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M A R K E T B E AT

BRUSSELS Office Q3 2020 Economic Overview YoY Chg

12-Mo. Forecast

203,000 YTD Take-Up (sq m)

Economic data suggest that the post-lockdown rebound had been slightly stronger than expected earlier this year. GDP was revised up slightly to -7.8% in 2020, up from -8.7% previously estimated. The economy is expected to rebound in 2021 with an economic growth of 5.6%, with risks and uncertainties on the downside. Concerns about unemployment, however, remain high, putting pressure on consumer spending. Furthermore, total output and employment are not expected to return to pre-crisis levels before 2022. The unemployment rate, expected at 6.1% by the end of 2020, is forecasted to increase to 6.9% in 2021. CPI is expected to remain low at 0.8 in 2020 and 1.9 for 2021.

Letting Activity

7.25%

Around 76,000 sq m of take-up and 66 transactions were recorded on the Brussels office market in Q3. While take-up was well below the quarterly average of 100,000 sq m, the letting activity was not necessarily bad given the current circumstances. The total take-up YTD is around 203,000 sq m (200 transactions), mainly due to an historically low first quarter. The largest transaction of the quarter was recorded in the Belmont Court (Leopold) with the letting of the EEAS (13,300 sq m). Other notable transactions include the 6,400 sq m letting of TBWA in the Excelsiorlaan 77 (Airport) and the preletting of White & Case in the soon-to-be renovated The First (Leopold). When it comes to prime rents, CBD locations showed some resilience with the Leopold district still at 320€/sq m/year. Prime rents have increased to 275€/sq m/year in the Louise area following strong demand for qualitative office spaces. The North district, too, benefitted from an increase in prime rental values, currently found at 250€/sq m/year. The decentralised and peripheral areas, however, has seen prime values decrease to 175€/sq m/year. Weighted average rents for the year in Brussels reached an all-time high of 193€/sq m/year. Despite the expected uptick before the end of the year, the vacancy rate for the overall market has decreased this quarter to 7.25%.

Vacancy Rate

€320

Prime rent (€/sq m/year)

4.00% Prime yield

Investment Activity ECONOMIC INDICATORS Q3 2020 YoY Chg

12-Mo. Forecast

-7.8% GDP Growth Belgium

6.1% Unemployment Rate Belgium

0.8% Consumer Price Index (% change)

The investment activity in Brussels was quite decent with 320 MEUR (14 transactions) recorded this quarter, perfectly in line with the 10-year quarterly average. The total investment volume YTD has reached an exceptional EUR 2.74 bn with 57 transactions thanks to some remarkable transactions throughout the year. Even by disregarding the historic sale of the Finance Tower, the current investment volume YTD is above the annual average. While most large transactions are considered to be ‘pre-COVID’ deals, demand for office investments is still strong. This is especially true for core products in CBD locations, where prime yields are still at their lowest levels despite the economic downturn. Prime yields in decentralised districts and peripheral areas, however, have slightly increased (to 6.50%) due to current financing difficulties for riskier products. The LT prime yield is still found at 3.50%.

Outlook Some important letting transactions are still in the pipeline, especially in the CBD. Nevertheless, as forecasted, take-up was expected to decrease quite severely in 2020, regardless of the pandemic. A slightly stronger letting activity is expected for 2021, but still below the annual average. The arrival of new office schemes and the negative effects of the health crisis should lead to an increase in vacancy before the end of the year. Prime rental values, however, are expected to remain stable until 2021. The investment pipeline before 2021 is also promising and could give a final boost to the investment volume for the year. Competition is expected to remain strong for core assets but uncertainties relating to financing might disrupt some discussions. QUARTERLY TAKE-UP (in 000 SQ M)

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

600

3.000

7,00%

500

2.500

6,00%

400

2.000

300

1.500

200

1.000

100

500

0

0

5,00%

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.

2010

2011

2012

2013 Q1

2014 Q2

2015 Q3

2016

2017

Q4

2018

2019

2020

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

Prime Yield


M A R K E T B E AT

BRUSSELS Office Q3 2020 MARKET STATISTICS 2020-2022 UNDER CONSTRUCTION (SQM)

PRIME RENT (€/sq m/year)

PRIME YIELD

93,300

48,000

€320

4.00%

10,800

216,000

€250

4.10%

5,000

6,000

209,000

€250

5.00%

4.2%

2,500

15,400

3,000

€275

4.25%

26,000

4.3%

-

4,600

-

€195

5.50%

2,632,000

296,000

11.3%

6,700

23,500

-

€175

6.50%

2,115,000

360,000

17.0%

26,200

49,300

71,000

€175

6.50%

13,423,000

970,000

7.25%

76,000

202,900

547,000

€320

4.00%

INVENTORY (SQM)

AVAILABILITY (SQM)

VACANCY RATE

Q3 2020 TAKE-UP

YTD TAKE-UP

Brussels (Leopold)

3,357,000

104,000

3.1%

33,200

Brussels (Centre)

2,363,000

70,000

3.0%

2,400

Brussels (North)

1,483,000

77,000

5.2%

Brussels (Louise)

873,000

37,000

Brussels (Midi)

600,000

Brussels (Decentralised) Brussels (Periphery)

SUBMARKET

Brussels (Overall)

KEY LEASE TRANSACTIONS Q3 2020 PROPERTY

SUBMARKET

TENANT

SQ M

TYPE

Belmont Court

Leopold

EEAS

13,300

Letting

ART Building

Leopold

Confédération Construction

7,200

Purchase

Excelsiorlaan 75-77 The First Keiberg III

Airport

TBWA

6,400

Letting

Leopold

White & Case

4,800

Pre-letting

Airport

Penthouse Business Center

4,000

Purchase

CÉDRIC VAN MEERBEECK Head of Research Belgium & Luxembourg +32 477 98 11 83 cedric.vanmeerbeeck@cushwake.com NIGEL BELLER Research Analyst +32 473 94 36 30 nigel.beller@cushwake.com

*Renewals not included in leasing statistics

cushmanwakefield.com

KEY SALES TRANSACTIONS Q3 2020 PROPERTY

SUBMARKET

SELLER / BUYER

Volume (in MEUR)

Yield

Blue Tower

Louise

Befimmo / Goldman Sachs

112

5.30%

Walloon Brabant

MC2 Development / Belfius Insurance

39

4.80%

Leopold

Blue Colibri / Confédération Construction

35

N/A

South

Boghosslan / AG Insurance & Real Estate

28

N/A

ING HQ (Walloon Brabant) ART Building Brussels Green park

KEY CONSTRUCTION COMPLETIONS YTD 2020 PROPERTY

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

Centre

Meet District, BIO, Allia

16,500

Deka / Ghelamco

Quartz

Leopold

EFTA

9,000

Cofinimmo

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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