The Walloon office market

Tim Harrup

Real estate advisor JLL has analysed the current state of the Walloon office market in a new report. It starts by saying that the Walloon office market is relatively small if compared to the other two regions. As of the end of 2022, the stock in the main 4 cities (Liège, Namur, Charleroi and Mons) was estimated at 1.7 million m² against 5 million m² in the big 5 cities of Flanders and 13 million m² in Brussels and its periphery, which comprises assets located in its Flemish as well as its Walloon suburbs.

Liège is by far the most active and ranks fourth in Belgium in market size with an estimated stock of 693,000 m², JLL goes on to say. Unlike that of Brussels and Flanders, the Walloon office market is largely influenced by demand from authorities. In figures, their share in total take-up over the 2018-2022 period was 70%. These can shake the market by large-size deals illustrated by an average transaction size of 4,826 m² while the private sector returned an average transaction size of only 874 m².

Corporate activity is however not absent, especially in Liège which is considered as the economic core of Wallonia and as such has a recurring leasing activity from corporates. Namur is the administrative capital, hence it is dominated by the regional authorities that closed significant transactions in 2020. Charleroi performs the role of ‘social capital’ of Wallonia and, as such, it hosts authorities related to social security as well as trade unions. Mons is the smallest market and has a limited level of occupier activity. Again, when representative transactions arise, they are mainly by local administrations. After a serious dip in 2021, activity rebounded in 2022 with a 59.5% growth to 57,260 m². The main driver was Charleroi with two key transactions: one built-to-suit by the Société Wallonne de Crédit Social and the pre-letting by two social security-related administrations of nearly the entirety of the ‘pentagon’ tower of the Left Side Business Park alongside the station. The latter was actually announced before 2022, but de-blocked at the end of last year with the launch of works. Demand in the other cities was comparatively low in the absence of large-size transactions.

Vacancy and pipeline

With regards to vacancy, JLL has observed a rising trend in Namur, Liège and Charleroi. As of the end of 2022 there was 26,161 m² vacant in Liège, which is a vacancy rate of 3.8%, one of the lowest in Belgium and in line with Ghent. Mons, however, has an even lower vacancy of 2.4% but based on a much smaller market size. Several recent completions in Namur, such as Eaglestone’s Aquilis (2,700 m² still available) and Thomas & Piron’s L’Arc (12,000 m² maintain vacancy in the city at a relatively high level of 7.1%, or 38,965 m² in volume. Vacancy in Charleroi is currently estimated at 33,359 m², 12.0% of stock. It is concentrated on the Aeropole business park in Gosselies. s. Interestingly, one of the largest available assets in the center (4,300 m² Avenue des Alliés) could be transformed into student housing. If permits are granted, it would be one of the first office reconversion of a representative size in Wallonia.
JLL has also identified a development pipeline of nearly 250,000 m² towards the end of the decade, of which 52% is speculative. Wallonia seems to be a place to be for Flemish developers, who are the most active. Around 85,000 m² is located in Charleroi, 74,000 m² in Namur, 44,000 m² in Mons and the rest in Liège. Timing is subject to cautions since, as experienced in the other two regions, the building permit process is excessively long in Wallonia.