Bad start to the year for office rentals in Brussels: ‘One of the worst ever’

The rental of office space in Brussels was a third lower in the first months of this year than in 2023. Real estate agents point to the economic slowdown and the hesitant attitude of companies. The European Commission must save the rest of the year.

‘For rent: 6,500 square meters of sustainable office space’: a large banner has recently been hung on the facade of the Hôtel des Douanes on the Tour & Taxis site in Brussels, where the editorial staff of De Tijd is also located. Completely renovated, hiply furnished, low energy consumption and close to a major train station (Brussels North): the office building seems to meet all the requirements of modern companies and employees.

But owner Nextensa cannot find a tenant for his newest crown jewel for the time being. “We are in discussions with a number of candidates who have already come to take a look,” says Michel Van Geyte, CEO of the listed real estate group, a participation of the holding Ackermans & Van Haaren. ‘You notice that many companies are looking for sustainable offices. But the decision-making process is very slow.’

The difficult quest is no exception. The major real estate agents report in their reports that the ‘take up’ (rental) in Brussels, which accounts for approximately half of the Belgian market, has fallen noticeably at the beginning of this year. Broker JLL speaks of ‘one of the weakest first quarters ever’. According to JLL, barely 49,324 square meters of office space was rented in Brussels between January and March. That is 31 percent less than in the first quarter of 2023 and 55 percent less than the average of the past five years (see graph).

This seems to bring the entire real estate chain to a standstill. Due to the sudden, sharp increase in interest rates, investors are showing less interest in real estate, real estate developers have put projects on hold and architects and contractors have less work. Now rental to end customers is also starting to slow down. “The market is on pause and waiting for better times,” says competitor Colliers.

According to real estate experts, potential tenants are thinking more and more about a possible move. “The decision-making process at companies is longer, tougher and more complex than five years ago,” says Christophe Golenvaux, head of office leasing in Brussels at JLL. ‘Employers want to reach a consensus and that takes more time.’

Additionally, brokers are finding that many companies ultimately prefer to renew their leases in their current agencies. “We see a lot of renegotiations in the market because tenants are postponing moving plans to more stable times,” Colliers notes. “Everyone is in the same situation: everything is slowing down due to the bad economy,” says Marc-Antoine Buysschaert, CEO of the real estate agent Cushman & Wakefield in Belgium. ‘Service companies in particular saw their costs skyrocket and were paying attention. Everyone wants a CO2-neutral building, but that comes at an additional cost. In addition, construction prices have risen. Then many companies choose to renegotiate their leases.’

This trend clashes with the story that companies are massively looking for brand new, sustainable offices because they need to significantly reduce their CO2 emissions. “Old buildings are super competitive because they are so cheap to rent,” Buysschaert notes. ‘That is why many companies are pushing back the inevitable transition to sustainable offices.’

According to Buysschaert, there is currently little sustainable office space available for rent in Brussels. ‘Almost all developers have stopped building offices. As a result, there is insufficient quality supply today. And no one dares to develop at their own risk, because the banks do not follow suit. But Belgian companies want to see an office first before signing a lease. Many top projects therefore only find a tenant shortly before completion.’

In this election year, the real estate sector is mainly counting on European officials to save 2024 in the rental field. Last month, the European Commission announced that it will rent 14,000 square meters in the renovated Montoyer 34 office building from Ghent owner Alides and 24,000 square meters in Kolmont’s Montgomery Parc. The magazine Trends-Tendances reported in October that the energy company Engie is considering moving its headquarters to Oxy, the former Muntcentrum that the promoters Immobel and Whitewood are currently renovating. In that case, the European Commission can rent the vacant space in Engie’s current headquarters Pole Star, which owner Cityforward is renovating.

In the medium term, Cityforward should create great dynamics on the Brussels rental market. The fund, managed by Whitewood, announced last month the purchase of 21 worn-out office buildings from the European Commission. Cityforward wants to completely redevelop these complexes in the coming years, which will mean that many European officials will have to move.