Broker and real estate advisor JLL has produced its analysis of the year just ending. Where the Brussels office market is concerned, it notes a growing trend among companies which is further calling into question the traditional office occupancy model. This is the desire for companies to attract ‘digital natives’ into their businesses, those young people who have grown up with smartphones, computers and tablets, and who have therefore never known life without them. This is leading to two phenomena: either a concentration in highly efficient and low energy large buildings, or in the exact opposite – small and flexible co-working areas. Where the former is concerned, JLL points to the pre-let of 22,000 m² in Quattuor by Beobank (North District), and in terms of the latter, there are myriad examples, the new paertnership between Silversquare and Befimmo being just one. Tribes, Spaces (Regus), Flex Corner (Cofinimmo)… the list goes on. In fact, JLL has calculated, at 23,000 m², take-up in small co-working spaces represented 6% of all Brussels take-up this year – four times higher than the average over the past five years.
A public sector year
Moving on to the wider market, while the private sector has accounted for 63% of overall take-up, the Belgian administrations have taken up virtually all of the rest (36%). Among these major public sector transactions, JLL highlights 32,400 m² by the INAMI in Galilée (North) and 6,200 m² by The Bank of Belgium at the Place Ste. Gudule (Centre). The Brussels Region has bought Blue Star (23,000 m² – Decentralised ), the STIB has taken 12,000 m² in the Centre, the SLRB has bought the Toison d’Or building (6,000 m² – Louise ) and the regional administration has also rented almost 9,000 m² in Arcadia (Centre). The total take-up for the year is expected to settle at around 385,000 m², a disappointing 13% lower than last year but in line with the five year average
Looking at projects, only 31,000 m² of speculative developments were delivered in 2017, a particularly low level which has had a positive effect on vacancy. The overall vacancy level of 8.4% at the beginning of December is the lowest for 15 years! In terms of the different districts, the CBD is down to 4.5% (from 4.9% a year earlier) and the rest of the market down to 15% from 17.4%.
JLL also points out that the new generation of highly efficient buildings meets with almost instant success: Belliard 40, Manhattan and Passport are three examples. Within this context of low supply, rents have moved up. We can finally confirm that the prime rent in the European district is € 300/m²/year, and average rents for new or existing buildings which meet the new market demands are standing at € 225. These two figures are up by 9% and 6% respectively, compared to last year. JLL believes a further rise is possible in 2018.
The Koreans are coming
Brussels remains popular with investors. Two billion Euros were placed in offices in 2017, 13% up on 2016. Major transactions are the sale of the Engie Towers to a Korean fund for around 400 million Euros; Another Korean investor, Hana, has bought Meeûs 8 for 212 million Euros, and yet another has parted with 122 million Euros for Brederode. Overall, Asian investors, led by the Koreans, accounted for a little over a third of all office investment. Yields have been squeezed to 4.5%.