETAIL UNITS) (FIGURES ARE NET, %)

SHOPPING CENTRES (FIGURES ARE NET, %) Country prime

4.10

NOTE: Volumes below €25 million may result in sharper yields, approx. 50 to 100 basis points. 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.

The polarisation in the performance of retail centres is set to continue in the coming years. Fewer but stronger centres where the owner is prepared to invest in the quality of the environment will sweep up a greater share of experiential retailing while mid-tier centres without a clear consumer value proposition will struggle to survive. Furthermore, despite the current disruption brought by the Internet, this could also boost physical retail and make shopping easier and exciting, as well as making property marketing and management more efficient. Food & Beverage activities continue their exponential growth and play as key differentiator in the attractivity of a centre. Other sub-sectors and formats will also continue to drive strong demand, such as showrooming, brand experience offerings and health & wellbeing concept.

Investment focus Investment activity was subdued during the third quarter, though in line with activity observed since the beginning of 2019. Investors are more and more cautious and there is also a polarisation in the market. Smaller lot-size assets remain very liquid while we observe a slowdown for the bigger schemes or schemes located in secondary locations. Prime yields increased in all the high streets in Q3, with a correction between 10 and 25 bps. Conversely, prime yields compressed to 5.40% in the out of town retail (and even lower for foods), confirming the strong performances of this specific segment.

Outlook In Northern continental Europe, more than 85% of the sales still touch a store. However, the role of the store in creating these sales is changing and if the traditional physical retail will continue to exist, it will represent a smaller part of the overall tenant mix. Furthermore, mixed-use schemes and the blurring of traditional property sectors (mix with residential coworking spaces…) will be a key theme of the coming years.

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.

MARKET INDICATORS

Jean Baheux Head of Retail Agency Belgium Avenue des Arts 56, 1000 Brussels Tel: +32 2 546 0861 jean.baheux@cushwake.com cushmanwakefield.com