ANTWERP OFFICE MARKET - Trends and outlook 2019

Page 1

THE ANTWERP OFFICE MARKET Trends and outlook 2019





TABLE OF CONTENTS INTRODUCTION

7

THE GROWTH OF THE ANTWERP OFFICE MARKET

10

CURRENT MARKET DYNAMICS

16

THE CO-WORKING SECTOR IN ANTWERP

20

DEALING WITH DECREASING VACANCY IN A DYNAMIC MARKET

23

ANTWERP OFFICE INVESTMENT MARKET

26

CONTACTS

28


“

The city is located in the heart of one of the most concentrated urban areas in Belgium and Europe


CUSHMAN & WAKEFIELD

INTRODUCTION The city of Antwerp is the capital of the Antwerp province and has a population of roughly 520,000 inhabitants, making it the second largest city in Belgium. The city is located in the heart of one of the most concentrated urban areas in Belgium and Europe, forming a triangle with Brussels and Ghent where most of Belgium’s economic and industrial activities are located.

ANTWERP

Antwerp functions as the main economic motor of the Flemish region but is also an important international business epicentre for certain industries. Antwerp is the second largest portal city in Europe, the world capital in the diamond industry and Europe’s largest petrochemical cluster. Moreover, the city has become an important fashion centre as well and is home to flagship stores and branches from all major domestic and international retailers. The Antwerp office market benefits from a decent road network but accessibility during peak time is often problematic due to heavy traffic congestion on the city ring road and the highways connecting the city. The railway infrastructure is well-established with direct connections to almost all major Belgian cities and some neighbouring capitals. Finally, Antwerp also benefits from an international airport near the centre of the city. With more than two million square meters of office stock, Antwerp is the second largest office market in Belgium. It is important to note that the seven subdistricts forming the Antwerp office market stretch beyond the boundaries of the city of Antwerp. Most of the Antwerp district’s office stock is concentrated in the Centrum and the Singel. TRAVEL TIMES FROM ANTWERP BY CAR

Station Antwerpen Centraal

Brussels

40min

Ghent

45min

Amsterdam

1h30

Rotterdam

1h05

Frankfurt

3h30

Station Antwerpen Berchem

Antwerp International Airport 7


CUSHMAN & WAKEFIELD

ANTWERP OFFICE DISTRICT DASHBOARD

Q 1 2019

A N TWE R P

ALL FL A N D E R S M A R K ETS ( A n twerp in clud e d )

Total: 2,302,000 Stock (sq m)

Centre: 1,144,000 Singel: 511,000

4,257,000

Periphery: 647,000

2018 Take-up (sq m)

144,000

290,000

Five-year average (sq m)

127,000

212,000

Vacant spaces (sq m)

122,000

205,000

Vacancy rate (%)

5.3%

4.8%

155

155

115

115-135

Prime rents (EUR/sq m/year) Weighted average rents (EUR/sq m/year) 8


CENTRUM

SINGEL

Kalmthout

MAP OF ANTWERP OFFICE DISTRICTS Stabroek Kappellen PERIFERIE NOORD

Brasschaat

HAVEN

Schoten Schilde

Wijnegem Sint-Gillis-Waas

Beveren

Zwijndrecht LINKEROEVER

Wommelgem

CENTRUM

Borsbeek SINGEL

Kruibeke

Sint-Niklaas

Zandhoven

PERIFERIE OOST

Antwerpen

Ranst

Mortsel Edegem

Boechout Hove

Hemiksem Aartselaar

Schelle

Temse

Lint

PERIFERIE ZUID

Duffel

Niel Hamme

Kontich

Bornem Boom Puurs

Rumst

Lier


CUSHMAN & WAKEFIELD

THE GROWTH OF THE ANTWERP OFFICE MARKET

The Antwerp office market is composed of three main districts:

CENTRE Enclosed by the Eilandje in the north, the railway and the Uitbreidingstraat in the east, the Schelde in the west and the Markgravelei and the Statiestraat in the south.

SINGEL Borders either side of the Ring to the south in the Berchem area.

PERIPHERY Is itself divided into the Haven, Linkeroever, Periferie Noord, Periferie Oost and Periferie Zuid subdistricts.

Antwerp is Flanders’ largest office market with a total stock of 2,302,000 sq m, ahead of Ghent (1,076,000 sq m), Leuven (555,000 sq m) and Mechelen (324,000 sq m). Antwerp’s office stock has grown at an average annual growth rate of 2% over the past 15 years. Over this period, its share in Flanders’ total stock has decreased from 59% to 54% while Ghent’s influence has grown over the period.

ANTWERP OFFICE STOCK, SQ M (LHS) AND SHARE OF TOTAL FLANDERS STOCK (RHS)

Centre

Singel

Periphery

2018

2017

2016

50%

2015

0

2014

52%

2013

500,000 2012

54%

2011

1,000,000

2010

56%

2009

1,500,000

2008

58%

2007

2,000,000

2006

60%

2005

2,500,000

Antwerp share of Flanders (RHS )

10


ONE ROOF

RUBENS

Antwerp is Flanders’ largest office market with a total stock of 2,302,000 sq m, ahead of Ghent, Leuven and Mechelen.”

DISTRIBUTION OF THE OFFICE STOCK IN THE ANTWERP DISTRICT

Grade A

Grade B

Grade C

Unknown


CUSHMAN & WAKEFIELD

STOCK BY BUILDING GRADE A 7% B 18%

Only 25% of the Antwerp stock (or 575,000 sq m) is not composed of Grade C buildings. This has been one of the main issues the Antwerp market has had to contend with over the past years. Indeed, demand for quality modern spaces is consistently strong, while corresponding supply has not been as readily available. Nevertheless, a surge of speculative projects over past years signals a recognition on behalf of developers of an opportunity to push the market forward.

2,302,000 SQ M

C 75%

ANTWERP LARGE RECENT OFFICE DELIVERIES

ASSET

DISTRICT

Provinciehuis

Centre

DELIVERY

SU R FACE

DAT E

( SQ M )

2019

6,000

OWN E R

TE N A N TS / OCCU PIE R S

Provincie Antwerpen

Own occupation

Post X

Singel

2016 – ongoing

> 50,000

IRET

Locale Politie, Kuehne + Nagel, Crelan, KPMG, Coolblue, EY, Proximus, Christelijke Mutualiteiten, …

The Link

Singel

2018

27,000

Baloise

VF Europe, Sweco, Meet District, Astrea, …

Fidea Verzekeringen

Centre

2018

7,000

Fidea

Own occupation

Havenhuis

Centre

2016

10,000

Antwerpse Havenbedrijf

Own occupation

Engie

Centre

2015

11,000

Baloise

Engie, KBC

12


“

...a surge of speculative projects over past years signals a recognition on behalf of developers of an opportunity to push the market forward.�


In the longer term, several locations and large-scale urban projects across the Antwerp territory will play key roles in shaping the future of the market. These include (but are not limited to-):

Blue Gate Antwerp

Campus West

Pelikaanstraat

An important PPP which will reconvert the 63 ha Petroleum Zuid brownfield along the Schelde in the Periferie Zuid district into a pole of activity centred on sustainable chemical research.

Group Bouwen are in the process of turning the Linkeroever district into a creditable alternative office location. The developer has purchased the site of the former Gazet van Antwerpen printing works which is subject to an important spatial implementation plan (RUP) and authorises the development of up to 80,000 sq m of offices.

This RUP (Ruimtelijke Uitvoeringsplan – a form of spatial implementation plan) is currently being drafted, having previously existed as a BPA (Bijzondere Plan van Aanleg – special land-use plan). In its draft form, it outlines that the 15,000 sq m area behind the Pelikaanstraat (Center district) could see the development of up to 260,700 sq m of offices phased across five office towers among other functions including residential and hospitality.

Oosterweelverbinding

Ex-Connectimmo site, Singel

Infrastructual project which aims to add the final missing links required to complete the Antwerp Ring road. Works on the Linkeroever/ Zwijndrecht junction on the left bank of the Schelde (one of five key junctions) are anticipated to start in 2019. The entire project is scheduled to end by 2026. The Oosterweelverbindingproject is intended to improve traffic and mobility around Antwerp and could render previously peripheral areas into interesting alternative economic locations such as is the case with the Linkeroever and the case of the RUP applying to Campus West. Several citizen groups are already formulating suggestions on how to leverage the project to develop and revitalise neighbourhoods.

Alides and Cores are planning to jointly develop a new office project on a strategically located plot of land previously owned by bpost and Connectimmo near Berchem station.


Blue Gate Antwerp Campus West Pelikaanstraat Oosterweelverbinding Ex-Connectimmo site, Singel


CUSHMAN & WAKEFIELD

CURRENT MARKET DYNAMICS Since 2014 included, average annual take-up in Antwerp amounts The Centre and Singel districts to 127,000 sq m. This number has have been the traditional hotgrown substantially over the past spots for market activity, especouple of years since dynamics cially in recent years - accounthave moved up a notch thanks to ing for close to 70% of take-up. some large speculative projects These districts are the most which have entered the market sought-after by occupiers due and triggered large occupier to their accessibility and historic moves. The average number of and economic relevance. deals amounts to 186 per year over the same period and has also increased due to occupiers’ ANTWERP TAKE-UP, 000S SQ M (LHS) AND NUMBER OF DEALS (RHS) appetite for the aforementioned 250,000 250 developments.

A look at the distribution of takeup over the 2014-2018 period underlines Antwerp’s main sectors of activity, although a couple of single large deals distort this view somewhat. Occupiers from the public sector, finance & insurance sectors, the industrial sector as well as logistics companies provide the bedrock of Antwerp’s office activity and have been complemented by the sectors such as ICT and the wider real estate sector over this period.

Centre

Singel

Periphery

2018

2017

2016

2015

2014

2012

0

2013

50 2011

50,000 2010

100

2009

100,000

2008

150

2007

150,000

2006

200

2005

... average annual takeup in Antwerp amounts to 127,000 sq m.”

200,000

0

# deals (RH S)

DISTRIBUTION OF TAKE-UP BY OCCUPIER TYPOLOGY, 2014-2018 11%

Belgian Administration

8% 45%

8%

647,500 SQ M

6% 5% 5%

16

Consumer goods Education Industry

7%

5%

Finance Insurance

IT Telecom Real Estate Distribution-Logistic-Transport Other services



Regarding public sector demand, the Sixth State Reform (transfer of competences from the Federal State to the Regions) in 2014 did not result in notable shifts of workers from Brussels towards the Flemish capital. Instead it led to a consolidation of Flemish administrative bodies in Brussels. Most recent public sector moves in Antwerp have involved provincial or city administration. Notable examples include Pleegzorg Provincie Antwerp’s purchase of the 4,000 sq m Berchemse Poort, and especially the 50,000 sq m development at Post X for the local Antwerp police.

ANTWERP TAKE-UP, ANNUAL SHARE OF PUBLIC AND PRIVATE SECTORS

“

Antwerp is an economic destination with an exceptional profile and history

100% 80% 60% 40%

Private sector

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

0%

2005

20%

Public sector

Occupiers locate in Antwerp because it is an economic destination in its own right with an exceptional profile and history in terms of international trade to this day.

Therefore, as a Belgian office location, Antwerp can attract occupiers thanks to characteristics which do not necessarily apply to nearby Brussels or Ghent. In addition, companies on its soil are capable of organic growth as the economy improves, as witnessed by the numerous extension deals which have taken place. Alternatively, certain companies located elsewhere open secondary locations in Antwerp to harvest closer proximity to clients as well as their own workforce, avoiding mobility complications which result from commuting to Brussels for instance.


CUSHMAN & WAKEFIELD

ANTWERP LARGE RECENT OFFICE TRANSACTIONS SU R FAC E

TENANT /

( SQ M )

OCC U PIE R

Singel

50,000

Lokale Politie Antwerpen

Development

Meir 127

Centre

33,000

Karel De Grote Hogeschool

Purchase

2017

De Persgroep new Belgian head office

Centre

8,000

De Persgroep

Development

2008

Noordster

Centre

15,500

FOD Financien / Douane

Pre-letting

2017

Argenta head office extension

Centre

+/- 15,000

Argenta

Development

2010

Copernicus

Centre

14,080

VDAB

Letting

2011

Mercator Building

Singel

14,000

Provincie Antwerpen

Letting

2009

City Link

Singel

13,808

Mercator

Letting

2012

Engie

Centre

11,000

Engie

Letting

2012

Havenhuis

Centre

10,000

Antwerp Port Authority

Letting

2010

Winthertur Building

Singel

8,742

AGSOA

Purchase

2018

The Link

Singel

7,705

VF Europe

Letting

2016

Fidea Antwerp

Centre

7,000

Fidea

Development

Y EA R

ASS E T

DISTR IC T

2017

Post X

2018

The Antwerp prime rent has been at a stable level of EUR 155/sq m/year since 2017 and is found in modern spaces in both the Centre and Singel districts. This level is forecasted to increase to as much as EUR 160/sq m/year in the next few years at competition for available Grade A spaces heats up.

T R A N SACTI O N

ANTWERP PRIME RENTS AND AVERAGE RENTS (EUR/SQ M/YEAR)

400 300 200 100

20

Average rents are traditionally fairly stable and are currently at EUR 115/sq m/year.

0 20 5 0 20 6 0 20 7 0 20 8 0 9 20 10 20 1 20 1 12 20 13 20 14 20 15 20 16 20 17 20 20 18 19 (f 20 ) 20 20 21

0

Prime rent Prime Brussels

19

Average weighted rent


CUSHMAN & WAKEFIELD

THE CO-WORKING SECTOR IN ANTWERP The co-working trend’s increasing influence on the office sector also applies to Antwerp. Indeed, take-up by co-working operators increased more than twofold in 2016 with a total of more than 4,000 sq m mainly attributed to Spaces in Post X. This number increased substantially again in 2017 when close to 10,000 sq m were recorded across four separate transactions. After a break in 2018, activity resumed strongly in 2019 thanks to Antwerp’s very own Fosbury & Sons who are expanding their presence having committed to take 10,000 sq m in the Montevideo project on Kattendijkdok..

Office spaces occupied by the coworking sector in Antwerp amount to more than 1.16% of the total stock, a figure in line with major European cities of 1% to 2%.

Operators’ preferred locations are the Centre and Singel district, i.e. well-connected locations, including by public transport in many cases.

COWORKING TAKE-UP IN ANTWERP (SQ M) 12,000 10,000 8,000 6,000 4,000 2,000 0

2012

2013

2014

Centrum

2015 Singel

2016

2017

2018

Periphery

LOCATION S

OPERATOR

(CU R R E N T A N D U PCOM IN G )

Fosbury & Sons

2

Interoffices

1

IWG (Regus and Spaces)

6 (Regus) | 1 (Spaces)

Meet District

1

Multiburo

1

Mundo a

1

Officenter

1

20

2019 YTD



“

The vacancy rate on the Antwerp market has been decreasing at a dizzying pace


CUSHMAN & WAKEFIELD

DEALING WITH DECREASING VACANCY IN A DYNAMIC MARKET

Vacancy currently stands at 5.32% as new projects have been quick to absorb demand, attesting to the level of demand for Grade A spaces (203,000 sq m, or 33% of take-up over the 2014-2018 period). This represents the lowest vacancy level in more than 15 years and warrants a closer look at what type of spaces are currently left available.

12.00% 10.00% 8.00% 6.00% 4.00% 2.00%

14 20 15 20 16 20 17 20 18

13

20

12

20

11

20

20

9

8

10

20

0

20

7

0

0

20

6

20

0

0

5

0.00% 20

This peak marked a turning point where speculatively delivered projects began absorbing demand. Indeed, over the 2016-2018 period, as much as 133,000 sq m of stock has been added to the market, including 109,000 sq m of projects which were launched speculatively – a very notable change in mentality in a Belgian environment which has always been prone to caution (i.e. turnkey developments), especially post GFC.

VACANCY RATE

20

The vacancy rate on the Antwerp market has been decreasing at a dizzying pace since its latest peak in 2017 (9.92%).

Vacancy rate Antwerp

There are currently 122,500 sq m of available office spaces on the market. An overwhelming share of this vacancy (77%) is attributable to Grade C spaces, including as much as 63,000 sq m corresponding to 1,000+ sq m floorplates. Such floor sizes require finding more elusive occupiers looking for large spaces in older buildings. Among the 28,000 sq m of Grade A- and B spaces available on the market (23% of the total vacancy), 20,000 sq m corresponds to 1,000+ sq m floorplates. Based on the marked preference for Grade A spaces over the past five years (33% of take-up), it is therefore fair to assume that available Grade A- and B spaces should fill up without too much difficulty.

Astute owners of older spaces are left with various scenarios to pursue to deal with their vacancy, including:

Reconverting into another function

Renovating into Grade A spaces.

Leaving as is.

such as residential. There has

Such outcomes could be

rental levels.

been a noted trend for such

especially envisaged in highly

reconversions in Antwerp over

accessible locations.

the past few years.

o Propose market-defying

o In the case of large floorplate owners: bet on a lack of alternatives for occupiers searching for such spaces.

23


DISTRIBUTION OF VACANT SPACES BY BUILDING GRADE Grade A 8% Grade B 15%

Owners of vacant spaces will also be keeping a keen eye on the development pipeline over the coming years. Indeed, the pipeline (projects currently under construction or for which permits have been delivered) is composed of potentially 172,000 sq m over the next five+ years. As things stand, 51% of this pipeline amounts to turnkey projects. In addition, question marks hang over the number of phases which will actually be delivered over this period in certain projects. Indeed, it is often the case that projects with permits initially planned to be developed speculatively are revised to await a critical mass of pre-lettings before constructions are launched.

122,500 SQ M

Grade C 77%

“

The pipeline is composed of potentially 172,000 sq m over the next five years.�

ANTWERP NEW OFFICE PROJECTS PIPELINE 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

10 8 6 4 2 0 2019

2020

Speculative / Awaiting tenants

2021 Committed

Unknow n date # projects (RHS)


CUSHMAN & WAKEFIELD

ANTWERP LARGE OFFICE PROJECTS ASSET

DISTRICT

1

Post X Building 8

2

3

SURFAC E D E LIV E RY COM M IT T E D/

OW NE R /

(SQ M )

YEAR

TURNKEY

D E V E LO P E R

Singel

8,000

2019

N

IRET

Post X Politie

Singel

50,000

2019

Y

IRET

De Persgroep

Centre

23,000

2020

Y

De Persgroep

N

Univesiteit Antwerpen, AG Vespa, Bopro, DEC, Essenscia, PMV, POM

4

Blue_App +

Periferie

5

BlueChem

Zuid

6

Argenta head office extension

Centre

15,000

2021

Y

Argenta

7

Campus West (8 buildings)

Linkeroever

46,000

TBD

TBD

Group Bouwen

8,000

2020

Antwerpen, Stad Antwerpen, VITO

7

3 6

4

2 1

5

25


CUSHMAN & WAKEFIELD

ANTWERP OFFICE INVESTMENT MARKET Regional office markets (chiefly represented by Antwerp) are perceived as something of a specialty market as far as investments are concerned. Foreign investors rarely invest in office buildings outside of Brussels due to factors such as small availability of assets, weak market rotation and lack of direct understanding of local dynamics. They can however be involved when large tickets become available.

Nevertheless, there has been an increase in momentum in the past couple of years, with larger landmark deals carried out such as Leasinvest’s purchase of Hangar 26 – 27 for EUR 22.6 million at the end of 2018, as well as Baloise’s acquisition of The Link for EUR 89 million in early 2019.

Over the 2014-2018 period, an average of five deals

per year were recorded for an average volume of EUR 84 million per year. For the sake of compar- ANTWERP ANNUAL INVESTED VOLUMES, EUR M 12 ison, Brussels has recorded an average invested 200 volume of EUR 1.52 billion over the same period. 10 150

Antwerp also differs by the nature of its investments, where purchasers often acquire lower-grade buildings, to renovate them, and most often to reconvert them into residential buildings.

100

6 4

50

2

0

0 2014

2015

2016

Volumes

Antwerp is the most expensive regional market in terms of prime assets ANTWERP SHARE OF INVESTED VOLUMES PER NATIONALITY

100% 80% 60% 40% 20% 0% 2014

8

2015

2016

Belgium

China

2017

2018

Q1 2019

Other

26

2017

2018

Q1 2019

# deals (RHS )

As mentioned above, Antwerp is a market overwhelmingly dominated by Belgian players. These mostly amount to private developers in the case of smaller assets which are destined to be reconverted or refurbished, and institutional investors or Belgian REITs in the case of larger transactions. Owner occupiers constitute a third smaller category of players on the Antwerp investment market – this was the case of a Chinese owner-occupier in the Eilandje in 2016.


As a result of the market being mostly confined to local capital, pressure on yields is far lesser than in larger cities which consistently attract foreign investors such as Brussels. However, Antwerp is the most expensive regional market in terms of prime assets with a prime yield having undergone successive compressions resulting in its current level of 6.00%. We do not forecast any further immediate compressions to this level.

7.20% 7.00% 6.80% 6.60% 6.40% 6.20% 6.00% 5.80% 5.60% 5.40%

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

ANTWERP AND FLANDERS PRIME OFFICE YIELDS

Flanders

Antwerp


In using the data contained in this report, the following should be noted: • The data series has been prepared based on information which has been collected through our own Research, Capital Markets and Agency teams as well as material available to us from public and other external sources. In respect of all external information, the sources are believed to be reliable (unless stated) and have been used in good faith. However, Cushman & Wakefield has not verified such information and cannot accept responsibility for their accuracy and completeness, nor for any undisclosed matters that would affect the conclusions we have drawn. Nonetheless, in interpreting the information used, we have had to rely on the validity and accuracy of the data and information sources available to us. • We have taken every possible care in the collation of this data series. The data is believed to be correct at the time of reporting but may be subject to change during the life of the project and beyond and as new information becomes available. We reserve the right to change data without prior notice in the light of revised market opinion and evidence. • In accordance with standard practice, we would confirm that the information is confidential to the parties to whom it is addressed, for their sole use, and for the stated purposes only. No responsibility is accepted to any third party in respect of the whole or any part of its contents. Neither the whole, nor any part of this project or data series, nor any reference thereto, may be included in any document, circular or statement without our written approval of the form and context in which it appears. It may not be reproduced by any means (electronic or otherwise) without prior written consent from Cushman & Wakefield.

ABOUT CUSHMAN & WAKEFIELD 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. To learn more, visit www.cushmanwakefield.be or follow @CushWakeBelgium on Twitter.

R ES EA R C H

OFFICE AGE NCY

SHANE O’NEILL

ERIC VAN DYCK

DIMITRI VLOEBERGHS

Senior Research Analyst, Regional offices and Industrial markets T: +32 2 510 08 33 M: +32 473 26 68 31 Shane.oneill@cushwake.com

Head of Antwerp Office International Partner T: +32 3 376 05 00 M: +32 475 257 902 Eric.vandyck@cushwake.com

Senior Account Manager T: +32 3 376 05 00 M: +32 476 77 03 76 Dimitri.vloeberghs@cushwake.com

CÉDRIC VAN MEERBEECK

NATHAN CLAESSENS

Head of Research Belgium & Luxembourg Partner T: +32 2 629 02 86 M: +32 477 98 11 83 Cedric.vanmeerbeeck@cushwake.com

Account Manager T: +32 3 376 05 06 M: +32 494 58 32 26 Nathan.claessens@cushwake.com

cushmanwakefield.be

© 2019 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.