fin POWER

From a ‘marginal’ market towards the fastest growing part of the RE (real estate) - market

SERVICED OFFICE MARKET IN BELGIUM

Key financial figures

Social Workplaces conference, December 2016

I. Introduction&situationwithin‘Officemarket’

II. Historyandevolutionof#flexibleworkspaces

III. Thebusinesscentremarket:actualsituation

IV. KeyfinancialsofthebusinesscentresinBelgium

V. Conclusions

INTRODUCTION

q Business&coworking-centersinBelgium:q Seelistinannex

q Whatisabusinessorcoworking-center?q Usesthisasnameofhisbusiness(businesscenterorcoworking-spaceorboth)

q Businesscenter:full-timereceptionavailable– cfr.VAT-regulationforbusinesscentersq Coworking-center:focuson‘community’,communitymanager,nofulltimereceptionnecessary

q Forprofit,registeredcompanies(excl.not-for-profitorganizations)q Servicedoffices=fulltimereceptionservicesorcommunity-manager

q Usedfigures:q Publishedfinancialdata(BelgianNationalBank)

INTRODUCTION“Definitionsandlimitations”

INTRODUCTIONSituatingwithinthetotal‘OFFICEMARKET’

4

§ Office-market in Belgium

Ø Market of ‘larger cities’ very well documented

Ø Own, rough estimation of market in regional cities

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

Ø Stable market with appr. 21 Mio office space

§ Business center market

Ø Definition of ‘business center : ‘

Ø Flexible contracts, Including services

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

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

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

§ Co working market

Ø New, upcoming market

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

Ø 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 totaloffice market in Belgium (<> 2-4 % in U.K., the Netherlands)

Offices(x1,000m²)Brussel 13.000Antwerpen 1.900Gent 1.200Liège 5005othermainofficecities: 200-400

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

(f.ex.Kortrijk,Roeselare,Brugge,St.Niklaas,Aalst,)Totalofficespacesin'cities': 20.950

#Businesscentres(inm²)Number: 184Averagesurface: 1.792Totalsurfaceoccupied: 329.684

in%ofofficemarket: 1,57%

#CoworkingcentersNumber: 71Averagesurface: 469Totalsurfaceoccupied: 33.270

in%ofofficemarket: 0,16%in%ofbusinesscentermarket: 10,09%

INTRODUCTIONSituatingwithinthetotal‘OFFICEMARKET’

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

ServicedOfficemarketFlexiblecontracts(month/year/…)Focusonservicesandcommunity

Officemarket‘longtermcontracts’

NoflexibilityLimitedservices(facilities)

è Limited‘newconstructions’<2%ofmarket

è DecreasingdemandduetoNWOW

Coworkingmarket<monthly‘memberships’

Flexible,focuson‘community’Limitedbutincreasingservicesè Marketgrowth>50%/year

BusinesscentremarketFlexible‘yearly’contractsFlexible,focuson‘services’

Limitedbutincreasingcommunityè Marketgrowth5-15%/year

Decreasingmarket

Increasing market

II.HISTORY“Amarketwitharichhistory”

• 1965:Firstbusiness-centresintheU.K./U.S.• 1980–90:1st‘boom’ofbusinesscentres

(bedrijvencentra)– Apr.120initiativesinBelgium– Severalsubventionschemestostimulateinvestment

• f.ex.1989:Regus,Officenterandmorethen50Bedrijvencentrawerecreated

• 1990– 2005:Survivalofthefittest– Apr.1/3thoftheinitialinitiativesdidnotsurvive– Mostotherinitiatives‘fighttosurvive’

• F.ex.ClosureofIntercenter,OfficenterMechelen,Chapter11forRegusin2003,…

• 2006– actually:– Marketgrowththebusinesscentremarketof5-15

%/year– Marketbecomesprofitableundertheguidanceof

Regus– the‘Gorilla’inthismarket.

• 2005:Thefirst‘coworking-site’inSanFrancisco(HatFactorybyBradNeuberg)

• 2008:FirstcoworkingsitesinBrussels(Silversquare,TheHub)

• 2008- ..:survivalofthefittestcoworking-locations

– TheHuband50%oftheotherinitiativesinthismarkethaveceasedtoexist.

– Wework demonstratesthestronggrowthpossibilitiesofthismarket

2014-16:increasein‘hybrid’formulaeè evolvingtoone‘SERVICEDOFFICESmarket’

II.HISTORY“Amarketwitharichhistory”

• Firstboomofbusinesscentreuntil1990-95

• Then,95-2005:morefailuresthenstart-upsinourmarketuntil…

• 2005-6:startofthe‘NewWayofWorking’

• Fromthen,weseeanaccelerationofthegrowthoflocationsfrom5-10%(2005-2010)to10-20%actually

• Actually,themarkethasgrowntomorethen250flexibleworkspacelocationsinBelgium– doubleofthenumber5yearsago.

§ 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.BUSINESSCENTERSINBELGIUM3.1.NumberofBusinessCenters

§ 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.BUSINESSCENTERSINBELGIUM3.2Businesscentersbylocation

Cities AantalBrussel 81Antwerpen 31Gent 21Liège 10Leuven 8Hasselt 8LouvainLaNeuve 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%

NumberofBC/CW-centersprocityBrusselAntwerpenGentLiègeLeuvenHasseltLouvainLaNeuveKortrijkMechelenCharleroiNamenSint-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.BUSINESSCENTERSINBELGIUM3.3.Ownership– typesoftheBelgianbusinesscentermarket

IV.FINANCIALDATAOFBUSINESSCENTERMARKET

4.1.Turnoverevolution

• Turnover– Totalmarketturnovernearly100Mio€– 1/3thisdonebyinternationalplayers

• Ownonly17%ofthebusinesscenters

– Theprivateownersservenearly50%ofthemarket

• Growthrhythm– Exponentialmarket-creation1980-1995:

morethen100BCcreated– From1995– 2005:nosubstantialgrowthof

themarket(<2%/yr)– 2006-2010:growthwith5-10%peryear,not

abnormalforthismarketcomparedwithinternationalstudies

– 2011– 2014:growth2-5%,relativelylowduetoprice-pressure.

– 2015:turnovergrowthof6,5%- increasing,butstilllowertheninsurroundingmarkets.

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

IV.FINANCIALDATAOFBUSINESSCENTERMARKET

4.2Operationalprofit(EBIT)ofbusinesscenters

• Although>25%ofthebusinesscentersmakelosses,the‘market’hasapositiveprofitability,varyingbetween0and5%.

• Theprivateandinternationalcentershavein2015anacceptableprofitofappr.4%operatingprofitonturnover.

– Acceptablesince5-10%seemstobethetarget

– But,clearlydecreasingvs.the5-10%levelsinthe‘golden’years2006-2010

• Alotofsemi-publicinitiativesdomakesubstantiallosses,althoughappr.50%areprofitable

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

IV.FINANCIALDATAOFBUSINESSCENTERMARKET

4.3Differentfinancialmodels

• Asset– efficiencyof‘Internationalmarket’isveryhigh– noinvestmentin‘own’buildings– Privateandpublicsectoroperatorsmostlyhaveinvestedinthebuilding

• Financialleverageofpublicsectorverylimited(cash>loanvolume)

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

FixedAssets

Assets/Turnover

OwnFunds

OwnFunds/Assets

Ownfunds/Turnover

International 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.FINANCIALDATAOFBUSINESSCENTERMARKET

4.4.Advantagesofscale?

• Thereareclearlyalotofadvantagesofscaleinthebusinesscentermarket

– Commercially(website,referrals,…)– Purchasingpower,alsoonmanagement-level– Strategicallyand‘bestpractices’

• But,themediumturnoverofabusinesscenterisdeclining….

– And,wehavenotincludedthecoworking-centersinthiscomparison…

• Wehaveputthe‘profitability’ofacentercomparedwiththe‘size’ofeachcenter.

– Profitability=profitmarginonturnover– Size=turnoverbycenter

• The‘regression-line’clearlydemonstrates– Thesubstantiallossesthatabusinesscentermakesinhis1-2startingyears

(between100and500k€)– A‘break-even’levelofa‘median’centeraround500k€turnover– Above600-700k€turnover,mostofthebusinesscentersareprofitable.

Conclusions

• Thebusinessandcoworkingmarketare‘integrating’moreandmoretowardsaservice-officemarket

– And,themarket-shareofthismarkethasincreasedfrom1,4to1,6%ofthetotalofficemarketinBelgium.– StilllaggingbehindthelevelsintheU.K.andtheNetherlands(2-4%)

• Theturnoverofourmarkethasincreasedwith6%in2015,inthe‘normal’5-10%growthrateandreachesnearly100Mioturnover.

• Theprofitabilityofthemarketisregainingnormallevels

– Onlythepublicsectorremainsasegmentofthemarketwheresubstantiallossesoccur.

Annexe

Listofbusinesscentresandcoworkingplacesinventoriedforthisstudy

Categorie Locatie Naam Locatie Naam Locatie NaamBC Geel 4Wings BC Oostende BedrijvencentrumRegioOostende BC Waver BusinessCenterWavreNord

BC Aalst AalstCityCenter BC Waregem BedrijvencentrumRegioWaregem BC Kortrijk BusinessCentrumKortrijkPottelberg

BC Aalter AaltersBedrijvencentrum BC Roeselare BedrijvencentrumRoeselare BC Willebroek BusinesscentrumRivium

BC Lier Accentisbusinesscenter BC StTruiden BedrijvencentrumSintTruiden CW FossesLaVille BusinessOne

BC Egezée AccortisePactechBusinessCenter BC Tienen BedrijvencentrumTienen BC Liège CAPBusinessCenter

CW Antwerpen Acospace BC Tongeren BedrijvencentrumTongeren CW Nivelles Capinnove

BC Brussel Acte BC Veurne BedrijvencentrumVeurne BC LouvainLaNeuveCEILouvain

BC Gent Adequat BC Brussel BedrijvencentrumVilvoorde BC Brussel Centred'EntreprisesdeSaint-Gilles

CW Gent AereyCoworking BC Oudenaarde BedrijvencentrumVlaamseArdennen BC Liège Centresd'AffairesAfinis

BC Brussel Agence86'creativebusinesscenter' BC Sint-Niklaas BedrijvencentrumWaasland BC LouvainLaNeuveCercleDuLac

BC Antwerpen ALMAntwerpen BC Brussel BedrijvencentrumZaventem BC Brussel Chambred'affaireCFCI

BC Brussel AlnairBusinessCenter BC Brussel BedrijvencentrumZennevalei CW Kontich ClubhouseCoworking

BC Antwerpen AntwerpBerchemCentralStation BC Brussel BelgiumBusinesscenter BC Genk C-MineCrib

BC Antwerpen AntwerpBusinessHouse BC Antwerpen BeneluxBusinessCenter CW Antwerpen CoBuro

CW Antwerpen AntwerpCentralStation CW Brussel BetaGroupCoworking CW Mons Connexion-coworking

BC Antwerpen AntwerpCityCenter BC Leuven BioIncubatorLeuven CW Brussel Co.StationBrussels

BC Sint-Niklaas AstridBusinessCenterSint-Niklaas BC Brussel Bisschofsheimbusinesscenter CW Hasselt CordaIncubator

BC Brussel AteacBusinessCenter BC Brussel Bizzcenter CW Brussel CoworkingBusinessCenterBrussels

BC Brussel AteliersdesTanneurs BC Kortrijk Bizz-Init CW Hasselt CoworkingHasselt

BC LouvainLaNeuve Axisparcbusinesscenter BC Brussel BLSI CW Namen CoworkingNamur

CW Brussel BarBuro BC Antwerpen BNO'Thefactory' CW Tielt Creatielt

CW Brussel BarD'OfficeBrussel(Voka) BC Brussel BPSAdHoc CW Liège CristalHubCoworking

CW Leuven BarD'OfficeLeuven CW Brugge BruggeStation BC Leuven deHoorn

CW Oostende BarD'OfficeOostende CW Brussel BrusselCentralStation CW Brugge DeHuyskamer

BC Nivelles BCSGroup CW Brussel BrusselLuxemburgStation BC Antwerpen DeWolkammerij

BC Aalst BedrijvencentrumAalst BC Brussel BrusselsAirportCorporateVillage BC Brussel DiamantConference&BusinessCenterBrussel

BC Beringen BedrijvencentrumBeringen BC Brussel BrusselsCityCenter BC Liège DiamantConference&BusinessCenterLuik

BC Gent BedrijvencentrumDePunt BC Brussel BrusselsGrootBijgaarden BC Brussel DiegemGrensstraat

BC Antwerpen BedrijvencentrumDeWinkelhaak BC Brussel BrusselsITTower CW Antwerpen DotsCoworking

BC Dendermonde BedrijvencentrumDendermonde BC Brussel BrusselsVillage BC Gent EasyOfficeCenter

BC Genk BedrijvencentrumGenk BC Brussel BrusslesEUSchuman BC Brussel EEBICBusinessCenter

BC Geraardsbergen BedrijvencentrumGeraardsbergen CW Brussel BrusslesSouthStation BC LouvainLaNeuveEinsteinBusinessCenter

BC Hasselt BedrijvencentrumHasselt CW Sint-Truiden BurOBar CW Brussel Enclume&Co

BC Ieper BedrijvencentrumIeper BC LaLouvi!re BuroBusinessduCentre CW Tournai ESCOExpaceCoworking

BC Zelzate BedrijvencentrumKanaalzone BC Namen BurogestBouge BC Brussel EspaceMoselle

BC Leuven BedrijvencentrumLeuven BC Namen BurogestOfficePark BC Brussel EUBusinessCentre

BC Maasmechelen BedrijvencentrumMaasmechelen CW Antwerpen Burooz BC Liège EuregioBusinessCenterLiège

BC Malle bedrijvencentrumMalle BC Brussel Burotel CW Brussel FactoryForty

BC Maldegem BedrijvencentrumMeetjesland BC Brussel Burotel367 BC Dienze FiladOndernemingscentrum

BC Overpelt BedrijvencentrumOverpelt BC Brussel BurotelCongres CW Brussel Firma

BC Brugge BedrijvencentrumRegioBrugge BC Antwerpen BusinessCenterAmerikalei BC Brussel FlageyDigital

BC Kortrijk BedrijvencentrumRegioKortrijk BC Charleroi BusinessCenterCharleroi CW Gent FloatingDeskCoworking

BC Mechelen BedrijvencentrumRegioMechelen BC Nivelles Businesscenterservices BC Antwerpen Fountainbusinesspark

Locatie Naam Locatie Naam Locatie NaamBC Herentals Frame21 CW Gent Loft169 BC Brussel SeedFactory

BC Tournai FuturOrcq BC LouvainLaNeuve Louvain-La-Neuve BC Brussel ServcorpBastionTower

BC Mouscron FuturX BC Gent Maaltecenter BC Brussel ServcorpSchuman

BC Oostende GreenbridgeincubatiecentrumenwetenschapsparkBC Brussel MCSquare BC Brussel SilverSquare

BC Houthalen GreenvilleCleantechCampus BC Mechelen MCSquareMechelen BC Brussel SilverSquare

BC Gent GrowthFase BC Antwerpen MultiburoAntwerpenCentraalStation BC Brussel SilverSquare

BC Antwerpen HAVN-Buzzispace BC Brussel MultiburoBrusselsAirport BC Brussel SintAnnacenter

BC Sint-Niklaas Heptagonbusinesscenter BC Brussel MultiburoLouise CW Antwerpen SocialMediaClubKube8

CW Antwerpen HetBolwerk/Bard'Office(Fort5) BC Brussel MultiburoQuartierEuropéen CW Turnhout SPK-BarD'office

CW Aalst Hopmarkt50 BC Diest Office21 BC Turnhout SquarePointBusinessCenter

BC Hasselt HuisVanstraelen BC Brussel OfficeservicesBrussels CW SintNiklaas StNiklaasStation

BC Gent HuizeMinne BC Leuven OfficenerLeuven CW Brussel Studio28

BC Leuven I&ILeuven BC Hasselt Officenter CW Antwerpen StudioStart

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

CW Gent Icubes BC Turnhout OfficenterTurnhout CW Charleroi SwitchCoworkingCharleroi

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

CW Melle IdeeKids CW Ieper OndernemingscentrumIeper/BarD'Office BC Antwerpen Talentarena

BC Gent IdolaBusinessCenter CW Gent Oneoffice CW Antwerpen TelenetIdealabs-TheSquad

BC Ieper IdolaBusinessCenter BC Bierges OptimalisBusinessCenter CW LaLouvi!re thecoworkFactory

CW Gent Ihub BC Brussel OrionaGroupCinquantenaire BC Gent TheCrescentGhent

BC Estaimpuis ImpactCentreEuropéend'affairesetdeservices BC Brussel OrionaGroupLouiza BC Brussel TheCrescentRiverside

BC Leuven InvolleVaart BC Brussel OrionaGroupSchumann CW Brussel TheFlex

BC Gent IncubatieenInnovatiecentrumUgent BC Brussel PaepsemBusinessCenter BC Brussel TheHubBrussel

CW Antwerpen IndianCaps BC Gent Parkoffice CW Brussel theLibrary

BC Brussel InnovatieenincubatiecentrumBrussel BC Kortrijk Parkoffice CW Brussel TheMug

BC Wommelgem InterofficesAntwerpEast BC Brussel Plug&Work CW Aarschot TheOffice(coworkingAarschot)

BC Zaventem InterofficesBrusselsAirport BC Charleroi QuadratureBusinesscenter CW Kortrijk TheStudio's

CW Antwerpen K85 BC Brussel QuartierLatin CW Ronse TIO3TextilesOpenInnovationCentre

BC Hasselt Kaai16 BC Eupen QuartumBusinessCenter CW Brussel Transforma

CW Antwerpen KBCStartigAntwerpen CW Mechelen RE:FlexMechelen BC Brussel TribesBrussel

CW Antwerpen KBCStartigGent CW Antwerpen RE:flexBerchem BC Kortrijk Twelve

CW Hasselt KBCStartigHasselt BC Brussel RegusAirportDiegem BC Antwerpen UBIS

CW Brussel KBCStartitBrussel BC Brussel RegusAirportMeetingCenter BC Antwerpen Universitairbedrijvencentrum

CW Kortrijk KBCStartitKortrijk BC Brainelalleud RegusBraineLalleud BC Brussel VIPOfficesHeadquarter

BC Geel KempensBedrijvencentrum BC Brussel RegusBrusselsSouthStation BC Tielt VlaemynckBusinessCenter

CW Liège LaForge BC Brussel RegusBrusselsWestBasilix BC Hasselt WetenschapsparkLimburg

CW LouvainLaNeuve LauvainCoworkingSpace BC Brussel RegusCentralStattion BC LouvainLaNeuveWetlandsBusinessCenter

CW Tubize LeCentred'EntreprisesChapagneLandas BC Brussel RegusCommision CW Gent Wolfstraat9

CW Leuven LeuvenStation BC Brussel RegusEUParliament BC Brussel Workspaces

CW Antwerpen Level9 BC Gent RegusGentZuiderpoort BC Antwerpen WTCbusinesscenter

BC Liège Liègebusinesscenter BC Brussel RegusMidi CW Charleroi WupCoworking

CW Liège LiègeGuillemains BC Brussel RegusWaterlooOfficePark CW Hasselt Zelfies

BC Liège LiègeSpatiopôle CW Liège RogierEspaceCoworking BC Zellik Zellik.biz

CW Gent LikeBirds BC Brussel Science14Atrium