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The Flex Office Market in Belgium
1. fin POWER
Presentation at the Belgian Workspace Association, 2023
Available on ‘SlideShare’ for every-one
The flex office market in Belgium
Update on the coworking sector and its operators in Belgium
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