Office space sector in Brussels sees tentative signs of recovery

2021 is clearly a year of transition in terms of the occupancy of office buildings in Brussels due to the effect of the pandemic but positive signals can be seen in the commercial property sector, according to the corporate real estate consulting firm Jones Lang Lasalle (JLL).

"At the level of take-up, the rate of occupation of office space, we’ve seen a slight increase of 8% over the first quarter thanks to transactions such as that carried out by RTBF and the acquisition of Realex for the Conference Centre of the European Union,” said JLL’s head of office for its Brussels agency, Céline Mandart on Tuesday.

“However, this performance must be qualified because the number of transactions is down by 36% over the full year. This is especially true for the segment of medium-sized transactions, office space in the 1,000 to 2,500m² range, which is the most impacted with a decline of 50%."

The proportion of new buildings - existing or projects - in the take-up of office space has never been so high: in the first half of the year, it amounted to 75%, of which 11% were in existing buildings. In addition, prospective tenants have shown a strong interest in green buildings, especially those displaying the best sustainability score, mainly "Excellent" or "Outstanding" on the international BREEAM scale for sustainable properties. Second-hand buildings are proving much less attractive, which is putting pressure on owners to upgrade their properties.

"In terms of vacancy rates, there is little change from last year,” continued Céline Mandart. “But we obviously wonder about what spaces will be vacated in the near future. The pandemic has accelerated the internal reorganisation of most corporates who are wondering how they will be able to attract their employees back to the office.

“Companies are working on a hybrid working formula, allowing flexibility in both the private and public sectors,” she added. “Most certainly, teleworking will be allowed two to three days a week. Companies will therefore review their real estate strategy, reduce the number of square metres and free up spaces that have become obsolete. But will there be buyers for these types of spaces? That is the question.”

In terms of the future, the second half of the year looks more promising with an expected run of transactions regarding projects located in the Brussels North district. "2021 will be better than 2020, but without too much reason for excitement," predicted Jones Lang Lasalle.

This caution may be down to a dark cloud looming on the horizon: Construction costs increased by 8% in Belgium in 2020, according to Arcadis' International Construction Costs Index 2021. This was due to the increase in the price of raw materials and "sustainable" bonds. This increase could have an effect in the form of higher rents.