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From business and coworking-centers to ‘service offices’

A fast evolving market with growth expectations

SERVICED OFFICE MARKET IN BELGIUM

Key financial figures

Bobca Conference, September 2016

I. Introduction & situation within ‘Office market’

II. History and evolution of # flexible workspaces

III. The business centre market : actual situation

IV. Key financials of the business centres in Belgium

V. Conclusions

INTRODUCTION

Business & coworking-centers in Belgium : See list in annex

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

For profit, registered companies (excl. not-for-profit organizations) Serviced offices = full time reception services or community-manager

Used figures : Published financial data (Belgian National Bank)

INTRODUCTION“Definitions and limitations”

INTRODUCTIONSituating within the total ‘OFFICE MARKET’

4

Office-market in Belgium Market of ‘larger cities’ very well documented

Own, rough estimation of market in regional cities

Total ca. 21 Mio m², accommodation for appr. 1 Mio collaborators (employees + civil servants in office environments)

Stable market with appr. 21 Mio office space

Business center market Definition of ‘business center : ‘

Flexible contracts, Including services

Excluding ‘joint-office-buildings’ with no ‘reception’

Total : ca. 185 business centers, appr. 330,000 m² office space.

Accounts for appr. 1,6 % of total office space in Belgium, growing market-share.

Co working market New, upcoming market

Total of appr. 71 Coworking spaces in Belgium, totaling appr. 35,000 m² office space.

Growth rate of market > 30-50 %, but still limited examples of viable business models.

The business and coworking-market covers appr. 1,6 % of the total office market in Belgium (<> 2-4 % in U.K., the Netherlands)

Offices (x 1,000 m²)Brussel 13.000 Antwerpen 1.900 Gent 1.200 Liège 500 5 other main offi ce cities : 200 - 400

(Charleroi, Namur, Hasselt, Leuven, Mechelen)15 'regional cities' 100-200

(f.ex. Kortrijk, Roeselare, Brugge, St. Niklaas, Aalst, )Total office spaces in 'cities' : 20.950

# Business centres (in m²)Number : 184 Average surface : 1.792 Total surface occupied : 329.684

in % of offi ce market : 1,57%

# Co working centersNumber : 71 Average surface : 469 Total surface occupied : 33.270

in % of offi ce market : 0,16%in % of business center market : 10,09%

INTRODUCTIONSituating within the total ‘OFFICE MARKET’

5The office market is shifting towards the ‘serviced offices’

Serviced Office marketFlexible contracts (month/year/…)Focus on services and community

Office market‘long term contracts’

No flexibilityLimited 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 > 50 %/year

Business centre marketFlexible ‘yearly’ contracts

Flexible, focus on ‘services’Limited but increasing community Market growth 5-15 %/year

Decreasing market

Increasing market

II. HISTORY“A market with a rich history”

• 1965: First business-centres in the U.S.• 1980–90: 1st ‘boom’ of business centres

(bedrijvencentra)– Apr. 120 initiatives in Belgium– Several subvention schemes to stimulate investment

• f.ex. 1989 : Regus, Officenter and more then 50 Bedrijvencentra were created

• 1990 – 2005 : Survival of the fittest– Apr. 1/3th of the initial initiatives did not survive – Most other initiatives ‘fight to survive’

• F.ex. Closure of Intercenter, Officenter Mechelen, Chapter 11 for Regus in 2003, …

• 2006 – actually :– Market growth the business centre market of 5-15

%/year– Market becomes profitable under the guidance of

Regus – the ‘Gorilla’ in this market.

• 2005 : The first ‘coworking-site’ in San Francisco (Hat Factory by Brad Neuberg)

• 2008 : First coworking sites in Brussels (Silversquare, The Hub)

• 2008 - .. : survival of the fittest coworking-locations

– The Hub and 50 % of the other initiatives in this market have ceased to exist.

– Wework demonstrates the strong growth possibilities of this market

2014-16 : increase in ‘hybrid’ formulae evolving to one ‘SERVICED OFFICES market’

II. HISTORY“A market with a rich history”

• First boom of business centre until 1990-95

• 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

• Actually, the market has grown to more then 250 flexible workspace locations in Belgium – double of the number 5 years ago.

Total appr. 185 “business centers” and 68 ‘CW-centers’ identified in Belgium :

28 ‘BC’s’, Bedrijvencentra

17 BC + 8 CW centers for Regus

6 ‘groups’ with 3-8 centers

13 operators with 2 centers

appr. 140 operators with only 1 location, appr. 50 % of the market

In 2011 : ca. 135 BC, which means an annual growth of appr. 10 %/year

Failure rate limited (< 3 % of market)

C.W. market is clearly growing faster

Growth from 50 tot 68 locations in 2015 (+40 %)

Differentiation between ‘business centers’ becomes unclear (only VAT-regulation is relatively clearcut)

In Belgium, we observe appr. 250 business and coworking centers of which more than 50 % are stand-alone centers.

III. BUSINESS CENTERS IN BELGIUM3.1. Number of Business Centers

Appr. 55 % of Belgium’s business centers are located in Brussels, Antwerp en Gent

32 % located in Brussels

13 % located in Antwerp

8 % located in Gent

Is comparable with the importance of the relative office market.

Only 10 cities have more then 4 BC/CW-initiatives, which seems a minimum to have a profitable market.

> 50 % of all business centers in Belgium are located in the three main cities (Brussels, Antwerp and Gent)

III. BUSINESS CENTERS IN BELGIUM3.2 Business centers by location

Cities AantalBrussel 81Antwerpen 31Gent 21Liège 10Leuven 8Hasselt 8Louvain La Neuve 7Kortrijk 7Mechelen 5Charleroi 4Namen 3Sint-Niklaas 3Nivelles 3Oostende 3Ieper 3Brugge 3Total 257

32%

12%

8%4%3%

3%

3%

3%2%

2%

1%

1% 1%

1%1%1%1%1%1%1%1%0%

Number of BC/CW-centers pro cityBrusselAntwerpenGentLiègeLeuvenHasseltLouvain La NeuveKortrijkMechelenCharleroiNamenSint-NiklaasNivellesOostendeIeperBruggeTurnhoutAalstGenk

Locatie

Aantal

Aktief in 2016

A growing number (45 %) of the coworking and business centers are located in the center of the cities

This was only 34 % in 2010 !

Actually, still more centers are located on the ringways or in industrial area’s

Recently, locations within stations are opened by Regus

The percentage of business and coworking centers located in city-centers is growing in Belgium.

III. BUSINESS CENTERS IN BELGIUM3.3. Ownership – types of the Belgian business center market

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.1. Turnover evolution

• Turnover – Total market turnover nearly 100 Mio €– 1/3th is done by international players

• Own only 17 % of the business centers

– The private owners serve nearly 50 % of the market

• Growth rhythm – Exponential market-creation 1980-1995 :

more then 100 BC created– From 1995 – 2005 : no substantial growth of

the market (< 2 %/yr)– 2006-2010 : growth with 5-10 % per year, not

abnormal for this market compared with international studies

– 2011 – 2014 : growth 2-5 %, relatively low due to price-pressure.

– 2015 : turnover growth of 6,5 % - increasing, but still lower then in surrounding markets.

The Belgian business center market is lagging behind on the international growth rates of the market of appr. 10 %/year

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.2 Operational profit (EBIT) of business centers

• Although > 25% of the business centers make losses, the ‘market’ has a positive profitability, varying between 0 and 5 %.

• The private and international centers have in 2015 an acceptable profit of appr. 4 % operating profit on turnover.

– Acceptable since 5-10 % seems to be the target

– But, clearly decreasing vs. the 5-10 % levels in the ‘golden’ years 2006-2010

• A lot of semi-public initiatives do make substantial losses, although appr. 50 % are profitable

The price pressure since 2010 has decreased the profit margins of our market, which is still pushing the turnover downwards.

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.3 Different financial models

• 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, where the public sector needs 4 x more own funds for the same 1 € turnover.

Turn-over

Fixed Assets

Assets/ Turnover

Own Funds

Own Funds/Assets

Own funds/

TurnoverInternational 26.295 5.480 0,2 -8.223 -1,5 -0,3Private 45.944 132.465 2,9 63.353 0,5 1,4Semi-public 25.241 112.922 4,5 107.489 1,0 4,3

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.4. Advantages of scale ?

• 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.

Conclusions

• The business and coworking market are ‘integrating’ more and more towards a service-office market

– And, the market-share of this market has increased from 1,4 to 1,6 % of the total office market in Belgium.– Still lagging behind the levels in the U.K. and the Netherlands (2-4 %)

• The turnover of our market has increased with 6 % in 2015, in the ‘normal’ 5-10 % growth rate and reaches nearly 100 Mio turnover.

• The profitability of the market is regaining normal levels

– Only the public sector remains a segment of the market where substantial losses occur.

Annexe

List of business centres and coworking places inventoried for this study

Categorie Locatie Naam Locatie Naam Locatie NaamBC Geel 4Wings BC Oostende Bedrijvencentrum Regio Oostende BC Waver Business Center Wavre Nord

BC Aalst Aalst City Center BC Waregem Bedrijvencentrum Regio Waregem BC Kortrijk Business Centrum Kortrijk Pottelberg

BC Aalter Aalters Bedrijvencentrum BC Roeselare Bedrijvencentrum Roeselare BC Willebroek Business centrum Rivium

BC Lier Accentis business center BC St Truiden Bedrijvencentrum Sint Truiden CW Fosses La Ville Business One

BC Egezée Accortise Pactech Business Center BC Tienen Bedrijvencentrum Tienen BC Liège CAP Business Center

CW Antwerpen Acospace BC Tongeren Bedrijvencentrum Tongeren CW Nivelles Capinnove

BC Brussel Acte BC Veurne Bedrijvencentrum Veurne BC Louvain La NeuveCEI Louvain

BC Gent Adequat BC Brussel Bedrijvencentrum Vilvoorde BC Brussel Centre d'Entreprises de Saint-Gilles

CW Gent Aerey Coworking BC Oudenaarde Bedrijvencentrum Vlaamse Ardennen BC Liège Centres d'Affaires Afinis

BC Brussel Agence 86 'creative business center' BC Sint-Niklaas Bedrijvencentrum Waasland BC Louvain La NeuveCercle Du Lac

BC Antwerpen ALM Antwerpen BC Brussel Bedrijvencentrum Zaventem BC Brussel Chambre d'affaire CFCI

BC Brussel Alnair Business Center BC Brussel Bedrijvencentrum Zennevalei CW Kontich Clubhouse Coworking

BC Antwerpen Antwerp Berchem Central Station BC Brussel Belgium Business center BC Genk C-Mine Crib

BC Antwerpen Antwerp Business House BC Antwerpen Benelux Business Center CW Antwerpen Co Buro

CW Antwerpen Antwerp Central Station CW Brussel Beta Group Coworking CW Mons Co nnexion - coworking

BC Antwerpen Antwerp City Center BC Leuven Bio Incubator Leuven CW Brussel Co.Station Brussels

BC Sint-Niklaas Astrid Business Center Sint-Niklaas BC Brussel Bisschofsheim business center CW Hasselt Corda Incubator

BC Brussel Ateac Business Center BC Brussel Bizzcenter CW Brussel Coworking Business Center Brussels

BC Brussel Ateliersdes Tanneurs BC Kortrijk Bizz-Init CW Hasselt Coworking Hasselt

BC Louvain La Neuve Axisparc business center BC Brussel BLSI CW Namen Coworking Namur

CW Brussel Bar Buro BC Antwerpen BNO 'The factory' CW Tielt Creatielt

CW Brussel Bar D'Office Brussel (Voka) BC Brussel BPS Ad Hoc CW Liège Cristal Hub Coworking

CW Leuven Bar D'Office Leuven CW Brugge Brugge Station BC Leuven de Hoorn

CW Oostende Bar D'Office Oostende CW Brussel Brussel Central Station CW Brugge De Huyskamer

BC Nivelles BCS Group CW Brussel Brussel Luxemburg Station BC Antwerpen De Wolkammerij

BC Aalst Bedrijvencentrum Aalst BC Brussel Brussels Airport Corporate Village BC Brussel Diamant Conference & Business Center Brussel

BC Beringen Bedrijvencentrum Beringen BC Brussel Brussels City Center BC Liège Diamant Conference & Business Center Luik

BC Gent Bedrijvencentrum De Punt BC Brussel Brussels Groot Bijgaarden BC Brussel Diegem Grensstraat

BC Antwerpen Bedrijvencentrum De Winkelhaak BC Brussel Brussels IT Tower CW Antwerpen Dots Coworking

BC Dendermonde Bedrijvencentrum Dendermonde BC Brussel Brussels Village BC Gent Easy Office Center

BC Genk Bedrijvencentrum Genk BC Brussel Brussles EU Schuman BC Brussel EEBIC Business Center

BC Geraardsbergen Bedrijvencentrum Geraardsbergen CW Brussel Brussles South Station BC Louvain La NeuveEinstein Business Center

BC Hasselt Bedrijvencentrum Hasselt CW Sint-Truiden Bur O Bar CW Brussel Enclume&Co

BC Ieper Bedrijvencentrum Ieper BC La Louvi!re Buro Business du Centre CW Tournai ESCO Expace Coworking

BC Zelzate Bedrijvencentrum Kanaalzone BC Namen Burogest Bouge BC Brussel Espace Moselle

BC Leuven Bedrijvencentrum Leuven BC Namen Burogest Office Park BC Brussel EU Business Centre

BC Maasmechelen Bedrijvencentrum Maasmechelen CW Antwerpen Burooz BC Liège Euregio Business Center Liège

BC Malle bedrijvencentrum Malle BC Brussel Burotel CW Brussel Factory Forty

BC Maldegem Bedrijvencentrum Meetjesland BC Brussel Burotel 367 BC Dienze Filad Ondernemingscentrum

BC Overpelt Bedrijvencentrum Overpelt BC Brussel Burotel Congres CW Brussel Firma

BC Brugge Bedrijvencentrum Regio Brugge BC Antwerpen Business Center Amerikalei BC Brussel Flagey Digital

BC Kortrijk Bedrijvencentrum Regio Kortrijk BC Charleroi Business Center Charleroi CW Gent Floating Desk Coworking

BC Mechelen Bedrijvencentrum Regio Mechelen BC Nivelles Business center services BC Antwerpen Fountain business park

Locatie Naam Locatie Naam Locatie NaamBC Herentals Frame 21 CW Gent Loft169 BC Brussel Seed Factory

BC Tournai Futur Orcq BC Louvain La Neuve Louvain-La-Neuve BC Brussel Servcorp Bastion Tower

BC Mouscron Futur X BC Gent Maaltecenter BC Brussel Servcorp Schuman

BC Oostende Greenbridge incubatiecentrum en wetenschapsparkBC Brussel MC Square BC Brussel Silver Square

BC Houthalen Greenville Cleantech Campus BC Mechelen MC Square Mechelen BC Brussel Silver Square

BC Gent Growth Fase BC Antwerpen Multiburo Antwerpen Centraal Station BC Brussel Silver Square

BC Antwerpen HAVN - Buzzispace BC Brussel Multiburo Brussels Airport BC Brussel Sint Annacenter

BC Sint-Niklaas Heptagon business center BC Brussel Multiburo Louise CW Antwerpen Social Media Club Kube8

CW Antwerpen Het Bolwerk / Bar d'Office (Fort 5) BC Brussel Multiburo Quartier Européen CW Turnhout SPK - Bar D'office

CW Aalst Hopmarkt 50 BC Diest Office 21 BC Turnhout Square Point Business Center

BC Hasselt Huis Vanstraelen BC Brussel Office services Brussels CW Sint Niklaas St Niklaas Station

BC Gent Huize Minne BC Leuven Officener Leuven CW Brussel Studio 28

BC Leuven I & I Leuven BC Hasselt Officenter CW Antwerpen Studio Start

BC Gent IBBT-Incubator BC Antwerpen Officenter Antwerpen/A12 CW Antwerpen Swenst

CW Gent Icubes BC Turnhout Officenter Turnhout CW Charleroi Switch Coworking Charleroi

BC Gent I-Cubes CW Mechelen Ondernemershuis/Bar d'Office BC Mechelen T - Offices

CW Melle Idee Kids CW Ieper Ondernemingscentrum Ieper/ Bar D'Office BC Antwerpen Talentarena

BC Gent Idola Business Center CW Gent Oneoffice CW Antwerpen Telenet Idealabs - The Squad

BC Ieper Idola Business Center BC Bierges Optimalis Business Center CW La Louvi!re the cowork Factory

CW Gent Ihub BC Brussel Oriona Group Cinquantenaire BC Gent The Crescent Ghent

BC Estaimpuis Impact Centre Européen d'affaires et de services BC Brussel Oriona Group Louiza BC Brussel The Crescent Riverside

BC Leuven In volle Vaart BC Brussel Oriona Group Schumann CW Brussel The Flex

BC Gent Incubatie en Innovatiecentrum Ugent BC Brussel Paepsem Business Center BC Brussel The Hub Brussel

CW Antwerpen Indian Caps BC Gent Parkoffice CW Brussel the Library

BC Brussel Innovatie en incubatiecentrum Brussel BC Kortrijk Parkoffice CW Brussel The Mug

BC Wommelgem Interoffices Antwerp East BC Brussel Plug &Work CW Aarschot The Office (coworking Aarschot)

BC Zaventem Interoffices Brussels Airport BC Charleroi Quadrature Business center CW Kortrijk The Studio's

CW Antwerpen K85 BC Brussel Quartier Latin CW Ronse TIO3 Textiles Open Innovation Centre

BC Hasselt Kaai 16 BC Eupen Quartum Business Center CW Brussel Transforma

CW Antwerpen KBC Startig Antwerpen CW Mechelen RE: Flex Mechelen BC Brussel Tribes Brussel

CW Antwerpen KBC Startig Gent CW Antwerpen RE:flex Berchem BC Kortrijk Twelve

CW Hasselt KBC Startig Hasselt BC Brussel Regus Airport Diegem BC Antwerpen UBIS

CW Brussel KBC Startit Brussel BC Brussel Regus Airport Meeting Center BC Antwerpen Universitair bedrijvencentrum

CW Kortrijk KBC Startit Kortrijk BC Braine lalleud Regus Braine Lalleud BC Brussel VIP Offices Headquarter

BC Geel Kempens Bedrijvencentrum BC Brussel Regus Brussels South Station BC Tielt Vlaemynck Business Center

CW Liège La Forge BC Brussel Regus Brussels West Basilix BC Hasselt Wetenschapspark Limburg

CW Louvain La Neuve Lauvain Coworking Space BC Brussel Regus Central Statti on BC Louvain La NeuveWetlands Business Center

CW Tubize Le Centre d'Entreprises Chapagne Landas BC Brussel Regus Commision CW Gent Wolfstraat 9

CW Leuven Leuven Station BC Brussel Regus EU Parliament BC Brussel Workspaces

CW Antwerpen Level 9 BC Gent Regus Gent Zuiderpoort BC Antwerpen WTC business center

BC Liège Liège business center BC Brussel Regus Midi CW Charleroi Wup Coworking

CW Liège Liège Guillemains BC Brussel Regus Waterloo Office Park CW Hasselt Zelfies

BC Liège Liège Spatiopôle CW Liège Rogier Espace Coworking BC Zellik Zellik.biz

CW Gent Like Birds BC Brussel Science14 Atrium