COVID-19 Impacts Belgium Real Estate

Cédric Van Meerbeeck • 05/11/2020
A brief weekly update on the impacts of COVID-19 pandemic on commercial real estate in Belgium.

5 November

Indicators paint a pretty bleak picture of the Belgian economy (-7.7% GDP in 2020[1]) amid the global COVID-19 health crisis. Making matters more complicated in the short term, the Belgian government has decided to re-introduce containment measures from the beginning of November until mid-December. This introduces a clear downside risk which will have ramifications across most sectors.


Despite intense pressure, private consumption had returned to pre-crisis levels by Q3. This pressure will now be compounded by the new containment measures with the crucial end-of-year period drawing nearer. However not all segments and locations are equal, as food retailers and out-of-town locations will continue to demonstrate resilience.


Deteriorating sentiment in the services sector is reflected in decreased occupier activity across Brussels and the rest of Belgium. Nevertheless, large and symbolic deals continue to take place. Quality assets and core locations are the focus of investors’ interest in order to weather the turbulent context.


Manufacturing confidence is making a resilient recovery – this is reflected in an encouraging dynamic in semi-industrial occupier activity while logistics has been in the spotlight as it plays a crucial role to navigate the pandemic. As a result, foreign investor demand in Belgium is higher than ever.

[1] As per Oxford Economics on 28 October 2020, pre new containment measures.

30 April

As the COVID-19 crisis takes a turn for the worse, we expect to see short term negative market impacts. Activity is still suffering, and the economic recovery is expected to be only gradual and that output will remain below its pre-crisis level until mid-2022 at least. GDP is anticipated to fall by 7.8% in 2020 before rebounding to 5.6% growth in 2021 while unemployment is expected to increase in 2020 and in 2021. Retail spending is likely to also be lower with a negative impact on the retail sector. 

Despite office letting activity still below average levels both in terms of space taken and number of deals, prime office rents are witnessing some resilience and we expect them to remain stable over the short term. A historically low vacancy level supports the market along with a consistent occupier focus on brand new and well-located office buildings.  

Prior to the COVID-19 crisis, the retail sector was already under pressure and is the most impacted market, with a decrease in turnover and rents falling significantly, especially for high street properties.  

Conversely to retail, demand for logistics assets are booming. The competition in this sector is high and we are seeing strong yield compression.  

9 April

The coronavirus crisis is having an increasing impact on the entire Belgian economy. According to Oxford Economics latest figures, Belgium could be one of the most impacted countries in Europe, with a GDP decline now forecast around 2% this year. While every industry is affected in a different way (see our post on the retail sector previously), most professionals within commercial real estate are currently working from home. 

The everyday life of a broker during this unprecedented period 

In order to comply with the guidelines provided for the industry, real estate agents are prohibited from organising client meetings (unless virtually). As such, communication by e-mail, phone and video conferencing has quickly intensified. Nevertheless, real estate remains a people business, meaning face-to-face meetings and property inspections remain an essential part of our work.  

The lack of face to face contact and inability to be able to visit properties is affecting the generation of new leads and of course the creation of new letting deals. This is especially true for smaller transactions, which are expected to decline in the coming months. 

The take-up could be negatively impacted in the first half of the year 

It is safe to say that the COVID-19 crisis will have a negative impact on the take-up levels for the first half of the year. The magnitude of the effects on the take-up is still unknown and very difficult to estimate since there is much uncertainty regarding the duration of the lockdown and the rate at which the economy is going to recover.  

It is important to bear in mind that the take-up levels in 2019 were exceptional and a slowdown in activity was expected for 2020, regardless of the current crisis. Year-to-date, the Brussels take-up stands around 65,000 sq m.

On average, 60% of all office transactions in Brussels are smaller than 500 sq m. These transactions are usually concluded relatively quickly, but it is getting more complicated to relocate smaller tenants. This is also because smaller businesses with ten to twenty employees will likely postpone their move or even completely rethink their relocation plans due to the crisis. 

Rental levels remain stable for the moment 

Currently there is no pressure on rental levels. Prime rents in Brussels are still at 320 €/sq m/year (in the Leopold District) and the weighted average rents for the year so far is around 165 €/sq m/year (similar to the 5-year average).  

Fortunately the crisis has hit the market at a period of historically low vacancy levels, so competition is still stabilising rents. 

However, we see some tenants entering a leasing contract are asking landlords for extra concessions. Often the request is 1 or even 2 months rent-free period on top of what is usually seen in the market. Generally property owners are not objecting per se and are showing some understanding given the situation. 

Several property owners have revealed that some tenants are getting increasingly anxious as the uncertainty surrounding the lockdown is mounting. Some landlords are beginning to get requests from their tenants to postpone lease payments for the April to June period. Should the lockdown last longer than expected, we are going to see more severe reactions in the market regarding this issue. 

What the future looks like for the Brussels office market? 

Should the lockdown not continue into summer we are still expecting a rebound for the second part of the year as the Brussels office market has historically proven to be resilient  

Several important transactions are in the pipeline and are continuing despite the COVID-19 crisis. Even if delayed, these will go ahead in the coming months. Furthermore, public institutions (both national and European) will need to relocate leading to an increase in new requirements. 


2 April

According to latest figures and news in Belgium, the Belgian economy will be severely hit during this second quarter.

The Fédération des Entreprises de Belgique estimates the economic impact of COVID-19 to be €2.4 billion per week with aviation, F&B and events sectors as the most impacted. As such, the Belgian economy should witness a slight GDP decrease in 2020, currently estimated to be 0.6%.

Most retail, leisure and entertainment venues are now closed to the 18 April, and the lockdown could be extended to 3 May. 

With physical stores now closed, retailers are increasingly asking for rent reductions or cancellations while online retail is recording a significant rise, both for food and non-food deliveries.

As such, logistics activities, especially last-mile logistics, have experienced exceptional demand in recent weeks.    

Last week saw an increasing number of office occupiers asking landlords for rental payment reductions or freezes.

Coworking operators are also suffering from reduced demand though they may benefit from a rebound of activity in H2 2020.

This lockdown could boost ‘new ways of working’ and especially working remotely. 

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