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M A R K E T B E AT

BRUSSELS Office Q2 2020 Economic Overview YoY Chg

12-Mo. Forecast

YTD Take-Up (sq m)

Following the heavy economic blow caused by the coronavirus-related lockdown, indicators and surveys confirm activity is now rebounding. In particular, surging expectations in both business and consumer confidence surveys support the view that recovery is underway. Oxford Economics’ GDP growth forecast indicated that the Belgian economy will contract by 8.7% this year followed by a rebound in 2021 where a 7.1% growth is expected. However, subsequent growth (up to mid-2022) will be much more gradual as higher unemployment (forecasted at 6.6% for 2020), subdued external demand, delayed investment plans and a limited fiscal response due to the return of the political deadlock, will slow the recovery.

7.60%

Letting Activity

Vacancy Rate

Letting activity during Q2 reached 78,000 sq m (62 transactions), bringing the total for the first half of the year to 128,000 sq m. Indeed, this is one of the weakest semesters ever recorded. As a reminder, activity in the letting market was expected to decrease following a remarkable take-up level in 2019, but the weak activity was strongly amplified by the COVID-19 outbreak and the subsequent lockdown measures. The take-up level this semester was boosted by the expected move of the OIB (EU Commission) in The One (30,000 sq m), and by the pre-letting of ING Bank in the Commerce 46 (14,200 sq m). Prime rents have not been affected by the economic downturn and remain at 320€/sq m/year. The weighted average rents, on the other hand are higher at around 190 €/sq m/year. The vacancy rate for the overall market is still at a low 7.60% but a slight uptick is expected due to the delivery of some new office schemes.

128,000

€320

Prime rent (€/sq m/year)

Investment Activity

ECONOMIC INDICATORS Q2 2020 YoY Chg

12-Mo. Forecast

-8.7% GDP Growth Belgium

6.3% Unemployment Rate Belgium

0.4% Consumer Price Index (% change) Source: Oxford Economics 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.

The first half of the year saw the highest investment volume ever recorded on the Brussels office market with EUR 2.4 bn invested. Indeed, this includes the historical transaction of the Finance Tower (sold for around EUR 1.3 bn). Nevertheless, H1 2020 recorded 45 transactions, the highest number of deals ever recorded in a single semester. Most of the transactions were launched before the outbreak and closed during the first quarter of the year, still reflecting the strong momentum observed over the last couple of years. The effect of the outbreak on the investment market has mainly been felt during Q2 which recorded 16 transactions and a total of 340 MEUR, including the sale of the Silver Tower for more than 200 MEUR. Prime yields did not change since last quarter and are at 4.0% following a high demand and strong activity before COVID-19. The long term prime yield saw a slight compression to 3.50%.

Outlook Take-up activity is still forecasted to be weak in the coming quarters despite some large transactions in the pipeline. Rental levels could change in some submarkets but the prime rent should remain unchanged at 320€/sq m/year (Leopold district). There are still numerous transactions in the investment pipeline but the activity might slow down as banks are being more prudent with loans which could lead to a higher cost and lower LTV, resulting in a slight rise of the prime yield. QUARTERLY TAKE-UP (in SQ M)

INVESTMENT VOLUME (MEUR, LHS) AND PRIME YIELD (RHS)

600.000

3.000

7,00%

500.000

2.500

6,00%

400.000

2.000

300.000

1.500

200.000

1.000

100.000

500

0

0 2010

2011 2012 2013 2014 Q1

Q2

2015 2016 2017 2018 Q3

Q4

2019 2020

5,00% 4,00% 3,00% 2,00% 1,00% 0,00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 Volume Prime Yield


M A R K E T B E AT

BRUSSELS Office Q2 2020 MARKET STATISTICS 2020-2022 UNDER CONSTRUCTION (SQM)

PRIME RENT (€/sq m/year)

PRIME YIELD

60,000

60,000

€320

4.00%

8,600

216,000

€250

4.10%

1,000

1,000

212,000

€220

5.00%

4.1%

3,400

13,200

3,000

€250

4.25%

26,000

4.3%

-

4,600

-

€195

5.50%

2,710,000

302,000

11.1%

6,900

16,800

-

€175

6.50%

2,105,000

357,000

17.0%

12,400

23,900

65,000

€185

6.25%

13,510,000

1,029,000

7.6%

78,400

128,100

556,000

€320

4.00%

INVENTORY (SQM)

AVAILABILITY (SQM)

VACANCY RATE

Q2 2020 TAKE-UP

YTD TAKE-UP

Brussels (Leopold)

3,360,000

127,000

3.8%

50,000

Brussels (Centre)

2,355,000

80,000

3.4%

4,700

Brussels (North)

1,480,000

100,000

6.7%

Brussels (Louise)

900,000

37,000

Brussels (Midi)

600,000

Brussels (Decentralised) Brussels (Periphery)

SUBMARKET

Brussels (Overall)

KEY LEASE TRANSACTIONS Q2 2020 PROPERTY

SUBMARKET

TENANT

SQ M

The One

Leopold

EU Commission

30,000

Letting

Commerce 46

Leopold

ING Bank

14,200

Pre-Letting

IT Tower

Louise

Skadden, Arps, State Mzagher & Flom

2,600

Letting

Corporate Village G

Airport

Frame 21

2,300

Letting

Service Public de Wallonie (SPW)

2,200

Letting

Collines de Wavre Walloon Brabant *Renewals not included in leasing statistics

TYPE

NIGEL BELLER Research Analyst +32 473 94 36 30 nigel.beller@cushwake.com

cushmanwakefield.com

KEY SALES TRANSACTIONS Q2 2020 PROPERTY

SUBMARKET

SELLER / BUYER

Volume (in MEUR)

Yield

Silver Tower

North

Ghelamco / Deka

213

3.25%

Leopold

Inami / Belfius, BPI, Burco

23

-

South

AXA REIM / Alides

20

6.50%

Tervueren House Woluwe Gate

KEY CONSTRUCTION COMPLETIONS YTD 2020 PROPERTY

CÉDRIC VAN MEERBEECK Head of Research Belgium & Luxembourg +32 477 98 11 83 cedric.vanmeerbeeck@cushwake.com

SUBMARKET

MAJOR TENANTS

SQ M

Mobius I (Allianz Tower)

North

Allianz

26,000

Allianz / Immobel

Manhattan Center

North

Spaces, Baker Mckenzie, Yara

41,000

Victory Advisors

Spectrum

Centrer

Meet District, BIO, Allia

16,500

Deka / Ghelamco

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION 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 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.

OWNER / DEVELOPER ©2020 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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