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Presentation Belgian flexible office market 2022
1. fin POWER
Presentation at the Belgian Workspace Association, 2022
FLEXIBLE OFFICE MARKET IN BELGIUM
Key financial figures
B.W.A. Conference, 20 October 2022
2. I. History and evolution of # flexible workspaces
II. Evolution within the Belgian Office market
III. The flexible office market : actual situation
IV. Key financials of the flexible offices in Belgium
V. Conclusions
INTRODUCTION
3. Flexible office market in Belgium :
Slides available on internet
What was 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
Actually, all of them evolving towards ‘flexible offices’ – covering both models.
Used figures :
Published financial data (Belgian National Bank)
INTRODUCTION
“Definitions and limitations”
4. I. HISTORY
“A fast-growing market with a rich history”
• First ‘hype’ of business centres was between 1985
and 1990.
– First Regus-office in 1989 in Brussels
– Then, 95-2005 : more closings then new centres
• From 2005 on : second boom : start of the ‘New
Way of Working’ (mobile devices)
• Third ‘boom’ : coworking movement, from 2012-14
on (important impulse from Wework, many local
similar ambitions)
• The covid-crisis in 2020 has hit our market hard,
with more closures then new openings.
– Hybrid working becomes an additional ‘motor’ of ouw market
• For 2021 and 2022 we see already a moderate
‘restart’ of our market, with a growth of 8-10 % of
the number of centres
– The growth is lower then in the hype
– The challenge will be how/if our market could return
to its historical growth rhythm of 15-20 %.
5. Offices (x 1,000 m²) Okt. 2022
Brussels 13.015.000
CBD - Central business district 8.181.500
Decentraal 2.236.500
Periferie 2.092.000
Antwerp 2.175.000
Gent 1.500.000
4 other 'office-cities' 2.055.000
(Liège, Mechelen, Leuven, Namur)
15 'regional cities' 150 - 350,000
(f.ex. Kortrijk, Roeselare, Brugge, St. Niklaas, Aalst, )
30 'small' cities
(25-60,000 inhabitants) 50 - 100,000
Totaal 24.745.000
# Business centres (in m²)
Number : 319
Average surface : 2.173
Total surface occupied : 693.231
in % of office market : 2,80%
# Co working centers
Number : 220
Average surface : 481
Total surface occupied : 105.810
in % of office market : 0,43%
in % of business center market : 15,26%
Total serviced office surface: 799.041
% oppervlakte 'serviced offices' 3,23%
II. BELGIAN OFFICE MARKET
Situating within the total ‘OFFICE MARKET’
5
Office-stock in Belgium
Stable volume 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. 319 business centers, appr. 700,000 m² office space.
Co working market
Total ca. 220 Coworking spaces, more then 100,000 m² office space.
Both account for 3,23 % of the total office space in Belgium
The flexible office-market covers more then 3 % of
the total office market in Belgium.
6. II. BELGIAN OFFICE MARKET
Situating within the total ‘OFFICE MARKET’
6
The office market is shifting towards the ‘serviced offices’
Flexible Office market
Flexible contracts (month/year/…)
Focus on services and community
Office market
‘long term contracts’
Limited flexibility
Limited services (facilities)
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 last year :
• Decrease of m² offices of 2 % / year
• Increase of the BC/CW-market with ca. 20 %
pro year
• Slightly higher then in 2014-19
Growth of BC/CW market to appr. 20 % of
office-market by 2030
Our market will represent between 10-20 % of the office
market by 2030 – depending on our ‘growth rate’
More prudent expectations:
• Decrease of m² offices of 1 % / year
• Increase of the BC/CW-market with ca. 12 %
pro year
• In line with growth 2015 – 2021
Growth of BC/CW market to appr. 10 % of
office-market by 2030
8. Total > 500 “serviced office locations” in
Belgium :
IWG is the biggest ‘operator’ with since
this year more then 100,000 m², followed
by Officenter and Silversquare.
Bedrijvencentra and Bar D’office, groups
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. FLEXIBLE OFFICES IN BELGIUM
3.1. Operators of business and coworking-centers
Rijlabels Aantal # m²
(leeg)
278 277693
IWG (Regus & Spaces) 47 100.294
Officenter 14 44.509
SilverSquare 8 40.037
Bar D'office 47 33.725
MeetDistrict 5 30.500
Global Estate Group 1 25.000
Bedrijvencentrum 12 21.139
Mundo Lab 5 17.900
Fosbury 3 15.550
LRM 4 15.300
Greenhouse/Intervest 3 15.000
Interoffices 6 14.045
Bluepoint 3 13.365
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, Geel and Nivelles
have a more then 5 % market
penetration of serviced offices
Namur, Roeselare and Kortrijk are
cities with still less then 2 % of their
offices operational as serviced
offices.
The local presence of BC/CW is very different for the main cities in
Belgium, due to some strong, local initiatives (or the absence of… )
III. FLEXIBLE OFFICES IN BELGIUM
3.2 Flexible offices by location
Sources: CBRE, Finpower
10. IV. FINANCIAL DATA OF FLEXIBLE OFFICE MARKET
4.1. Turnover evolution
• Turnover (figures until 2020)
– Total market turnover has passed the 250
Mio in 2021, a growth of ca. 10 % vs. the
stable turnover of 2020
• Growth rhythm
– The ‘market’ growth in turnover has been
fluctuating between 10 an 20 % from
2007 on.
– In 2020 we see clearly the influence of the
covid-crisis, with a ‘zero’ growth. But, in
2021 the growth was again above 10 % -
which gives us much hope for the next
years.
After a ‘decline’ in turnover in 2020 due to covid, we see for 2021 a
renewal of our growth path of 10-20 % turnover growth.
11. IV. FINANCIAL DATA OF FLEXIBLE OFFICE MARKET
4.2 Operational profit (EBIT) of business centers
• But the main ‘covid’-effect we have seen in our
market is in the substantial losses made in 2020
and in 2021
– Nearly every new centers has a deficit the first 2-3 years.
But, due to covid, these start-up losses where much
higher then normal.
– Appr. 40 % of the centers in 2020-21 had losses, clearly
higher then the ‘normal’ 30-35 % in this market due to
the covid crisis.
– Still 55 % of the centers generate an operational profit
during 2020-21, despite the strong effects of the covid-
crisis.
• This decrease in profitability should reverse by
2022, if the market returns to ‘normalization’.
– But the energy-crisis will affect also strongly the
profitability of our sector in 2022-23.
The profitability of our market has always been a challenge, where
covid has hit our market very hard, especially the ‘start-ups’ of 2020-21
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 (EBIT) of > 15 % 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 acceptable profit
levels of 5-15 %
– 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 newly opened centers,
where we have 20 locations accounting for more then
25 Mio € of operational losses in 2021 !
Although the increased losses, the median profitability of the ‘mature’
market has regained its level of 5-15 %
Turnover Op. Profit in % Median
1st Quartile 83.756 18.328 22% 25%
2nd Quartile 116.310 13.816 12% 11%
3rd Quartile 91.253 -5.109 -6% -3%
4th Quartile 52.264 -31.183 -60% -47%
13. Conclusions
• The business and coworking market are ‘integrating’ more and more towards a
service-office market, filling more the 3 % of the Belgian office market
• The number of ‘service office centers’ has increased to more then 500 in 2022,
which should be the start of an exponential growth we expect the following
years, where we expect growth rates of 15-25 % a 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 10-20 % of the office market by 2030, which will need an
acceleration of the growth rate of our market to 12-20 % / year
• The profitability of the market was under much stress due to the covid-crisis,
but we already observe that the strong and mature centers do still reach a
median profitability of 5-15 %, which is acceptable given the risk of this 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