Flanders looking for quality offices

Transcription

1 Office market report Pulse Spring 2014 The Belgian Logistics Market - Quarterly Update Flanders On Point Summer 2015 Flanders looking for quality offices Take-up in Flanders in 2014 increased by 25% y-o-y to nearly 200,000 sq.m is expected to be similar, though Q was quiet. Vacancy slight increased in Antwerp and Leuven. Outlook is downward oriented in all Flemish cities, especially Ghent, as speculative pipeline is limited. Immediate vacancy of high quality, visible and accessible buildings is very low, some projects are therefore started at risk in Antwerp and Ghent. Prime rents increase in Ghent and Leuven. Stability in Antwerp and other cities. Investment activity moves to a record year 2014 in every segment will be the best year ever in Flanders with huge shopping center deals. Prime yields are under pressure in every segment.

2 - 2 - On Point Flanders Office Market Summer 2015 Foreword In their search for quality, accessibility and visibility, investors are increasingly interested to invest in the expanding Flanders Office Markets. A new record high investment volume is expected for The occupiers side of the market had a rather slow start in 2015 with a take up of 68,000 sq.m. in Flanders up to 05/15. Especially the Antwerp region saw a low activity in the first 5 months. Nevertheless this weak start of the year, we expect a much better second half of the year with a pipeline of more than 20,000 sq.m. only for Antwerp. tenants from 2,000 up to 7,000 sq.m. Availability is under pressure and almost no availability can be found in new buildings throughout Flanders. Rental levels are stable in all cities and even increased in Ghent and Leuven. Ralph Schellen (*) - Head of Office Agency Flanders (*) Allres Bvba / Sprl As in Ghent a few years ago, new large developments are started in Antwerp such as City Link 2&3, Post X, Kievit, and Nieuw Zuid, potentially attracting Key statistics Q Q Antwerp Take-up (sq.m.) 89,607 61,974 89,500 12,312 Vacancy rate (%) 11.4% 11.9% 11.25% 12.2% Stock (thousand sq. m.) 1,920 1,931 1,987 2,000 Prime Rent ( /sq. m./pa) Ghent Take-up 18,866 51,703 34,845 23,700 Vacancy rate (%) 3.7% 4.7% 4.90% 4.90% Stock (thousand sq. m.) 1,115 1,133 1,270 1,270 Prime Rent ( /sq. m./pa) Mechelen Take-up 28,043 11,883 5,952 2,559 Vacancy rate (%) 10.3% 12% 10.8% 9.9% Stock (thousand sq. m.) Prime Rent ( /sq. m./pa) Leuven Take-up 25,381 12,532 32, Vacancy rate (%) 10.7% 8.5% 10.9% 13.3% Stock (thousand sq. m.) Prime Rent ( /sq. m./pa)

3 - 3 - On Point Flanders Office Market Summer 2015 The Flanders office market at a glance 4,500,000 sq.m. stock in Big 6 cities OFFICE STOCK Q Antwerp and Ghent are by far the largest office market 10% 2% 3% 10% 46% 194,000 sq.m. taken up in % Antwerp contributed to 46% and remains the most active office market. In Q1 2015, however, take-up in Ghent exceeds Antwerp. Antwerp Ghent Mechelen Leuven Aalst Hasselt TAKE-UP BY CITY MAY 2015 Occupiers activity in Flanders relatively quiet in Q1 2015, several mid to large size deals expected in the short term Take-up by year-end might be similar to Flanders lacks quality offices corresponding to occupiers demand mei/15 Antwerp Ghent Mechelen Leuven Hasselt Aalst Other Developers regain confidence and start some selective projects at risk. Rents increase in Ghent and Leuven, but are unchanged in Antwerp and other cities. Prime rents are 155 / sq.m. / year in Ghent, vs. 150 in Leuven and 145 in Antwerp. There is still upward pressure on rental values in Ghent.

4 - 4 - On Point Flanders Office Market Summer 2015

5 - 5 - On Point Flanders Office Market Summer 2015 Antwerp Slow start in 2015 but transactions in the pipeline KEY FIGURES Q1 15 Outlook 2015 TAKE-UP ( 000 SQ.M.) STOCK ( 000 SQ.M.) 1,931 1,987 2,000 VACANCY RATE 11.9% 11.25% 12.2% PRIME RENTS ( /SQM/Y)

6 - 6 - On Point Flanders Office Market Summer 2015 Antwerp and its periphery has the largest office stock in the Flanders Region, and the second largest in the country, after that of Brussels together with its Flemish periphery. The current office stock in Antwerp amounts to 2 million sq.m. Since the project pipeline is very low, the stock is expected to remain stable throughout With vacancy in the double-digit figures, the market is tenant favourable and is expected to remain so for the next 2 years. Vacancy is expected to decline gradually, as the project pipeline is limited and thanks to a number of reconversions. In the past five years reconversions of older office properties to other uses amounted to just under 100,000 sq.m. Reconversions were registered mainly in the Centre which has the highest structural vacancy in old office buildings. Based upon a number of large transactions in the pipeline, take-up levels in the second half year should be better, bringing take-up for the year 2015 in line with that of 2014, which was 89,500 sq.m. An annual take-up of 75,000 sq.m. is considered as the new annual average. Take-up in Antwerp took a slow start in 2015, but a number of large transactions are in the pipeline At the end of the first quarter of 2015, a takeup of 12,300 sq.m. was registered across 33 transactions. That was 48% below the average quarterly take-up in the past five years and marks a slow start to the year. As at May 2015 take-up has risen to 20,700 sq.m., which will result in a subdued first half year, below the level registered in the first half of 2014, which was just under 37,000 sq.m. Take-up levels in the second half year should improve thanks to a number of large transactions in the pipeline but the overall results for the year will be modest to average. The corporate sector accounted for 85% of the demand in the year so far, local administrations represented the remaining 15%. The latter was realised in just one large transaction of c. 2,500 sq.m. by the Flemish Region in the Kievitplein, near the Central Station, which was the only transaction in the market segment above 2,500 sq.m. The largest volume in the year to date was registered in the market segment between 500 and 1,000 sq.m., where 5,500 sq.m. were transacted, representing 34% of the volume transacted so far. 22% of the transaction volume was recorded in the market segment between 250 and 500 sq.m., and the top 3 is completed by the market segment between 1,000 and 2,500 sq.m., where 17% of the take-up was registered, or 2,810 sq.m. Take-up in 2015 so far was spread over the city centre, which attracted 51% of the takeup volume, followed by the Periphery (27%) and the Ring (18%). The first two districts took a market share in excess of their 5-year averages, whilst the proportion of take-up registered in the Ring (18%) and the Port (4%) districts was below their respective TAKE-UP BY BUSINESS SECTOR (SQM) TAKE-UP BY DISTRICT (SQM) sq.m May 2015 Corporates Administrations sq.m May2015 Centre Periphery Port Ring

7 - 7 - On Point Flanders Office Market Summer year averages of 26% and 6%. 33 transactions were registered in the first quarter, rising to 42 transactions as at end May, still very far from the 82 transactions registered in the first half of Of the total of 42 transactions recorded so far this year, 22 were in the city centre, a proportion in line with take-up volumes and also in line with the 5-year average. The periphery attracted more transactions than average, representing 29% or 12 transactions, against an average of 22%. The average size of transactions in 2015 so far is 393 sq.m., 29% below the 2014 average of 552 sq.m. All transactions in 2015 so far involved second hand space, illustrating the lack of available new space. In the past five years, take-up in new buildings represented 13% of the takeup, whilst pre-lettings represented 10%. The largest transaction in 2015 so far was the letting by the Flemish Region mentioned above, in the Kievitplein near the Station. Other transactions in the city centre were the letting of 890 sq.m. in the Lange Lozanastraat and the letting of 610 sq.m. by Dixon & Company. Initial Textiles let 1,800 sq.m. in the southern periphery, and law firm Argo Advocaten signed for 1,000 sq.m. in the City Link B building in the ring district. In the Nieuw Zuid project two acquisitions were recently finalised of 970 sq.m. each. Also recently Kühne & Nagel pre-let 2,200 sq.m. in building 6 of the Post X development alongside the Ring to be delivered in Autumn Vacancy in new buildings down to 7,000 sq.m. The current available space in Antwerp amounts to 243,800 sq.m. in 321 buildings, compared to 312 the previous quarter. The vacancy rate increased slightly quarter-onquarter, from 11.9% end December 2014 to 12.2% after the first three months of 2015, under impulse of the release of second hand buildings particularly in the city centre and port districts. The vacancy rate has failed to decline in the past 3 years. As a comparison, end 2013 the vacancy rate also stood at 11.9%. It is forecast to remain broadly stable until market conditions change, currently forecast at end Only 7,000 sq.m. are immediately vacant in new buildings, representing merely 3% of the available space. 74% of the vacant space, 180,000 sq.m., is in buildings older than 15 years. 23% of the vacancy or 57,000 sq.m. are vacant in modern buildings between 5 and 15 years old. Modern 23% VACANCY BY AGE CLASS New 3% Old 74% Looking forward, future supply is limited, and particularly speculative development will remain low. There were no deliveries in 2015 so far, and speculative completions this year are limited to 11,200 sq.m. in 2 projects, one of which totals 11,000 sq.m. The latter is a redevelopment project of the former Electrabel building after the move of Electrabel to a new building in Kievitplein, near the station, purchased by Baloise Insurance. Larger projects of over 50,000 sq.m. in the pipeline such as Post X and Nieuw Zuid will be developed in phases over the next 3 to 5 years, mainly on a nonspeculative basis but with the first building started as partly speculative. The first office building of Post X is pre-sold to Syntra, and will be delivered beginning The largest expected non-speculative completion in the short term is planned this Summer with the completion of the Kievit II building, 11,000 sq. m. prelet to GDF Suez / Electrabel and sold to investor Baloise Insurance, followed by the 9,500 sq.m. builtto-suit for Syntra alongside the Ring.

8 - 8 - On Point Flanders Office Market Summer 2015 Prime rent remains stable With vacancy still in double-digit figures, rental growth in Antwerp is not foreseen in the near term, but prospects for the longer term remain good. Market conditions are expected to remain tenant favourable for the next 2 years, and to move toward a balanced market from 2017 onwards. Prime rents remained stable at 145/ sq. m. pa. and apply to the city centre, whilst prime rents in the Ring district are 140/sq.m. p.a. In the port, the prime rent stands at 135/sq.m. p.a. and in the periphery the rent stands at 125/ sq.m. p.a RENTAL BAND BY DISTRICT (EUR/SQM/Y) ( City Center Port Ring Periphery Rental analysis shows a slight decrease in average rents and weighted average rents this quarter. The average rent recorded in Q was 110/ sq. m. pa, down from 113 the previous quarter and the weighted average rent was down to 114/ sq. m. pa. from 116/sq.m. p.a. the previous quarter. Current lease conditions for prime properties include rent free periods up to 6 months, and incentives for occupiers up to one month s rent for 6/9 year leases. Overall rent-free periods for secondary buildings amount up to 3 months of rent together with incentives towards the fit-out of the premises equal between 4 and 6 months of rent RENTAL ANALYSIS Q (EUR/SQM/Y) ( Q4 03 Q4 04 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Center Port Ring Periphery Q1 15 CITY LINK 2 & 3 DEVELOPER: WILLEMEN ARCHITECT: JASPERS - EYERS + ABV

9 - 9 - On Point Flanders Office Market Summer 2015 Ghent Rents rise again CALAIS OOSTENDE R4 E17 ANTWERPEN AMSTERDAM E40 GENT DRONGEN ZWIJNAARDE ARD ST. MARTENS LATEM MERELBEKE E17 DE PINTE E40 LILLE KORTRIJK OUDENAARDE BRUSSELS ZUID CENTRUM NOORD OOST KEY FIGURES Q1 15 Outlook 2015 TAKE-UP ( 000 SQ.M.) STOCK ( 000 SQ.M.) 1,133 1,270 1,270 VACANCY RATE 4.7% 4.9% 4.9% PRIME RENTS ( /SQM/Y) The office market in Ghent is the second largest in Flanders, after Antwerp, with a total office stock of million sq.m. at end of May New stock has been added recently in various new projects on the Loop, located in the Southern part of the city next to the E40 motorway. sq.m TAKE-UP BY SECTOR MAY 2015 (SQM) May 2015 Corporates Local Administration

10 On Point Flanders Office Market Summer 2015 Take-up below record years In 2014 take-up in Ghent came in at 34,845 sq.m., down vs. the outstanding year In 2015 to date, take-up already reaches 23,616 sq.m., with among others the acquisition of the Keizer Karel building (8,760 sq.m.) in Ghent Centre by Optima Bank. Over the last six months, we recorded further transactions in the successful Blue Towers. MIPS, Telenet and KPMG took respectively 1,527 sq.m., 1,500 sq.m. and 1,351 sq.m. This project of c. 38,500 sq.m. has therefore been let at 87% in less than 2 years. particularly strong over the last 3 years, 42% of the vacancy is less than five years old. In the Centre, 76% is older than 15 years. We believe that there is refurbishment potential in the Centre: since vacancy in the South may be rapidly absorbed by lettings, the Centre may find back some appeal, especially near the station. The South district contributed to 72% of the take-up in 2014, followed by the Centre with 24%, North and west sharing the rest. In 2015 to date, the Centre represented 70%, and the South 30%. With the AA Tower and the Blue Towers being nearly fully let, we expect less transactions in the short term in the South district. Corporates drive the market, with 95.5% of the take-up in 2014 compared to 99% in In 2014, there was one transaction by an administration, Hogeschool Gent who rented 1,482 m² in the Buchtenstraat near the Loop site. In 2015 to date, 100% of the transactions were by Corporates. Lowest vacancy in Flanders QUANTUM BUILDING DEVELOPER: ALIDES EVR-ARCHITECTEN As of Mid-May, there was 62,500 sq.m. immediately available in Ghent, corresponding to a vacancy rate of 4.9%, down vs. 5.25% in Q1 2014, remaining way below other big cities in Flanders. 50% of the immediate total vacancy is located in the South district, the largest being the remaining 5,151 sq.m. vacant in the Blue Towers, followed by the 3,000 sq.m available in the Portalis in Zwijnaarde. 36% of the total vacancy in Ghent is in the Centre. There is 5,808 sq.m. vacant in the West and 2,152 sq.m. in the North. The majority of the vacant stock is ageing, 58% being older than 15 years and 25% being less than five years old. In the South where the development activity has been Modern 17% VACANCY BY AGE CLASS Q New 25% Old 58%

11 On Point Flanders Office Market Summer 2015 New developments are restricted in 2015: vacancy may fall again As a consequence of the low vacancy, some projects are being launched speculatively, in the coming 18 months c. 20,000 sq.m. may be completed. In the South, c. 3,700 sq.m. will be delivered non-speculatively in the Take-Off Business Park in 2015, of which 2,500 sq.m. for the new HQ of Baltisse. This is the second phase of a project totaling 50,000 sq.m., a first phase of 3,360 sq.m. being already occupied by Planet Group. In Sint Denijs, 2,448 sq.m. will be completed by the end of next year on Kortrijksesteenweg. Banimmo s Tetris Business Park will offer sq.m. in the coming years, a first phase of 7,400 sq.m. prelet to Deloitte and sold to Integrale will be completed by the end of this year. By the end of 2015, a 13,000 sq.m. property will be delivered near the AA Tower in Zwijnaarde: it will be occupied by the University of Ghent. The future supply over the next 18 months is therefore restricted, we believe that vacancy will fall again. Rents rise further Prime rents in Ghent increased to 155 / sq.m./year, vs. 150 six months ago, this level being applicable to the new constructions in the South district. As vacancy is not expected to substantially increase in the medium term, the market remains favourable to landlords a further rise cannot be excluded. Secondary rents are about 20% lower, currently approx. 120 / sq.m. / year. Incentives are lower than in Brussels or in Antwerp. In the Centre, the Oude Dokken will offer 8,400 sq.m. in 2016, depending on prelets. In Q1 2016, Alides will complete its Quantum project, this c. 8,000 sq.m. building is located near Dampoort station. Alides will also develop the Waterfront project (Toemaattragel) totaling 40,000 sq.m., of which 4,500 sq.m. will be delivered in Q

12 On Point Flanders Office Market Summer 2015 Mechelen Corporates dominate the market Mechelen is located in the South of the Province of Antwerp, between the cities of Antwerp and Brussels. Economically it is the third Flemish city, after Antwerp and Ghent. Mechelen benefits from excellent access to the Amsterdam-Paris motorway (E19) via 2 exits, Mechelen-North and Mechelen-South. The centrally located station is an important stop in the Belgian north-south railway network, and offers a direct link to The Hague (high speed train), Antwerp, Brussels national airport (Diabolo project), and Brussels. Office zonings are located at the 3 strategic locations described above: Mechelen North and South near the E19 motorway exits, and the city centre, mainly near the station. The office market in Mechelen is dominated by small to medium-sized corporates, with occasional transactions from local administrations. The last transaction by administations dates back to end 2013, when the RVA employment service let 1,600 sq.m. in the Mechelen Station complex. Outlook KEY FIGURES Q TAKE-UP ( 000 SQ.M.) STOCK ( 000 SQ.M.) VACANCY RATE 12.0% 10.8% 9.9% PRIME RENTS ( /SQM/Y) Take-up dominated by corporates In 2014 the total volume taken up in Mechelen amounted to 5,900 sq.m., 50% below the 5-year annual average of just under 12,000 sq.m. In the first three months of 2015 a takeup of 2,599 sq.m. was recorded, climbing to 10,599 sq.m. as at end May Since the beginning of 2014 the market has been entirely dominated by corporates, whilst administrations are absent. 11 transactions were recorded in 2014, 42% below the 5-year average of 19. In the first quarter of 2015, 5 transactions were registered, which is equal to the 5-year average for the first quarter. The average size of transactions in the 5-year period from 2010 to 2014 was 645 sq.m., and 2,120 sq.m. in 2015 so far.

13 On Point Flanders Office Market Summer 2015 TAKE-UP BY SECTOR (SQM) sq.m May 2015 Corporates Local Administration When excluding the large transaction of 8,000 sq.m. by the Red Cross, the average size of transactions in 2015 so far is 650 sq.m., marginally above the 5-year average. The market remains focused on small and medium sized companies, the most active market segment being that of transactions below 500 sq.m., where 11 transactions were registered since beginning In the segment above 500 sq.m. there were 5 transactions in the same period. One transaction of over 5,000 sq.m. was registered, the 8,000 sq.m. acquired by the Red Cross in the Motstraat. 3 larger transactions were registered in the area around the station. Apart from the Red Cross Flanders that occupies a new building in the Motstraat, retailer Fred & Ginger built new headquarters of 2,760 sq.m. in the Bautersemstraat behind the station and Nokia Belgium let 500 sq.m. nearby the station. Low availability in new buildings The total office stock in Mechelen is 458,000 sq.m., of which only 35,000 sq.m. in buildings less than 5 years old. 60% of the stock is in modern buildings between 5 and 15 years old. A total of 45,300 sq.m. is currently available, which represents a vacancy rate of 9.9%, a decline from the 10.8% that was available in Autumn % of the vacancy, just under 25,000 sq.m. is available in buildings between 5 and 15 years old, where also the largest proportion of the stock is located (60%). Of the total current availability, vacancy in new buildings is the lowest, only 5,500 sq.m. or 12%. Current vacancy in new buildings in Mechelen North is in a recently completed project on the Blarenberglaan and in Mechelen Campus. There are two new buildings in the centre near the station. There is no immediate vacancy in Mechelen South. Vacancy in old buildings represents 33% of the total, in line with the proportion of old buildings in the stock. Pipeline is restricted In 2014 only one project was delivered, a 4,500 sq.m. property on the Blarenberglaan in Mechelen North, a redevelopment by BVI on the former Cummins site. The lack of completions resulted in a decline in the vacancy rate to just under 10%. In 2015, only one project is scheduled for delivery, a non-speculative development of 2,800 sq.m. for retailer FNG Group on the Bautersemstraat,in the Raghenopark near the station. In the near future York Business Park (7,400 sq.m.) is scheduled in Mechelen North, 2 projects are planned near the station for a total of 15,000 sq.m., and a nonspeculative project for a pharmaceutical international is planned in Mechelen South. Developers are expected to remain riskadverse in the foreseeable future and, therefore, developments will remain mainly non-speculative. Prime rents stable Whilst prime rents in Ghent and in Leuven rose early 2015, prime rents in Mechelen remained stable at 140/sq.m. p.a. Rents for secondary buildings and locations are approx. 20% lower. In the tenant favourable market in Mechelen, incentives remain applicable and usually include rent-free periods as well as contributions to fit-out.

14 On Point Flanders Office Market Summer 2015 Leuven Rents rising above Antwerp Offices in Leuven are mainly located in the periphery, along the ring road and, to a lesser extent, in the city centre. There are office clusters along the ring road, around the station and in the Vaartkom, where a lot of redevelopment took place in recent years. The periphery houses numerous ICT companies and spin-offs of the University of Leuven. Slightly further out of town along the E40 motorway in Heverlee, there is a large business zone oriented towards research & development. KEY FIGURES Q Outlook 2015 TAKE-UP ( 000 SQ.M.) STOCK ( 000 SQ.M.) VACANCY RATE 8.5% 10.9% 13.3% PRIME RENTS ( /SQ. M./Y) Leuven has the fourth largest office stock in Flanders, after Antwerp, Ghent and Mechelen, totaling 434,000 sq.m. Compared to a year ago, stock decreased by 31,000 sq.m., this being explained by the conversion into a school of the former HQ of Telindus (Proximus) that followed its acquisition by the Katholieke Hogeschool Leuven (KHL, now called UCLL), as well as the conversion into residential of the Hungaria building located on Vaartkom. PROXIMUS SITE HAASRODE

15 On Point Flanders Office Market Summer 2015 Largest deal ever in Leuven 2014 was an excellent year for the Leuven office market: take-up came in at 32,700 sq.m., by far the highest of the last five years and up 262% year-on-year. In the 5-year period , the annual average take-up amounted to 20,354 sq.m. In the 2 last years the private sector was dominant, representing an average of 95% of the takeup volume. Take-up last year was boosted by the largest occupier transaction ever on the office market in Leuven, the acquisition by KHL (Katholieke Hogeschool Leuven) of the former Telindus Proximus offices in Haasrode Research Park. The property totals 24,000 sq.m. on 4.5 ha of land and is located near the E40 motorway and the KHL-campus Hertogstraat. Early in 2014, the second largest transaction of the year was signed, the letting by Christelijk Mutualiteit of 1,950 sq.m. on 3 floors in the property located Diestsevest 14, that is now fully let. These major transactions were advised by JLL. Early in the 4th quarter a large letting transaction of 1,900 sq.m. was registered in the Ubicenter. In 2015 to date, occupier activity amounts to 4,400 sq.m. There was a few small size transactions in the Ubicenter and on the Diestsevest, as well as other transactions such as Punch and Unique Interim. 18 transactions were recorded in 2014, against a 5-year annual average of 17. The average size of transaction in 2014 amounts to 1,815 sq.m., 55% above the 5-year annual average and largely thanks to the KHL deal. As a comparison, the average transaction in 2013 was 522 sq.m., against sq.m. in the period. More than half of vacancy in old buildings JLL vacancy rate calculation is impacted by the decrease of stock. Mid-May 2015, it was estimated at 13.3%, covering 62,742 sq.m. 54% of the vacant space is in buildings of over 15 years old, representing a total of 30,000 sq.m. Modern buildings represent 21% of the vacancy, and 25% of the vacant space is in new buildings. The 3 largest vacancies are located in the Ubicenter Business Centre (former Philips site), with an availability of 13,900 sq.m., the Interleuvenlaan 16 in Haasrode (6,300 sq.m.) and 5,800 sq.m. in the Vander Elst building. Noticeably, vacancy in the Centre is much lower than in the suburbs: 25,000 sq.m. is currently immediately vacant (the Ubicenter representing 56% of this), equating to a vacancy rate of 8%. There is no speculative pipeline foreseen in the near foreseeable future, consequently we expect that, provided that the letting activity recovers, oversupply will be progressively absorbed with a vacancy rate trending to 10%. Prime rents rise to 150 / sq.m. Prime rents increased to 150 / sq.m. / y in Q1 2015, vs. 145 / sq.m. / y. six months ago, hence rents in Leuven exceed those in Antwerp. This is valid in the Centre where vacancy is limited. Prime rents for secondary buildings and locations range between 115 and 135 /sq.m. p.a. sq.m TAKE-UP BY SECTOR MAY 2015 (SQM) VACANCY IS PREDOMINANTLY IN OLD BUILDINGS New 21% mei/15 Corporates Local Administration Modern 25% Old 54%

16 On Point Flanders Office Market Summer 2015 Other Flanders Hasselt The office property market in Hasselt is the 5th largest in Flanders, with a stock of c. 139,000 sq.m. Take-up is irregular, consisting of mainly small to mid-size transactions. The average yearly take-up was 2,392 sq.m. In 2014, we registered a take-up of 2,215 sq.m. in three transactions, while in 2015 to date, there is one transaction of 896 sq.m.: Partena who will join KPMG and Baloise in the Alverberg Business park. JLL realized the largest transaction in 2014 with the letting of c. 1,400 sq.m. to Wolters Kluwer in the Ilgat Business Park. Immediate vacancy is currently estimated at 16.7%, covering 23,000 sq.m., 7,000 sq.m. of which in the Corda 1. Pipeline is limited: in 2016, a second phase of 6,200 sq.m. in the Alverberg Business Park may be delivered, depending on demand. Prime rents in Hasselt are unchanged at 135 / sq. m. / year and expected to remain unchanged in 2015 and Aalst Aalst is a regional office market, well located along the E40 motorway, between Brussels and Ghent, and totaling c. 75,000 sq.m. of office stock. The availability of recent office space constitutes a valid alternative for either Ghent or the West of Brussels was an excellent year in terms of take-up with 11,942 sq.m being registered, mainly in the successful SkylinE40 project. The largest transactions in 2014 were the letting to the FOD Financien and the Stad Aalst of 6,200 sq.m. in the Post site, followed by the letting by Ontex of 3,472 sq.m. in the SkylinE40. In 2015 to date, take-up amounts to 1,771 sq.m. with two transactions, including the letting to Telenet of 1,580 sq.m. in Villalaan 16 Future supply in Aalst consists of a second phase of the SkylinE40 development that will add another 20,000 sq.m., being planned without permit. No further developments are currently planned in Aalst. Prime rents in Aalst range between 135 and 145 / sq. m. / year with an upward pressure to 150 / sq.m. / year. Other cities Apart from the Big 5 (Antwerp, Ghent, Mechelen, Leuven and Hasselt) and Aalst, there is an irregular but active market in Bruges, Roeselaere, Kortrijk, Temse or Dendermonde. On average, take-up in these secondary markets over the last five years amounted to 29,000 sq.m., ie 14% of the average annual take-up in Flanders (excluding Brussels Periphery). It should be noted that an important part of the transactions are not pure office deals, but rather mixed type surface, sharing show rooms, retail, offices and / or semiindustrial space. Average deal size over the last five years was 757 sq.m. but only 292 sq.m. in In 2015 to date, average deal size is 517 sq.m., the largest deals being the acquisition by the NMBS of the office part of the Groen Brugge project (3,300 sq.m., Stationplein) in Bruges. was 11,353 sq.m., vs. 10,819 sq.m. in the same period last year.

17 On Point Flanders Office Market Summer 2015 Investment Market Flanders Huge shopping centre deals may boost investment volume in Flanders to an all-time high Jean-Philip Vroninks (*) Head of Capital Markets BeLux (*) Bvba / Sprl Introduction Investment volume in Flanders (excluding Brussels Periphery for offices) in 2014 was the highest of the decade, at 1,230 Mio, ie 48% more than in 2013 and well above the five year average of 794 Mio. As of early May 2015, investment volume is already 717 Mio, we therefore believe that 2015 will be the best year ever for property investment in Flanders. Retail volume exceeded offices in 2014 with a proportion of 35.3%, vs. 30.5% for offices and 17.6% for industrial. Retirement homes represented 13% of the volume in The proportion in 2015 to date is similar with 40.2% of retail, 27.9% offices, 15.6% industrial and 9.6% retirement homes. Noticeably, Hotels contributed to 6.7% INVESTMENT VOLUME IN FLANDERS BY SECTOR MAY May 15 Office Industrial Retail Hotel Other Retirement Homes TOP 10 INVESTORS Volume Invested May 15 ( Mio) AG REAL ESTATE 343 PRIVATE 228 RETAIL ESTATES * 212 AEDIFICA 180 WERELDHAVE BELGIUM 111 WDP 83 MONTEA 74 KKR 48 UNION INVESTMENT 44 FINANCIÈRE TEYCHENÉ 43 (*) Subject to conditions

18 On Point Flanders Office Market Summer 2015 Offices PRIME YIELDS 6/9 LEASE Q From To 12 months outlook ANTWERP RING 6.25% 7.50% ANTWERP CENTER 7.00% 7.75% MECHELEN 6.75% 7.50% GHENT 6.75% 7.50% LEUVEN 7.50% 8.50% Offices volume: 375 Mio in 2014 (+89% YoY) Mio as of May 2015 Offices last year benefited from the acquisition of the Kievit by AG Real Estate for 195 Mio, and at the very beginning of 2015, AG Real Estate made a second large size transaction in Flanders with the acquisition of the VAC Gent for 145 Mio. Ghent confirms its position as second most dynamic office market in Flanders with the sale to Integrale of Banimmo s first phase of the Tetris Business Park, prelet to Deloitte. The acquisition price was 25 Mio. Interestingly there is appetite for large redevelopment projects, as already witnessed in Brussels. Early Q Cores development acquired Crelan s HQ in Antwerp centre for 15 Mio. This c. 16,000 sq.m. site covering 8 buildings will be converted into residential. Average deal size in 2014 was 37.6 Mio, up vs. 28 Mio in 2013 and a five year average of 28 Mio. In 2015 to date, average deal, size already exceeds the average with 28.6 Mio. Yields are under downward pressure in every city and range between 6.25% and 7.75% in Antwerp, Ghent and Mechelen. VAC GENT - GHENT ARCHITECT: JASPERS-EYERS

19 On Point Flanders Office Market Summer 2015 Retail PRIME YIELDS From To 12 months outlook RETAIL WAREHOUSING 6.00% 7.25% SHOPPING CENTRES 5.00% 5.50% HIGH STREET 3.75% 5.00% Retail volume: 434 Mio in 2014 (+15% YoY) Mio as of May was an outstanding year for retail property investment with volume up 15% y-o-y, part of which thanks to large shopping center deals (Kortrijk Ring Shopping, sold to Wereldhave Belgium for 108 Mio), as well as to portfolio deals such as the sale of VastNed s Julianus portfolio to Teychené Invest for 35.6 Mio. In 2015 to date, volume is already boosted by the sale of the retail warehousing portfolio of Rockspring to Retail Estates for 129 Mio. This deal is still subject to condition precedents and may be closed by the end of the second quarter. Other noticeable deal is the sale of the Feest & Kultuur Paleis Oostende to Union Investment for c. 44 Mio. Private investor Group Hibert acquired the Meir 23 for 35 Mio, implying a record low yield of 3.25%. The solid boost in retail Industrial investment is clearly reflected in the average deal size: in 2015 to date, average deal size is 26 Mio, vs. 12 Mio in 2014 and 16 Mio in might be the best year ever for retail property investment since the Wijnegem and Waasland shopping centers are for sale. Both together, the investment value is nearly 1 billion. Prime retail yields are also under pressure: high street shops transactions in prime locations with a yield below, or even well below, 4% are more and more common. Prime retail warehousing yields range between 6% and 7.5%, and prime shopping centers trade between 5% and 6%, both being under pressure with the Wijnegem potentially giving a new benchmark in Belgium. PRIME YIELDS From To 12 months outlook LOGISTICS BRUSSELS-ANTWERP AXIS 6.75% 7.50% ANTWERP, ANTWERP-GHENT AXIS AND LIMBURG 6.75% 7.50% SEMI-INDUSTRIAL BRUSSELS FLEMISH BRABANT - ANTWERP 7.50% 8.50% GHENT 8.00% 9.00% E313 (ANTWERP GENK) 8.00% 9.00%

20 On Point Flanders Office Market Summer 2015 Industrial volume: 216 Mio in 2014 (+ 32% YoY) Mio as of May was the best year of the decade for industrial property investment, with higher deal size: average deal size in 2014 was 12 Mio, vs. 9 Mio in 2013 and a five year average of 9 Mio. In 2015 to date, average deal size is 22 Mio. The largest deal of 2014 was the sale to B-REITs Intervest Office / Industrial of the Machiels site in Opglabbeek for 33 Mio, followed by the acquisition of the DSV logistics site in Puurs by CBRE Global Investors for 22.7 Mio. In 2015 to date, volume already reaches 112 Mio, boosted by the sale of the DHL Supply Chain site in Bornem for 58 Mio (acquirer: WDP) and the sale to Montea of the DHL Aviation site in Brucargo (Zaventem) for 30.5 Mio. Liquidity of prime logistics site is decreasing, opportunities are limited. Since demand is high, prime logistics yields range between 6.75% and 7.5%, ie 25 bps lower than a year ago, and we see further downward pressure as demand from international and local investors is growing. Yields for prime semi-industrial properties are stable and range between 7.5% and 9.00%, also 25 bps lower than a year ago. Retirement homes B-REIT Aedifica is very active in its portfolio expansion, supported by important cash gathering through a capital increase at the end of last year. Throughout 2014, they made for 162 Mio of acquisitions in Flanders through 3 portfolio deals. In 2015 to date, investment volume in retirement homes amounts to 69 Mio, with Aedifica being once again active (one 18 Mio deal). Its peer Care Property Invest made one deal, as well as Ethias and Belfius Insurance. Investment in Hotels in Flanders has limited and irregular flow, though early Q KKR (US private equity firm) acquired the Radisson Blu and the Park Inn Hotel in Antwerp for 48 Mio. The deal was advised by JLL. Outlook Next to the possible completion of record high shopping center deals this year, the rest of the year may see other mid-size core and non-core office transactions in Ghent and Antwerp, as well as small to mid-size transactions in logistics. By year-end office investment volume may come in lower than 2014, while industrial investment volume may endup at a similar level than last year. All in all, investment activity in Flanders in 2015 may be the highest ever

21 On Point Flanders Office Market Summer 2015 Who invests in Flanders? The vast majority of the investor base in Flanders is local, transactions by international investors are irregular. We observe the same trend in most European countries with international flows focusing on the main markets and leaving regional cities for locals. Market knowledge is one explaining factor, the relatively low liquidity is also important. In Flanders, Belgian investors contributed to 86% of the volume of 2014 and 2015 to date. French, investors contributed to 4%, followed by Germans, US and Global with 2% each. Concentrating on the type of investors, REITs such as Befimmo, Montea or WDP contributed to 40% of the investment volume of the to date period, followed by Institutions such as AG Real Estate, Baloise and Ethias with 26% and Private investors with 16%. Pooled funds such as CBRE Global Investors or Union Investment contributed to 9%. BUYERS IN FLANDERS ARE PRIMARILY BELGIAN INVESTORS ( Q1 2015) 40% 3% 2% 1% 1% 1% 1% 2% 2% 4% 3% 16% 1% 2% 86% REITS, PRIVATE INVESTORS AND INSTITUTIONS DOMINATE THE MARKET ( Q1 2015) 26% 9% Belgium France Germany Global Ireland Asia Netherlands Norway USA Corporate Developers Government Institution Non-Profit Organisation Pooled Funds Private Propco's REITs

22 On Point Flanders Office Market Summer 2015 Letting transactions Q1 15 Year Qtr City District Operation BUILDING Age Area (sq. m.) Tenant ANT RING Acquisition ANTWERP X-ANTWERPEN, SYNTRA X PWP 9,435 SYNTRA ANT PERIW Acquisition THONETLAAN 102 PWP 6,500 VLAAMSE OVERHEID ANT PORT Letting ROMEYNSWEEL 3 Old 4, ANT CENTRUMANT Letting KIEVITPLEIN Modern 2,537 FERRANTI COMPUTER SYSTEMS VLAAMSE GEMEENSCHAP VOOR JONGERENWELZIJN ANT RING Letting POST X PWP 2,264 KUHNE & NAGEL GHENT GENT CENTRUM Acquisition KEIZER KAREL Old 8,780 OPTIMABANK GENT ZUID Letting BLUE TOWERS UC 1,527 MIPS GENT ZUID Letting BLUE TOWERS New 1,500 TELENET GENT ZUID Letting BLUE TOWERS New 1,351 KPMG GENT ZUID Letting BLUE TOWERS New 736 GILBO MECHELEN MECHELEN CENTER Acquisition DE MOT / RAGHENO New 8,000 RODE KRUIS VLAANDEREN MECHELEN CENTER Acquisition BAUTERSEMSTRAAT, 8 UC 2,758 FRED & GINGER MECHELEN CENTER Letting BLARENBERGLAAN, 6 Old 1,500 DE VOORZORG MECHELEN CENTER Letting MECHELEN CENTER Letting LEUVEN HAASRODE Acquisition STATIONSSTRAAT 108/112 GENERAAL DE WITTELAAN 9-21 LEUVEN HAASRODE RESEARCH PARC - ABCD Modern 503 NOKIA BELGIUM Modern 469 AVT EUROPE Old 23,954 KATHOLIEKE HOGESCHOOL LEUVEN (KHL) LEUVEN LEUVEN Letting DIESTSEVEST 14 Modern 1,943 CHRISTELIJKE MUTUALITEIT LEUVEN LEUVEN Letting UBICENTER Old 1,914 KUNSTMAAN NV LEUVEN LEUVEN Letting UBICENTER Old 1,676 DE WATERGROEP LEUVEN LEUVEN Letting VITAL DECOSTER Modern 788 SDL INTERNATIONAL HASSELT, AALST & OTHERS AALST AALST Letting POST SITE AALST New 6,200 FOD FINANCIEN / STAD AALST AALST AALST Letting SKYLINE40 - PHASE I New 3,482 ONTEX BRUGGE BRUGGE Acquisition GROEN BRUGGE Old 3,300 NMBS AALST AALST Letting VILLALAAN 16 Old 1,580 TELENET HASSELT STADHASSE Letting ILGAT BUSINESS PARK LOT 7/71 Old 1,437 WOLTERS KLUWER BELGIE

23 On Point Flanders Office Market Summer 2015 Investment transactions Q1 15 Year Qtr Location Property Price est. Mil.EUR Seller Buyer Buyer Cat OFFICE Antwerpen Kievitplein 198 Kanam AG Real Estate Institution Gent VAC Gent 145 PMV AG Real Estate Institution Leuven Vanderelst 40 Ghelamco Axa ReIM Institution Gent RAC Ter Plaeten 38 Baloise Alides (Maes) Private Ghent Deloitte (Tetris) 25 Banimmo Integrale Institution Various Kortrijk Oostende Various Portfolio Rockspring * Kortrijk Ring Shopping Center Feest- en Kultuurpaleis Portfolio Tongeren, Hoboken, Bree, Vilvoorde, Chenee, St Pieters leeuw RETAIL 129 Rockspring Retail Estates REITs Antwerpen Meir Bornem Opglabbeek Zaventem DHL Supply Chain Bornem Machiels Real Estate Brucargo DHL Aviation Puurs DSV Tessenderlo Antwerpen Industrieterrein ENA Genebos Radisson Blu & Park Inn Hotel Certificate Kortrijk Ring Shopping Center / Redevco Wereldhave Belgium REITs 44 IVG Immobilien Union Investment Pooled Funds 36 Vastned Retail Financière Teychené Private INDUSTRIAL Irish Bank Resolution Corp Groupe Hibert Private 58 MG Real Estate WDP REITs 33 Machiels Real Estate Intervest Offices & Warehouse REITs 31 MG Real Estate Montea REITs CBRE Global Investors 22 Developer RETIREMENT HOMES & HOTELS CBRE Global Investors Hyundai Heavy Industries Pooled Funds Corporate 48 Elbit Imaging Ltd KKR Pooled Funds Gent Hotel Reylof 36 Groep Van de Walle Holding GPL Private Various Various (*) Subject to conditions 3 retirement homes: Hasselt, Remicourt, Leopoldsburg Retirement homes De Notelaar (Olen) + Overbeke (Wetteren) 43 Vulpia Aedifica REITs 29 Armonea Aedifica REITs

24 On Point Flanders Office Market Summer 2015 Definitions Take-Up Take-Up New: Represents take-up of floorspace in new or substantially refurbished buildings of less than five years since completion. Take-Up Modern: Represents take-up of floorspace built or renovated between 5-15 years ago. Take-up Old: Represents take-up of floorspace built more than 15 years ago and not renovated. Rent Prime Office Rent represents the top openmarket rent that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The rent quoted normally reflects prime units of over 500 sq. m. of lettable floorspace, which excludes rents that represent a premium level paid for a small quantity of space. Top Quartile Office Rent represents the average mean value of the top (25 %) quartile of all known face rents achieved on leasing transactions completed within a market during the survey period (normally calculated annually, or quarterly on a 12 monthly rolling basis). It excludes any unrepresentative deals. Weighted Average Rent represents the average mean value of all known face rents achieved on leasing transactions completed within a market during the survey period weighted with the floorspace (normally calculated annually, or quarterly on a 12 month rolling basis). It excludes any unrepresentative deals. Prime yield Represents the best (i.e. lowest) rackrented yield estimated to be achievable for a notional office property of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The property should be let at the prevailing market rent to a first class tenant with an occupational lease that is standard for the local market. The prime initial net yield is quoted, i.e., the initial net income at the date of purchase, expressed as a percentage of the total purchase price, which includes acquisition costs and transfer taxes. Vacancy Vacancy represents completed floorspace offered on the open market for leasing or sale, vacant for immediate occupation on the survey date (normally at the end of each quarter period), within a market. It includes all vacant accommodation irrespective of the quality of office space or the terms on which it is offered. Vacancy excludes obsolete or mothballed office property, i.e. floorspace held vacant and not being offered for letting, usually pending redevelopment or major refurbishment. Vacancy Rate The Vacancy Rate represents immediately vacant office floorspace in all completed buildings within a market as at the survey date (normally at the end of each quarter period), expressed as a percentage of the total stock. Stock Stock represents the total amount of completed office space in buildings mainly used for office purposes within a market that is capable of occupation regardless of the type of ownership or type of building quality, as at the survey (normally at the end of each quarter period). Completions Completions represent floor-space completed during the survey period (normally annually). Completions include new development and refurbished accommodation, speculative developments, pre-let floor space and space for owner-occupation

25 On Point Flanders Office Market Summer 2015

26 On Point Flanders Office Market Summer 2015 JLL Offices Belgium Avenue Marnixlaan, 23 b1 B 1000 Bruxelles Brussel T 32 (0) F 32 (0) Jan Van Gentstraat 1 bus 402 B 2000 Antwerpen T 32 (0) F 32 (0) JLL Contacts ERIK VERBRUGGEN (*) HEAD OF OFFICE AGENCY BELGIUM +32 (0) erik.verbruggen@eu.jll.com RALPH SCHELLEN (**) HEAD OF OFFICE AGENCY - FLANDERS +32 (0) ralph.schellen@eu.jll.com JEAN-PHILIP VRONINKS (*) HEAD OF CAPITAL MARKETS - BELUX +32 (0) Jean-Philip.Vroninks@eu.jll.com PIERRE-PAUL VERELST HEAD OF RESEARCH - BELUX +32 (0) Pierre-Paul.Verelst@eu.jll.com (*) Bvba / Sprl (**) Allres bvba COPYRIGHT JONES LANG LASALLE IP, INC All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them. Printing information: paper, inks, printing process, recycle directive.