The document discusses the serviced office market in Belgium. It provides:
1) An overview of the history and evolution of flexible workspaces in Belgium, noting steady growth from 2005-2020 interrupted by COVID-19.
2) Statistics on the current Belgian office market and how the business/coworking center market accounts for over 3% of total office space.
3) Financial data on the business center market in Belgium, including a 3% growth in turnover in 2020 due to COVID-19, and over 45% of centers having losses in 2020 compared to 30-35% normally.
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Belgian serviced office market analysis oktober 2021
1. fin POWER
Presentation at the Belgian Workspace Association, 2021
SERVICED OFFICE MARKET IN BELGIUM
Key financial figures
B.W.A. Conference, 21 October 2021
2. I. History and evolution of # flexible workspaces
II. Evolution within the Belgian Office market
III. The business centre market : actual situation
IV. Key financials of the business centres in Belgium
V. Conclusions
INTRODUCTION
3. Business & coworking-centers in Belgium :
Slides available on internet
What is a business or coworking-center ?
Uses this as name of his business (business center or coworking-space or both)
Business center : full-time reception available – cfr. VAT-regulation for business centers
Coworking-center : focus on ‘community’, community manager, no full time reception necessary
Serviced offices = full time reception services or community-manager
Used figures :
Published financial data (Belgian National Bank)
INTRODUCTION
“Definitions and limitations”
4. I. HISTORY
“A fast-growing market with a rich history”
• First boom of business centres was
between 1985 and 1990.
• Then, 95-2005 : more failures then start-
ups in our market until …
• 2005-6 : start of the ‘New Way of
Working’
• From then, we see an acceleration of the
growth of locations from 5-10 % (2005-
2010) to 10-20% actually
• The covid-crisis in 2020 was ‘exceptional’,
and has halted this growth : new openings
= closings of centers
• For 2021 we see a growth of 10 % of the
number of centers, to appr. 500 centers –
which is very good given the covid-crisis.
-10%
-5%
0%
5%
10%
15%
20%
25%
0
100
200
300
400
500
600
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
# business en coworkingcenters
Belgium 1992-2021
Business centers Coworking centers Growth rate # centers
5. II. BELGIAN OFFICE MARKET
Situating within the total ‘OFFICE MARKET’
5
Office-market in Belgium
Stable market with appr. 25 Mio office space
Market of ‘larger cities’ very well documented
Estimate of regional cities and total market in collaboration with
CBRE.
Total ca. 25 Mio m², accommodation for > 1 Mio collaborators
(employees + civil servants in office environments)
Business center market
Total : ca. 290 business centers, appr. 750,000 m² office space.
Co working market
Total ca. 210 Coworking spaces, nearly 120,000 m² office space.
Both account for 3,04 % of the total office space in Belgium
The business and coworking-market covers more
then 3 % of the total office market in Belgium.
Kantoren (x 1,000 m²) Okt. 2021
Brussel 13.015.000
CBD - Central business district 8.164.000
Decentraal 2.419.000
Periferie 2.432.000
Antwerpen 2.276.000
Gent 1.376.000
4 andere 'kantoorsteden' 2.055.000
(Liège, Mechelen, Leuven, Namur)
15 'regionale steden' 150 - 350,000
(f.ex. Kortrijk, Roeselare, Brugge, St. Niklaas, Aalst, )
30 'kleine' steden
(25-60,000 inwoners) 50 - 100,000
Totaal 24.722.000
# Business centres (in m²)
Number : 290
Average surface : 2.191
Total surface occupied : 635.274
in % of office market : 2,57%
# Co working centers
Number : 210
Average surface : 553
Total surface occupied : 116.198
in % of office market : 0,47%
in % of business center market : 18,29%
Total serviced office surface: 751.472
% oppervlakte 'serviced offices' 3,04%
6. II. BELGIAN OFFICE MARKET
Situating within the total ‘OFFICE MARKET’
6
The office market is shifting towards the ‘serviced offices’
Serviced Office market
Flexible contracts (month/year/…)
Focus on services and community
Office market
‘long term contracts’
No flexibility
Limited services (facilities)
Limited ‘new constructions’ < 2 % of
market
Decreasing demand due to NWOW
Coworking market
< monthly ‘memberships’
Flexible, focus on ‘community’
Limited but increasing services
Market growth > 20 %/year
Business centre market
Flexible ‘yearly’ contracts
Flexible, focus on ‘services’
Limited but increasing community
Market growth 10-20 %/year
Decreasing
market ?
Increasing market
Difference is fading away
7. II. BELGIAN OFFICE MARKET
Expected evolution 2022 – 2030
Hypotheses :
• Decrease of m² offices of 0,5 – 1 % / year
• Increase of the BC/CW-market with ca.
20 % pro year
• Slightly higher then in 2014-19
Growth of BC/CW market to 25 % of office-
market by 2030
We expect a growth of our market of appr. 20 %/year, in order to
occupy 20-30 % of the office-market by 2030.
8. Total appr. 500 “serviced office
locations” in Belgium :
IWG is the biggest ‘operator’ with
more then 100,000 m², followed by
Officenter and Silversquare.
Bedrijvencentra, Bar D’office,
Cowallonia and Workero “group”
consist of ‘independent’ centers
20 operators have 3 or more
centers increasing
professionality.
> 50 % of the market remain ‘stand-
alone initiatives
In Belgium, we have a relatively fragmented market, where less
then 50% of the centers is operated by or within a ‘group’.
III. BUSINESS CENTERS IN BELGIUM
3.1. Operators of business and coworking-centers
Number of locations
IWG (Regus & Spaces) 46
Bar D'office 37
Workero 22
Officenter 13
Cowallonia Network 13
Bedrijvencentrum 12
Citydev 8
SilverSquare 7
Interoffices 6
Start it @KBC 6
Topos 5
Mundo Lab 5
Multiburo 5
MeetDistrict 4
LRM 4
m² of serviced offices
IWG (Regus & Spaces) 100.428
Officenter 35.840
Greenhouse 35.000
SilverSquare 32.037
Bar D'office 29.325
MeetDistrict 23.500
Bedrijvencentrum 21.139
Citydev 17.400
Agoria 17.000
Fosbury 15.550
Interoffices 14.975
LRM 13.950
Vano Immo 13.200
Mundo Lab 12.000
Wework 11.500
9. Medium ‘penetration’ is 3,5% in
Belgium
Brussels has with 2,5 % a ‘low’
penetration of BC/CW-centers
Most cities have between 3 and 5 %
of ‘service offices’ (incl. Antwerp,
Gent, Brugge, Aalst and Leuven)
Hasselt, Turnhout, Louvain-La-
Neuve, Genk and Oostende have a
more then 5 % market penetration of
serviced offices
Namur, Roeselare and Ieper are
cities with still less then 2 % of their
offices operational as serviced
offices.
The ‘local’ situation in the different cities is clearly very different.
III. BUSINESS CENTERS IN BELGIUM
3.2 Business centers by location
Sources: JLL, Finpower
10. IV. FINANCIAL DATA OF BUSINESS CENTER MARKET
4.1. Turnover evolution
• Turnover (figures until 2020)
– Total market turnover has passed the
190 Mio in 2020 - the growth has
decreased from 10% to 3% - in line
with the decrease in growth of the
number of centers.
• Growth rhythm
– The ‘market’ growth in turnover has
been fluctuating between 5 and 15 %
from 2007 on
– It is clear that 2020 is strongly
influenced by the covid-crisis.
Turnover growth has fallen to appr. 3 % in 2020, from 10-15 % the
previous 10 years.
11. IV. FINANCIAL DATA OF BUSINESS CENTER MARKET
4.2 Operational profit (EBIT) of business centers
• Due to the covid-crisis, the total
financial losses of the market have
increased to more then 8 Mio €
– A few centers ( 5 !) are responsible for most
of these losses
– Appr. 45 % of the centers in 2020 had losses,
clearly higher then the ‘normal’ 30-35 % in
this market due to the covid crisis.
– Only 55 % of the centers generate an
operational profit during 2020
• This decrease in profitability should
reverse by 2022, if the market returns
to ‘normalization’.
The profitability of our market has always been a challenge,
where covid has hit our market very hard, especially some major
players.
12. IV. FINANCIAL DATA OF BUSINESS CENTER MARKET
4.3 Quartiles indicate clearly the segmented market
• First quartile: mature, mainly private operators, still
generate a profit of 10-25 % on turnover
– This proves the ‘potential’ profitability of our market
– This ‘quartile’ is very stable, 75% of those companies were also in this quarter in
2019.
• Second quartile, mature players with a limited profit
level between 0-10 %
– Mainly ‘mature’ centers, les hit by the covid-crisis
• Third quartile, operators with a small operating loss,
where a lot of companies have ‘other value-creating
ambitions’ (government initiatives or building
owners).
• The last quartile are mostly the new opened centers,
where we have 10 locations accounting for more
then 10 Mio € of operational losses in 2020.
Although the increased losses, the median profitability of the market
has only declined from 3,3 % in 2019 to 3,2 % in 2020.
Turnover
2020
Operating
profit 2020
% Operating
profit
1st quartile 74.100 9.916 13%
2nd quartile 45.809 2.230 5%
3th quartile 42.426 - 1.252 -3%
4th quartile 34.078 - 18.620 -55%
Total market 196.412 - 7.726 -4%
13. Conclusions
• The business and coworking market are ‘integrating’ more and more towards a
service-office market, filling 3 % of the Belgian office market
• The number of ‘service office centers’ has increased to more then 500 in 2021,
which should be the start of an exponential growth we expect the following
years, a 10 % growth rate during a ‘covid-year’
– This means that the service office market occupies more then 3 % of the Belgian office market,
which is double the level of our first analysis in 2014.
– The market expects a growth to 25-30 % of the office market by 2030, which will create a
growth potential of our market with 20-25 % annually from 2022 to 2030 !
• The profitability of the market was under much stress due to the covid-crisis,
but the top quartile of our market realizes operating profit margins of 5-15 %
on turnover – which indicates the potential profitability of our market.
15. Annex 1 : Advantages of scale in our market
• There are clearly a lot of advantages of scale in
the business center market
– Commercially (website, referrals, …)
– Purchasing power, also on management-level
– Strategically and ‘best practices’
• But, the medium turnover of a business center
is declining ….
– And, we have not included the coworking-centers in this
comparison …
• We have put the ‘profitability’ of a center compared with the ‘size’ of each
center.
– Profitability = profit margin on turnover
– Size = turnover by center
• The ‘regression-line’ clearly demonstrates
– The substantial losses that a business center makes in his 1-2 starting years
(between 100 and 500 k€)
– A ‘break-even’ level of a ‘median’ center around 500 k€ turnover
– Above 600-700 k€ turnover, most of the business centers are profitable.
16. Annex 2 : Different financial models in our market
• Asset – efficiency of ‘International market’ is very high – no investment in ‘own’ buildings
– Private and public sector operators mostly have invested in the building
• Financial leverage of public sector very limited (cash > loan volume)
The ‘international’ operators focus optimizing their financial
leverage with ‘renting’ their buildings, the private (partially) and
public sector (mainly) focus on owning the real-estate.
Turn-
over
Fixed
Assets
Assets/
Turnover
Own
Funds
Own
Funds/
Assets
Own
funds/
Turnover
International 26.295 5.480 0,2 -8.223 -1,5 -0,3
Private 45.944 132.465 2,9 63.353 0,5 1,4
Semi-public 25.241 112.922 4,5 107.489 1,0 4,3