Q3-2019 | Regional Office Market Snapshot | Belgium

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BELGIUM

Regional Office 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:

Increases forecast for Antwerp, Ghent and Liège by year end.

Prime Yields:

Stable outlook with only Ghent expected to see a 25 bps drop by year end.

Supply:

Strong speculative pipeline scheduled for coming years across many markets.

Demand:

Strong demand to be maintained into year end.

Occupier focus

Prime Office rents – September 2019 LOCATION

€ SQ.M YR

US$ SQ.FT YR

GROWTH % 1YR 5YR CAGR

Antwerp (Singel)

157

16.5

0.0

2.8

Liege

150

15.7

0.0

2.9

Ghent

155

16.3

3.3

0.7

Mechelen

150

15.7

3.4

1.4

Leuven

150

15.7

0.0

1.4

Namur

160

16.8

0.0

0.6

Charleroi

135

14.2

3.8

2.4

CURRENT Q

LAST Q

LAST Y

10 YEAR HIGH LOW

Antwerp (Singel)

5.75

5.75

6.25

7.50

5.75

Liege

6.75

6.75

6.75

8.75

6.75

Ghent

6.00

6.00

6.25

8.25

6.00

Prime Office yields – September 2019 LOCATION (FIGURES ARE GROSS, %)

NOTE: The above yields are for typical 6/9 leases. 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.

Very strong activity is maintained in Q3 with a total take-up of 85,000 sq m, making for an impressive 2019 so far. Demand was almost equally shared between Flanders (45,000 sq m) and one of Wallonia’s best quarters of the past decade (40,000 sq m). Activity in Q3 was led by Antwerp (29,000 sq m), followed by Liège which recorded one of its best quarters of take-up (26,000 sq m). The latter, in addition to Mechelen (10,000 sq m) and Namur (13,000 sq m) have recorded their best quarters thus far in 2019. Meanwhile the Ghent office market in Flanders recorded a notable slowdown during the quarter. Several deals involving the public sector in Wallonia led it to its outstanding Q3 level including pre-lettings by regional authorities in projects in Namur as well as Liège. All prime rents have remained stable in Q3, led by Namur in Wallonia (EUR 160/sq m/year), and Antwerp and Ghent in Flanders (EUR 155/sq m/year). The latter are forecast to increase to the same level as Namur by the end of the year.

Recent performance

Investment focus

Yield - Prime Rental Growth - Country Average

8.00% 7.00% 6.00% 5.00% 4.00% 3.00%

15.0% 10.0% 5.0% 0.0% -5.0% Sep-09 Sep-11 Sep-13 Sep-15 Sep-17 Sep-19

Rental growth (y/y)

Yields

Yield - Country Average Rental Growth - Prime

Despite a slowdown and a lack of deals recorded in Wallonia, invested volumes in Q3 totalled a respectable EUR 85 million thanks to a small handful of investments in Flanders, including Belfius’ purchase of AB InBev’s headquarters in Leuven for EUR 45 million in a sale & leaseback operation.

The current invested total this year amounts to an impressive EUR 351 million, already the highest volume recorded since 2011.

Outlook Regional office demand traditionally reaches its apex in the final quarter of the year, although it is difficult to see certain districts improve substantially on an already excellent year. A solid 2019 of investments will benefit from the closing of some substantial deals in Q4.

cushmanwakefield.com


BELGIUM

Regional Office Market Snapshot Third Quarter | 2019

BUILT STOCK

TAKE-UP

TAKE-UP YTD

UNDER CONSTRUCTION

(SQ.M)

(SQ.M)

(SQ.M)

(SQ.M)

Antwerp

2,285,000

29,000

85,000

134,000

Ghent

LOCATION

1,076,000

3,000

46,000

44,000

Leuven

561,000

3,200

10,000

0

Mechelen

325,000

10,000

15,000

0

Liège

456,000

26,000

41,000

86,000

Namur

511,000

13,000

20,000

26,000

Charleroi

439,000

140

28,000

19,000

Source: Cushman & Wakefield

Key Occupier Transactions PROPERTY

MARKET

TENANT

SIZE

TRANSACTION

(SQ.M)

TYPE

Boulevard d’Avroy 38 + Institut Montefiore

Liège

Resa

12,000

Pre-letting

Paradis Express

Liège

SPW

7,000

Pre-letting

Campus West

Antwerp

Spaces

5,000

Letting

The Beacon

Antwerp

BAM

5,000

Letting

Liège Office Center

Liège

Spaces

5,000

Pre-letting

Ex-Sweco

Mechelen

VDAB

4,000

Letting

Gate 7

Antwerp

Cheops Technology

3,000

Letting

Elephantus

Mechelen

Alcon

2,000

Pre-letting

Source: Cushman & Wakefield

SS

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