The Growth of the Antwerp Office Market 10

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THE ANTWERP OFFICE MARKET

Trends and outlook 2019

TABLE OF CONTENTS

INTRODUCTION 7

THE GROWTH OF THE ANTWERP OFFICE MARKET 10

CURRENT MARKET DYNAMICS 16

THE CO-WORKING SECTOR IN ANTWERP 20

DEALING WITH DECREASING VACANCY IN A DYNAMIC MARKET 23

ANTWERP OFFICE INVESTMENT MARKET 26

CONTACTS 28 “The city is located in the heart of one of the most concentrated urban areas in Belgium and Europe CUSHMAN & WAKEFIELD

INTRODUCTION

The city of Antwerp is the capital and has of the Antwerp province Antwerp functions as the main economic motor of the Flemish a population of roughly 520,000 region but is also an important international business epicentre inhabitants, making it the second for certain industries. Antwerp is the second largest portal city in largest city in Belgium. The city is Europe, the world capital in the diamond industry and Europe’s located in the heart of one of the largest petrochemical cluster. Moreover, the city has become an most concentrated urban areas in important fashion centre as well and is home to flagship stores and Belgium and Europe, forming a branches from all major domestic and international retailers. triangle with Brussels and Ghent where most of Belgium’s econom- The Antwerp office market benefits from a decent road network ic and industrial activities are lo- but accessibility during peak time is often problematic due to cated. heavy traffic congestion on the city ring road and the highways connecting the city. The railway infrastructure is well-established with direct connections to almost all major Belgian cities and some ANTWERP neighbouring capitals. Finally, Antwerp also benefits from an international airport near the centre of the city.

With more than two million square meters of office stock, Antwerp is the second largest office market in Belgium. It is important to note that the seven subdistricts forming the Antwerp office market stretch beyond the boundaries of the city of Antwerp. Most of the Antwerp district’s office stock is concentrated in the Centrum and the Singel. TRAVEL TIMES FROM ANTWERP BY CAR

Brussels 40min

Station Ghent 45min Antwerpen Centraal Amsterdam 1h30

Rotterdam 1h05

Frankfurt 3h30

Station Antwerpen Berchem

Antwerp International Airport

7 CUSHMAN & WAKEFIELD

ANTWERP OFFICE DISTRICT DASHBOARD

ALL Q1 2019 ANTWERP FLANDERS MARKETS (Antwerp included)

Total: 2,302,000

Centre: 1,144,000 Stock (sq m) 4,257,000 Singel: 511,000

Periphery: 647,000

2018 Take-up (sq m) 144,000 290,000

Five-year average (sq m) 127,000 212,000

Vacant spaces (sq m) 122,000 205,000

Vacancy rate (%) 5.3% 4.8%

Prime rents 155 155 (EUR/sq m/year)

Weighted average rents 115 115-135 (EUR/sq m/year)

8 CENTRUM

SINGEL

Kalmthout

MAP OF ANTWERP OFFICE DISTRICTS

Stabroek

Kappellen

PERIFERIE NOORD

HAVEN Brasschaat

Schoten

Schilde Wijnegem Sint-Gillis-Waas Zwijndrecht Beveren Zandhoven LINKEROEVER Antwerpen PERIFERIE OOST CENTRUM Wommelgem Borsbeek Ranst SINGEL

Kruibeke Mortsel Sint-Niklaas Boechout Edegem Hove Hemiksem Aartselaar Kontich Schelle Lier Temse Lint PERIFERIE ZUID Du el Niel Hamme Bornem

Boom Puurs Rumst CUSHMAN & WAKEFIELD

THE GROWTH OF THE ANTWERP OFFICE MARKET

The Antwerp office market is composed ofthree main districts:

▶ ▶

▶ CENTRE SINGEL PERIPHERY Enclosed by the Eilandje in the Borders either side of the Ring Is itself divided into the Haven, north, the railway and the Uit- to the south in the Berchem Linkeroever, Periferie Noord, breidingstraat in the east, the area. Periferie Oost and Periferie Schelde in the west and the Zuid subdistricts. Markgravelei and the Stati- estraat in the south.

Antwerp is Flanders’ largest office market with a total stock of 2,302,000 sq m, ahead of Ghent (1,076,000 sq m), Leuven (555,000 sq m) and Mechelen (324,000 sq m). Antwerp’s office stock has grown at an average annual growth rate of 2% over the past 15 years. Over this period, its share in Flanders’ total stock has decreased from 59% to 54% while Ghent’s influence has grown over the period.

ANTWERP OFFICE STOCK, SQ M (LHS) AND SHARE OF TOTAL FLANDERS STOCK (RHS)

2,500,000 60%

2,000,000 58%

1,500,000 56%

1,000,000 54%

500,000 52%

0 50% 11 12 17 10 13 14 15 16 18 05 07 06 08 09 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Centre Singel Periphery Antwerp share of Flanders (RHS)

10 RUBENS ONE ROOF

Antwerp is Flanders’ largest office market with a total “ stock of 2,302,000 sq m, ahead of Ghent, Leuven and Mechelen.”

DISTRIBUTION OF THE OFFICE STOCK IN THE ANTWERP DISTRICT

Grade A Grade B Grade C Unknown CUSHMAN & WAKEFIELD

STOCK BY BUILDING GRADE

A 7%

B Only 25% of the Antwerp stock (or 575,000 sq m) 18% is not composed of Grade C buildings. This has been one of the main issues the Antwerp market 2,302,000 SQ M has had to contend with over the past years. In- deed, demand for quality modern spaces is consis- tently strong, while corresponding supply has not been as readily available. Nevertheless, a surge of speculative projects over past years signals a rec- C ognition on behalf of developers of an opportunity 75% to push the market forward.

ANTWERP LARGE RECENT OFFICE DELIVERIES

DELIVERY SURFACE TENANTS/ ASSET DISTRICT OWNER DATE (SQ M) OCCUPIERS

Provincie Provinciehuis Centre 2019 6,000 Own occupation Antwerpen

Locale Politie, Kuehne + Nagel, Crelan, KPMG, 2016 – Post X Singel > 50,000 IRET Coolblue, EY, Proximus, ongoing Christelijke Mutualiteiten, …

VF Europe, Sweco, Meet The Link Singel 2018 27,000 Baloise District, Astrea, …

Fidea Centre 2018 7,000 Fidea Own occupation Verzekeringen

Antwerpse Havenhuis Centre 2016 10,000 Own occupation Havenbedrijf

Engie Centre 2015 11,000 Baloise Engie, KBC

12 “...a surge of speculative projects over past years signals a recognition on behalf of developers of an opportunity to push the market forward.” In the longer term, several locations and large-scale urban projects across the Antwerp territory will play key roles in shaping the future of the market. These include (but are not limited to-):

Blue Gate Antwerp Campus West Pelikaanstraat

An important PPP which will re- Group Bouwen are in the process This RUP (Ruimtelijke Uitvoeringsplan – convert the 63 ha Petroleum Zuid of turning the Linkeroever dis- a form of spatial implementation plan) brownfield along the Schelde in trict into a creditable alternative is currently being drafted, having previ- the Periferie Zuid district into a office location. The developer ously existed as a BPA (Bijzondere Plan pole of activity centred on sus- has purchased the site of the for- van Aanleg – special land-use plan). In its tainable chemical research. mer Gazet van Antwerpen print- draft form, it outlines that the 15,000 sq ing works which is subject to an m area behind the Pelikaanstraat (Center important spatial implementa- district) could see the development of up tion plan (RUP) and authorises to 260,700 sq m of offices phased across the development of up to 80,000 five office towers among other functions sq m of offices. including residential and hospitality.

Oosterweelverbinding Ex-Connectimmo site, Singel

Infrastructual project which aims to add the final missing links re- Alides and Cores are planning quired to complete the Antwerp Ring road. Works on the Linkeroever/ to jointly develop a new office Zwijndrecht junction on the left bank of the Schelde (one of five key project on a strategically locat- junctions) are anticipated to start in 2019. The entire project is sched- ed plot of land previously owned uled to end by 2026. The Oosterweelverbindingproject is intended to by bpost and Connectimmo near improve traffic and mobility around Antwerp and could render previ- Berchem station. ously peripheral areas into interesting alternative economic locations such as is the case with the Linkeroever and the case of the RUP applying to Campus West. Several citizen groups are already formu- lating suggestions on how to leverage the project to develop and revitalise neighbourhoods. Blue Gate Antwerp

Campus West

Pelikaanstraat

Oosterweelverbinding

Ex-Connectimmo site, Singel CUSHMAN & WAKEFIELD

CURRENT MARKET DYNAMICS

Since 2014 included, average annual take-up in Antwerp amounts The Centre and Singel districts to 127,000 sq m. This number has have been the traditional hot- grown substantially over the past spots for market activity, espe- couple of years since dynamics cially in recent years - account- have moved up a notch thanks to ing for close to 70% of take-up. some large speculative projects These districts are the most which have entered the market sought-after by occupiers due and triggered large occupier to their accessibility and historic moves. The average number of and economic relevance. deals amounts to 186 per year over the same period and has also increased due to occupiers’ ANTWERP TAKE-UP, 000S SQ M (LHS) AND NUMBER OF DEALS (RHS) appetite for the aforementioned developments. 250,000 250

200,000 200

150,000 150

... average 100,000 100 annual take- “ 50,000 50 up in Antwerp 0 0 11 12 13 15 17 18 14 16 10 05 06 07 08 09 20 20 20 20 20 20 20 20 20

amounts to 20 20 20 20 20 127,000 sq m.” Centre Singel Periphery # deals (RHS)

A look at the distribution of take- up over the 2014-2018 period DISTRIBUTION OF TAKE-UP BY OCCUPIER TYPOLOGY, 2014-2018 underlines Antwerp’s main sectors of activity, although a 11% Belgian Administration couple of single large deals distort this view somewhat. Occupiers Finance Insurance 8% from the public sector, finance & Consumer goods insurance sectors, the industrial Education sector as well as logistics 45% 8% Industry companies provide the bedrock 647,500 SQ M of Antwerp’s office activity and 7% IT Telecom have been complemented by Real Estate the sectors such as ICT and the 6% Distribution-Logistic-Transport wider real estate sector over this 5% 5% 5% period. Other services

Regarding public sector demand, the Sixth State Reform (trans- fer of competences from the Federal State to the Regions) in 2014 did not result in notable shifts of workers from Brussels towards the Flemish capital. Instead it led to a consolidation of Flemish administrative bodies in Brussels. Most recent public sector moves in Antwerp have involved provincial or city administration. Notable examples include Pleegzorg Provincie Antwerp’s purchase of the 4,000 sq m Berchemse Poort, and Antwerp is an especially the 50,000 sq m development at Post X for the local “economic destination Antwerp police. with an exceptional ANTWERP TAKE-UP, ANNUAL SHARE OF PUBLIC AND PRIVATE SECTORS profile and history

100%

80% Therefore, as a Belgian office location, Antwerp can attract occupiers thanks 60% to characteristics which do not neces- 40% sarily apply to nearby Brussels or Gh- ent. In addition, companies on its soil 20% are capable of organic growth as the 0% economy improves, as witnessed by 11 12 17 10 13 14 15 16 18 05 07 the numerous extension deals which 06 08 09 20 20 20 20 20 20 20 20 20 20 20 20 20 20 have taken place. Alternatively, certain companies located elsewhere open Private sector Public sector secondary locations in Antwerp to har- vest closer proximity to clients as well Occupiers locate in Antwerp because it is an economic desti- as their own workforce, avoiding mo- nation in its own right with an exceptional profile and history in bility complications which result from terms of international trade to this day. commuting to Brussels for instance. CUSHMAN & WAKEFIELD

ANTWERP LARGE RECENT OFFICE TRANSACTIONS

SURFACE TENANT / YEAR ASSET DISTRICT TRANSACTION (SQ M) OCCUPIER Lokale Politie 2017 Post X Singel 50,000 Development Antwerpen Karel De Grote 2018 Meir 127 Centre 33,000 Purchase Hogeschool De Persgroep 2017 new Belgian head Centre 8,000 De Persgroep Development office FOD Financien 2008 Noordster Centre 15,500 Pre-letting / Douane Argenta head 2017 Centre +/- 15,000 Argenta Development office extension

2010 Copernicus Centre 14,080 VDAB Letting

Provincie 2011 Mercator Building Singel 14,000 Letting Antwerpen

2009 City Link Singel 13,808 Mercator Letting

2012 Engie Centre 11,000 Engie Letting

Antwerp Port 2012 Havenhuis Centre 10,000 Letting Authority Winthertur Build- 2010 Singel 8,742 AGSOA Purchase ing

2018 The Link Singel 7,705 VF Europe Letting

2016 Fidea Antwerp Centre 7,000 Fidea Development

The Antwerp prime rent has been at a stable level of EUR ANTWERP PRIME RENTS AND AVERAGE RENTS 155/sq m/year since 2017 and is (EUR/SQ M/YEAR) found in modern spaces in both 400 the Centre and Singel districts. This level is forecasted to in- 300 crease to as much as EUR 160/sq 200 m/year in the next few years at competition for available Grade 100 A spaces heats up. 0 11 Average rents are traditionally 05 06 07 08 09 10 12 13 14 15 16 17 18 f) 20 21 20 ( 20 20 20 20 20 20 20 20 20 20 20 20 20 19 20 20 fairly stable and are currently at 20 EUR 115/sq m/year. Prime rent Average weighted rent Prime Brussels

19 CUSHMAN & WAKEFIELD

THE CO-WORKING SECTOR IN ANTWERP

The co-working trend’s increasing influence Office spaces occupied by Operators’ preferred lo- on the office sector also applies to Antwerp. the coworking sector in cations are the Centre Indeed, take-up by co-working operators in- Antwerp amount to more and Singel district, i.e. creased more than twofold in 2016 with a total than 1.16% of the total well-connected locations, of more than 4,000 sq m mainly attributed to stock, a figure in line with including by public trans- Spaces in Post X. This number increased sub- major European cities of port in many cases. stantially again in 2017 when close to 10,000 sq 1% to 2%. m were recorded across four separate transactions. After a break in 2018, activity resumed COWORKING TAKE-UP IN ANTWERP (SQ M) strongly in 2019 thanks to Antwerp’s very own Fosbury & Sons who are expanding their pres- 12,000 ence having committed to take 10,000 sq m in 10,000 the Montevideo project on Kattendijkdok.. 8,000 6,000

4,000

2,000

0 2012 2013 2014 2015 2016 2017 2018 2019 YTD Centrum Singel Periphery

LOCATIONS OPERATOR (CURRENT AND UPCOMING)

Fosbury & Sons 2

Interoffices 1

IWG (Regus and Spaces) 6 (Regus) | 1 (Spaces)

Meet District 1

Multiburo 1

Mundo a 1

Officenter 1

“The vacancy rate on the Antwerp market has been decreasing at a dizzying pace CUSHMAN & WAKEFIELD

DEALING WITH DECREASING VACANCY IN A DYNAMIC MARKET

The vacancy rate on the Antwerp market has been VACANCY RATE decreasing at a dizzying pace since its latest peak 12.00% in 2017 (9.92%). 10.00% 8.00% This peak marked a turning point where specula- 6.00% tively delivered projects began absorbing demand. 4.00% Indeed, over the 2016-2018 period, as much as 2.00% 133,000 sq m of stock has been added to the mar- 0.00% ket, including 109,000 sq m of projects which were 11 12 13 15 16 17 18 05 06 07 08 09 10 14 20 20 20 20 20 20 20 launched speculatively – a very notable change in 20 20 20 20 20 20 20 mentality in a Belgian environment which has al- Vacancy rate Antwerp ways been prone to caution (i.e. turnkey develop- There are currently 122,500 sq m of available office spac- ments), especially post GFC. es on the market. An overwhelming share of this vacancy (77%) is attributable to Grade C spaces, including as Vacancy currently stands at 5.32% as new projects much as 63,000 sq m corresponding to 1,000+ sq m have been quick to absorb demand, attesting to floorplates. Such floor sizes require finding more elusive the level of demand for Grade A spaces (203,000 occupiers looking for large spaces in older buildings. sq m, or 33% of take-up over the 2014-2018 pe- Among the 28,000 sq m of Grade A- and B spaces avail- riod). This represents the lowest vacancy level in able on the market (23% of the total vacancy), 20,000 sq more than 15 years and warrants a closer look at m corresponds to 1,000+ sq m floorplates. what type of spaces are currently left available.

Based on the marked preference for Grade A spaces over the past five years (33% of take-up), it is therefore fair to assume that available Grade A- and B spaces should fill up without too much difficulty.

Astute owners of older spaces are left with various scenarios to pursue to deal with their vacancy, including:

Reconverting into another Renovating into Grade A Leaving as is. function spaces. o Propose market-defying such as residential. There has Such outcomes could be rental levels. been a noted trend for such especially envisaged in highly o In the case of large floorplate reconversions in Antwerp over accessible locations. owners: bet on a lack of the past few years. alternatives for occupiers searching for such spaces.

23 DISTRIBUTION OF VACANT SPACES BY BUILDING GRADE

Grade A 8% Grade B Owners of vacant spaces will also be keeping a keen eye on 15% the development pipeline over the coming years.

Indeed, the pipeline (projects currently under construction 122,500 SQ M or for which permits have been delivered) is composed of potentially 172,000 sq m over the next five+ years. As things stand, 51% of this pipeline amounts to turnkey projects. In addition, question marks hang over the number of phases which will actually be delivered over this period in certain projects. Grade C Indeed, it is often the case that projects with permits ini- 77% tially planned to be developed speculatively are revised to await a critical mass of pre-lettings before constructions are launched.

ANTWERP NEW OFFICE PROJECTS PIPELINE The pipeline 80,000 10 70,000 8 “is composed 60,000 50,000 6 of potentially 40,000 30,000 4 172,000 sq m 20,000 2 over the next five 10,000 0 0 years.” 2019 2020 2021 Unknown date Speculative / Awaiting tenants Committed # projects (RHS) CUSHMAN & WAKEFIELD

ANTWERP LARGE OFFICE PROJECTS

SURFACE DELIVERY COMMITTED/ OWNER/ ASSET DISTRICT (SQ M) YEAR TURNKEY DEVELOPER

1 Post X Building 8 Singel 8,000 2019 N IRET

2 Post X Politie Singel 50,000 2019 Y IRET

3 De Persgroep Centre 23,000 2020 Y De Persgroep

Univesiteit Antwerpen, AG Vespa, Bopro, DEC, 4 Blue_App + Periferie 8,000 2020 N Essenscia, PMV, POM 5 BlueChem Zuid Antwerpen, Stad Antwerpen, VITO

Argenta head 6 Centre 15,000 2021 Y Argenta office extension

Campus West 7 Linkeroever 46,000 TBD TBD Group Bouwen (8 buildings)

2 1 5 4

25 CUSHMAN & WAKEFIELD

ANTWERP OFFICE INVESTMENT MARKET

Regional office markets (chiefly represented by Antwerp) are perceived as something of a spe- cialty market as far as investments are concerned. Foreign investors rarely invest in office buildings outside of Brussels due to factors such as small availability of assets, weak market rotation and Nevertheless, there has been an increase in mo- lack of direct understanding of local dynamics. mentum in the past couple of years, with larger They can however be involved when large tickets landmark deals carried out such as Leasinvest’s become available. purchase of Hangar 26 – 27 for EUR 22.6 million at the end of 2018, as well as Baloise’s acquisition of Over the 2014-2018 period, an average of five deals The Link for EUR 89 million in early 2019. per year were recorded for an average volume of EUR 84 million per year. For the sake of compar- ANTWERP ANNUAL INVESTED VOLUMES, EUR M ison, Brussels has recorded an average invested 200 12 volume of EUR 1.52 billion over the same period. 10 150 8 Antwerp also differs by the nature of its invest- 100 6 ments, where purchasers often acquire low- 4 er-grade buildings, to renovate them, and most 50 often to reconvert them into residential buildings. 2 0 0 2014 2015 2016 2017 2018 Q1 2019 Volumes # deals (RHS)

As mentioned above, Antwerp is a market over- Antwerp is the most whelmingly dominated by Belgian players. These “expensive regional market mostly amount to private developers in the case of smaller assets which are destined to be recon- in terms of prime assets verted or refurbished, and institutional investors or Belgian REITs in the case of larger transactions. Owner occupiers constitute a third smaller cate- ANTWERP SHARE OF INVESTED VOLUMES gory of players on the Antwerp investment market PER NATIONALITY – this was the case of a Chinese owner-occupier in 100% the Eilandje in 2016.

80%

60%

40%

20%

0% 2014 2015 2016 2017 2018 Q1 2019

Belgium China Other

26 ANTWERP OFFICE INVESTMENT MARKET

ANTWERP AND FLANDERS PRIME OFFICE YIELDS

As a result of the market being mostly con- 7.20% fined to local capital, pressure on yields is far 7.00% 6.80% lesser than in larger cities which consistent- 6.60% 6.40% ly attract foreign investors such as Brussels. 6.20% However, Antwerp is the most expensive re- 6.00% 5.80% gional market in terms of prime assets with 5.60% a prime yield having undergone successive 5.40% 7 7 4 5 5 6 7 7 8 4 4 5 5 6 6 8 8 9 4 6 8 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 compressions resulting in its current level of 01 01 01 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Q1

6.00%. We do not forecast any further imme- Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q3 Q2 Q3 Q4 Q3 Q4 Q2 Q3 Q4 Q4 Q2 Q3 Q4 diate compressions to this level. Flanders Antwerp In using the data contained in this report, the following should be noted:

• The data series has been prepared based on information which has been collected through our own Research, Capital Markets and Agency teams as well as material available to us from public and other external sources. In respect of all external information, the sources are believed to be reliable (unless stated) and have been used in good faith. However, Cushman & Wakefield has not verified such information and cannot accept responsibility for their accuracy and completeness, nor for any undisclosed matters that would affect the conclusions we have drawn. Nonetheless, in interpreting the information used, we have had to rely on the validity and accuracy of the data and information sources available to us.

• We have taken every possible care in the collation of this data series. The data is believed to be correct at the time of reporting but may be subject to change during the life of the project and beyond and as new information becomes available. We reserve the right to change data without prior notice in the light of revised market opinion and evidence.

• In accordance with standard practice, we would confirm that the information is confidential to the parties to whom it is ad- dressed, for their sole use, and for the stated purposes only. No responsibility is accepted to any third party in respect of the whole or any part of its contents. Neither the whole, nor any part of this project or data series, nor any reference thereto, may be included in any document, circular or statement without our written approval of the form and context in which it appears. It may not be reproduced by any means (electronic or otherwise) without prior written consent from Cushman & Wakefield.

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RESEARCH OFFICE AGENCY

SHANE O’NEILL ERIC VAN DYCK DIMITRI VLOEBERGHS Senior Research Analyst, Head of Antwerp Office Senior Account Manager Regional offices and Industrial markets International Partner T: +32 3 376 05 00 T: +32 2 510 08 33 T: +32 3 376 05 00 M: +32 476 77 03 76 M: +32 473 26 68 31 M: +32 475 257 902 [email protected] [email protected] [email protected]

CÉDRIC VAN MEERBEECK NATHAN CLAESSENS Head of Research Belgium & Luxembourg Account Manager Partner T: +32 3 376 05 06 T: +32 2 629 02 86 M: +32 494 58 32 26 M: +32 477 98 11 83 [email protected] [email protected]

© 2019 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 cushmanwakefield.be omissions and is presented without any warranty or representations as to its accuracy.