- Office costs: €11,263 per FTE in Belgium, €8,972 average in Europe
- The Netherlands is 24% cheaper than our country, France 30% more expensive
- Favourable climate for commercial property sales
Brussels, 30 November 2016 - The Occupiers Cost Index (OCI), or office costs per employee per year in Belgium, ended 4% down compared to last year. Then the drop was only 2%. That was calculated by real estate specialist Colliers International in its annual survey on global office costs per (full-time) employee (FTE). The index is regarded as the "real estate costs barometer' in the field of commercial property. The OCI for Belgium is now €11,263. Last year that was still €11,759 or almost €500 per employee more than this year.
Belgium enhances its competitiveness, but remains expensive
"There are still opportunities to be had in Belgium. Office costs could potentially still fall by 10%", says Jeroen Govers, Senior Director of Real Estate Services at Colliers International. “The drop strengthens our competitive position with our neighbouring country France and with many European countries where there are significant increases. In France, there are increasingly fewer good quality 'large' office spaces available, which has hiked up rental prices. That makes our southern neighbours the fourth most expensive country in Europe. But our country still scores quite a bit better than the European average and there are still profits to be made, among other things with the renegotiation of existing lease contracts, to optimise the use of space and better adapt its services to people's needs. Renegotiating cannot be done at any time during the course of the lease, hence it is a slow business...” The main cause of our high office costs per FTE, according to Govers, is still the heavy wage costs (business management and facilities).
Belgian office costs are almost 20% higher than the European average, or half that of last year, when the percentage was 39%. Belgium has the ninth most expensive office costs out of the 29 European countries surveyed. Switzerland has the most expensive office costs - i.e. €18,484. Bulgaria has the lowest cost - €2,556. Our neighbour Germany is also faring better than Belgium, with €9,482. Luxembourg, like France, is still at the top as regards office costs, with €14,305 per year and is therefore a lot more expensive than our country.
The Netherlands is much cheaper than Belgium
The difference with the Netherlands remains significant. There, the office costs per FTE are only €8,564 - a drop of 3% compared to last year. That is more than €2,500 less per employee than here, and lower than the European average. According to Govers, the low office costs per FTE in Holland are due to the low rents for office space. “In Holland, the property crisis of some years ago, which left many offices lying vacant, has pushed prices down. However, the nadir has probably almost been reached: this year's drop of 3% is much less than last year, when it was still 10%. In addition, wage costs are simply lower than ours in Holland. That in itself makes the difference.” The fall in costs for Holland is to be found in the category of Staffing and Organisation - and then mainly in the areas of Document Management and Security. Given the threat of terrorism in Europe, the latter is remarkable.
Rents for office space in Brussels remain the same, co-working more popular
The rental price of office space in Brussels is fairly stable and not rising. The slight rise in the rental component of the Space & Infrastructure category is due to the increase in the index. “The market conditions are hardly changing, so the chance that the rent for office buildings will go up in the near future is very slight", according to Govers. Another aspect is that companies are dealing with space more sparingly. ‘The new way of working’ has its implications on the number of square metres that a company needs: in addition to ‘homeworking’, ‘co-working’ is becoming increasingly more popular. General Manager Pierre-Gilles Solvit: “Employees are more often working together in specially equipped co-working offices which are not part of the organisation where they are employed and are at another location. This means that companies need increasingly fewer square metres of their ‘own’. It's worth mentioning here that many companies do want to equip their place of work more dynamically, adapted to the changing work culture. But not all - especially older - buildings lend themselves to the reclassification necessary for this", Solvit adds. “Companies are nevertheless doing their best to respond to the prevailing trends. ‘Activity based working', for example, in which areas in an office are adapted to the activity that goes on there, is experiencing, after being given its name in the nineties, a revival in NWOW (New Ways of Working). For example, you might think here of the concept of separate quiet areas, project rooms and lounge corners.”
Renewed interest in urban centres
Another trend that is slowly manifesting itself is the revitalisation of urban centres, Govers adds. “Fifteen years ago, companies - mainly in the telecom and ICT business - deliberately opted to set up their offices outside the city centre. Now you see them slowly moving back into the centre of the city - on the one hand because of the mobility problem, and on the other hand because increasing numbers of firms are letting their people work one or two days a week from home. On the days that they do have to be in the office they must be able to get to that office easily - which means not by car any more, but preferably by public transport. It is becoming increasingly important for a company to be located within easy reach of one of the main railway or underground stations."
Market is favourable for commercial property sales
"At the moment the desired return on office property is rather low, but it depends on the location, the quality of the building, the reliability of the tenant and the term of the lease contract. And because investors can very easily attract loan capital with the low interest rates and as a result can deploy financial leverage, the market is favourable for sales of one's commercial property," says Matt Godward. “Because of the stabilisation of rental prices and those low interest rates, it is therefore a good time to sell one's offices and to strengthen one's own business with the funds which have been freed up, which is more profitable than real estate. Investors are currently quite happy getting a 5% return on top locations with reliable tenants, which means that more buildings are attractive to investors. The core business of the company provides a higher return, so it is logical to put your investments in it. The question therefore arises: do I really need to own the space in which I'm accommodated? The answer to that question at the moment is a balanced 'No’ - the profits come from other parts of your business, not the bricks and mortar."
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About the OCI
The Occupier Cost Index (OCI) calculates the median annual costs of real estate, working environment and general services per employee (Full Time Equivalent). This 'Real Estate Cost Barometer' is published by Colliers International. This year it is based on data from more than 3,650 buildings in 29 countries in Europe, with a total office area of approximately 33 million m² and more than 1.7 million employees.
About Colliers International Belgium
Colliers International is one of the world leaders in the field of services for corporate real estate, with more than 16,500 employees spread over more than 554 offices in 67 countries. In Belgium, Colliers International Belgium employs about 40 people. Its multidisciplinary teams (real estate specialists, workplace consultants, engineers, designers, project managers, ...) can provide a response via an integrated approach to any real estate questions from end-users.