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Presentation Belgian serviced office market analysis oktober 2023 10 07.pptx
1. fin POWER
Presentation at the Belgian Workspace Association, 2023
Available on ‘SlideShare’ for every-one
FLEXIBLE OFFICE MARKET IN BELGIUM
Key financial figures
B.W.A. Conference, 26 October 2023
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 ?
Was ‘fundamentally’ different in 2015 : business centers were ‘bricks and morter’, selling
workplaces – coworking was based upon community-building, selling memberships.
Actually, all of them evolving towards ‘flexible offices’ – covering both models.
We still make a distinction, but it becomes more and more difficult to do that. In our
analysis, we use define
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 :
Own data-base of active centers
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, 90-2005 : more closings than new centres !
• From 2005 on : : start of the ‘New Way of
Working’ (mobile devices), first ‘motor’ of growth
(5-10%/year)
• From 2012 on: additional growth of our market
by the coworking-movement – growth rate of 15-
20 %/year
– Thanks to the ‘Wework-hype’
• Covid en energy-crisis have ‘stopped’ our
marketgrowth from 2021 ot 2023 !
– In 2023 : no ‘net growth’ of number of business centres and
coworking spaces in Belgium
• Net growth of ‘business centres’, decrease in ‘coworking-centres’
5. Offices (x 1,000 m²) 2023
Brussels 12.527.953
CBD - Central business district 8.196.362
Decentraal 2.217.720
Periferie 2.113.871
Antwerp 2.175.000
Gent 1.550.000
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 24.307.953
# Business centres (in m²)
Number : 327
Average surface : 2.123
Total surface occupied : 694.222
in % of office market : 2,86%
# Co working centers
Number : 183
Average surface : 513
Total surface occupied : 93.942
in % of office market : 0,39%
in % of business center market : 13,53%
Total serviced office surface: 788.164
% oppervlakte 'serviced offices' 3,24%
II. BELGIAN OFFICE MARKET
Situating within the total ‘OFFICE MARKET’
5
Office-stock in Belgium
Stable/decreasing 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. 320 business centers, appr. 700,000 m² office space.
Co working market
Total ca. 180 Coworking spaces, more then 100,000 m² office space.
Both account for 3,24 % 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
Decreasing
market ? Increasing market
7. II. BELGIAN OFFICE MARKET
Expected evolution 2022 – 2030
Office-market : decrease of 1 or 2 %
pro year ?
• After growth of 1-2 % from 90-2010 and stable
evolution from 2010 on.
Serviced office market : increase of
10 or 20 % pro year ?
• A fast growth market or a new hype ?
8. Total > 500 “serviced office locations” in
Belgium :
IWG is the biggest ‘operator’ with appr.
100,000 m², followed by Officenter and
Silversquare.
> 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 # m²
(leeg) 287 306.207
IWG (Regus & Spaces) 46 97.473
Officenter 15 48.909
SilverSquare 9 44.037
BC Group (Bedrijvencentra) 16 36.199
MeetDistrict 5 29.500
Mundo Lab 6 20.200
LRM 4 15.300
Interoffices 6 14.045
Brucenter 9 13.587
Bluepoint 3 13.365
Vano Immo 2 13.200
Wework 2 10.581
Workways 2 10.000
Fosbury 2 9.550
Tribes 3 8.000
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 BUSINESS CENTER MARKET
4.1 Turnover and profitability evolution 2020 - 2022
• Although the clouds have not cleared
up, we clearly see improved profitability
in 2021 and 2022 for our market
– Turnover growth of > 10 % pro year
– The total EBITDA increases with more than 40 %
towards 55 Mio €
• The EBITDA margin increases to nearly 20 %
– The substantial operational losses of our market has been
absorbed, and we have reached the break-even level over all
players in the market.
• We can expect for the coming years a further turnover
growth and a return to ‘substantial’ profitability of our
market by 2024-2025
Our market has been hit hard in 2020 – 2022, but the figures of 2022
gives us good hope that our market will return to profitability the
following years.
2020 2021 2022
Total turnover 240.191 265.063 294.112
Turnovergrowth 1% 10% 11%
Operational cash-flow(EBITDA) 32.252 37.807 54.915
in%ofturnover 13% 14% 19%
Operational profit(EBIT) -11.825 -7.815 -1.785
in%ofturnover -5% -3% -1%
11. IV. FINANCIAL DATA OF FLEXIBLE OFFICE MARKET
4.2. Turnover evolution
• Turnover (figures until 2020)
– Total market turnover has reached nearly
300 Mio in 2022, a growth of more than 10
% after a stable 2020 and a 10% growth in
2021.
• The turnover grows faster then the number of
locations – which indicates an increase in occupancy
and/or increase in prices.
• Growth rhythm
– The ‘market’ growth in turnover has been
fluctuating between 10 an 20 % from 2007
on.
– After the ‘crisis’ of 2020-2022, we can
expect a return to the 10-20 % growth the
following years.
After a ‘decline’ in turnover in 2020 due to covid, we see from 2021 on
a renewal of our growth path towards 10-20 % turnover growth.
12. IV. FINANCIAL DATA OF FLEXIBLE OFFICE MARKET
4.3 Operational profit (EBIT and EBITDA)
• In 2022, the EBITDA realized in our market was
appr. the turnover of our market in 2012 !
• The growth of our market from 2013 – 2018 has
decreased the relative profitability of our
market
– EBITDA has decreased from 25 % in 2011-2013 to less
then 20 % in 2017-18
– Operating profit was more then 5 % in 2011, and
negative the last 10 years !
– Main reason is the substantial start-up losses of new
locations, creating losses during the first 2 to 4 years.
• This decrease in profitability should reverse by
2023, if the market returns to ‘normalization’.
– If demand would exceed offer the following years, a
return to 3-5 % operating profit
The EBITDA of 2022 of our market is higher than the turnover of our
market 10 years ago !
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 remained stable around 500 locations in
2023. We expect that in 2024 a renewal of the growth of our sector with a growth rate
of 10-20 % a year.
– This could mean that our market would occupy to 10 % of the office-market by 2030.
– It can be expected that the demand will grow faster, but it remains a question if the actual market-
structure will be able to respond to this greater market demand.
• This should have a positive effect on the occupation rate en profitability of the coworking-market the following years.
• The profitability of the market was under much stress due to the covid-crisis, but the
limited growth of the offer (number of coworking spaces) combined with an increased
demand (= turnover) will turn our market to profitability the following years.
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