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Brussels market down but not out

The eventual impact of the current health crisis on the real estate market in Brussels may not be known for quite some time. Nevertheless, real estate advisor JLL has prepared a report on first quarter and some second quarter activity, which reveals the expected significant drop in take-up compared to last year.
Moving on to first quarter activity, JLL says there was a significant downturn, but some strategic transactions signed. The confining of the entire country amidst the Covid crisis significantly slowed, if not stopped, most of the transactions ongoing as from Mid-March. The occupier market returned a shy 75,444 m² of take-up across the city in the first quarter of 2020, compared to 219,584 m² in the corresponding period last year. JLL does point out, however, that that 2019 was exceptionally strong, boosted by large size pre-lets, and that a direct year on year comparison may therefore not be meaningful. A limited number of representative transactions have nevertheless been recorded. Among these, BPI / CFE is tooccupy 7,000 m² in Serenitas (Decentralised South East), as part of the redevelopment of a group of obsolete buildings formerly owned by Cofinimmo. The project also comprises around 20,000 m² of residential.
In the first week of the second quarter, ING signed for a 9-year lease in the Immobel’s Commerce 46 project totalling 14,200 m², so despite the confinement, it is still possible to sign strategic transactions.

Home and flex working

On the downside, fears JLL, a few transactions may, however, be reconsidered at least at the level of surface need, corporates having a higher recourse on part-time home working. A survey performed by JLL in the USA indicates that 65% of people want a maximum 1-2 days working from home. Home working is, hence, part of the equation, not the new normal. Alongside this, future design of workspace will take into consideration a wider space per employee. Whether the lower need for office space related to part-time home working will be fully or partly counterbalanced by increased surface per employee is unpredictable at this stage. Another phenomenon impacting future demand is the case of landlords proactively suggesting to existing tenants approaching the maturity of their lease that they renegotiate.

We recently reported on the paradox of co-working spaces, and JLL reveals that in the three month period, no new transaction by flex operators has been recorded. This may, JLL counters, be may be more in relation with WeWork’s financial troubles than with the crisis. And indeed, early in the second quarter, Silversquare announced that it will double its earlier planned hub in Befimmo’s Central Gate (Pentagon in the immediate proximity of Central Station) and should occupy some 9,000 m² in this strategic location by 2021. And despite its troubles, in the early days of January, WeWork opened its third hub in Brussels, in the Light-On building owned by UBS located in the European district.
JLL finished its analysis of this sector of the market by saying that the post-crisis evolution of flex operators is uncertain: operators with very low surface per workplace (5-6 m² at WeWork, which implies problem with regard to social distancing) are likely to be severely hit, those having a more standard surface area per workplace, such as Silversquare, Tribes, Fosbury & Sons and Spaces could prove more resilient.
Tim Harrup

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