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Demand for office space in Brussels remains sluggish as companies downsize
While ordinary residents have seen the price of homes in the Belgian capital steadily rise, office property prices remain sluggish as companies continue to downsize in the wake of the pandemic and the resulting increase in remote work.
The year 2022 was particularly quiet for Brussels office real estate, with newly acquired space falling to 320,000m², according to an estimate provided by American company JLL, one of the sector's leaders in Belgium.
That represents a decrease of 33% compared to 2021.
The transactions that did take place were also much smaller than usual, with an average purchase of just 916m², a decrease of 37% over last year.
Nevertheless, JLL said that the number of overall purchases increased and it expects double-digit growth by the end of 2022, compared to 2021.
The pandemic and subsequent increase in remote working prompted many companies to downsize their offices, preferring – and needing – less space since more people are working from home more often.
The downsizing also brings savings: rents have risen by almost 5% in the European Quarter, which remains the most expensive at €330 per square metre.
But office space on the periphery of Brussels is increasing, jumping over 12% to €185 per square metre.
“This area now benefits from better accessibility, which will increase further in the future with the extension of the tram to the airport,” explained JLL Belgium’s Christophe Golenvaux.
But the company predicts that 2023 will see a recovery of the office real estate market, driven by an increase in demand for environmentally friendly offices.
“We are coming to the end of the cycle with high inflation and a possible recession, but the current situation in real estate is less catastrophic than during the financial crisis,” said Kasper Deforche, CEO of JLL Belux.
“Financing is available and the search for sustainable buildings will continue as they offer a serious competitive advantage.”
But providing a robust stock of eco-conscious buildings in the capital will be a challenge, with more than half of the buildings in Brussels and the surrounding area (an estimated 12 million square metres of real estate) being over 20 years old and potentially energy intensive.
Economic uncertainty has kept companies cautious about investing in real estate in recent years.