financial analysis of the business center and coworking market in belgium
TRANSCRIPT
fin POWER
From a ‘marginal’ market towards the fastest growing part of the RE (real estate) - market
SERVICED OFFICE MARKET IN BELGIUM
Key financial figures
Social Workplaces conference, December 2016
I. Introduction&situationwithin‘Officemarket’
II. Historyandevolutionof#flexibleworkspaces
III. Thebusinesscentremarket:actualsituation
IV. KeyfinancialsofthebusinesscentresinBelgium
V. Conclusions
INTRODUCTION
q Business&coworking-centersinBelgium:q Seelistinannex
q Whatisabusinessorcoworking-center?q Usesthisasnameofhisbusiness(businesscenterorcoworking-spaceorboth)
q Businesscenter:full-timereceptionavailable– cfr.VAT-regulationforbusinesscentersq Coworking-center:focuson‘community’,communitymanager,nofulltimereceptionnecessary
q Forprofit,registeredcompanies(excl.not-for-profitorganizations)q Servicedoffices=fulltimereceptionservicesorcommunity-manager
q Usedfigures:q Publishedfinancialdata(BelgianNationalBank)
INTRODUCTION“Definitionsandlimitations”
INTRODUCTIONSituatingwithinthetotal‘OFFICEMARKET’
4
§ Office-market in Belgium
Ø Market of ‘larger cities’ very well documented
Ø Own, rough estimation of market in regional cities
Ø Total ca. 21 Mio m², accommodation for appr. 1 Mio collaborators (employees + civil servants in office environments)
Ø Stable market with appr. 21 Mio office space
§ Business center market
Ø Definition of ‘business center : ‘
Ø Flexible contracts, Including services
Ø Excluding ‘joint-office-buildings’ with no ‘reception’
Ø Total : ca. 185 business centers, appr. 330,000 m² office space.
Ø Accounts for appr. 1,6 % of total office space in Belgium, growing market-share.
§ Co working market
Ø New, upcoming market
Ø Total of appr. 71 Coworking spaces in Belgium, totaling appr. 35,000 m² office space.
Ø Growth rate of market > 30-50 %, but still limited examples of viable business models.
The business and coworking-market covers appr. 1,6 % of the totaloffice market in Belgium (<> 2-4 % in U.K., the Netherlands)
Offices(x1,000m²)Brussel 13.000Antwerpen 1.900Gent 1.200Liège 5005othermainofficecities: 200-400
(Charleroi,Namur,Hasselt,Leuven,Mechelen)15'regionalcities' 100-200
(f.ex.Kortrijk,Roeselare,Brugge,St.Niklaas,Aalst,)Totalofficespacesin'cities': 20.950
#Businesscentres(inm²)Number: 184Averagesurface: 1.792Totalsurfaceoccupied: 329.684
in%ofofficemarket: 1,57%
#CoworkingcentersNumber: 71Averagesurface: 469Totalsurfaceoccupied: 33.270
in%ofofficemarket: 0,16%in%ofbusinesscentermarket: 10,09%
INTRODUCTIONSituatingwithinthetotal‘OFFICEMARKET’
5The office market is shifting towards the ‘serviced offices’
ServicedOfficemarketFlexiblecontracts(month/year/…)Focusonservicesandcommunity
Officemarket‘longtermcontracts’
NoflexibilityLimitedservices(facilities)
è Limited‘newconstructions’<2%ofmarket
è DecreasingdemandduetoNWOW
Coworkingmarket<monthly‘memberships’
Flexible,focuson‘community’Limitedbutincreasingservicesè Marketgrowth>50%/year
BusinesscentremarketFlexible‘yearly’contractsFlexible,focuson‘services’
Limitedbutincreasingcommunityè Marketgrowth5-15%/year
Decreasingmarket
Increasing market
II.HISTORY“Amarketwitharichhistory”
• 1965:Firstbusiness-centresintheU.K./U.S.• 1980–90:1st‘boom’ofbusinesscentres
(bedrijvencentra)– Apr.120initiativesinBelgium– Severalsubventionschemestostimulateinvestment
• f.ex.1989:Regus,Officenterandmorethen50Bedrijvencentrawerecreated
• 1990– 2005:Survivalofthefittest– Apr.1/3thoftheinitialinitiativesdidnotsurvive– Mostotherinitiatives‘fighttosurvive’
• F.ex.ClosureofIntercenter,OfficenterMechelen,Chapter11forRegusin2003,…
• 2006– actually:– Marketgrowththebusinesscentremarketof5-15
%/year– Marketbecomesprofitableundertheguidanceof
Regus– the‘Gorilla’inthismarket.
• 2005:Thefirst‘coworking-site’inSanFrancisco(HatFactorybyBradNeuberg)
• 2008:FirstcoworkingsitesinBrussels(Silversquare,TheHub)
• 2008- ..:survivalofthefittestcoworking-locations
– TheHuband50%oftheotherinitiativesinthismarkethaveceasedtoexist.
– Wework demonstratesthestronggrowthpossibilitiesofthismarket
2014-16:increasein‘hybrid’formulaeè evolvingtoone‘SERVICEDOFFICESmarket’
II.HISTORY“Amarketwitharichhistory”
• Firstboomofbusinesscentreuntil1990-95
• Then,95-2005:morefailuresthenstart-upsinourmarketuntil…
• 2005-6:startofthe‘NewWayofWorking’
• Fromthen,weseeanaccelerationofthegrowthoflocationsfrom5-10%(2005-2010)to10-20%actually
• Actually,themarkethasgrowntomorethen250flexibleworkspacelocationsinBelgium– doubleofthenumber5yearsago.
§ Total appr. 185 “business centers” and 68 ‘CW-centers’ identified in Belgium :
§ 28 ‘BC’s’, Bedrijvencentra
§ 17 BC + 8 CW centers for Regus
§ 6 ‘groups’ with 3-8 centers
§ 13 operators with 2 centers
§ appr. 140 operators with only 1 location, appr. 50 % of the market
§ In 2011 : ca. 135 BC, which means an annual growth of appr. 10 %/year
§ Failure rate limited (< 3 % of market)
§ C.W. market is clearly growing faster
§ Growth from 50 tot 68 locations in 2015 (+40 %)
§ Differentiation between ‘business centers’ becomes unclear (only VAT-regulation is relatively clearcut)
In Belgium, we observe appr. 250 business and coworking centers of which more than 50 % are stand-alone centers.
III.BUSINESSCENTERSINBELGIUM3.1.NumberofBusinessCenters
§ Appr. 55 % of Belgium’s business centers are located in Brussels, Antwerp en Gent
§ 32 % located in Brussels
§ 13 % located in Antwerp
§ 8 % located in Gent
§ Is comparable with the importance of the relative office market.
§ Only 10 cities have more then 4 BC/CW-initiatives, which seems a minimum to have a profitable market.
> 50 % of all business centers in Belgium are located in the three main cities (Brussels, Antwerp and Gent)
III.BUSINESSCENTERSINBELGIUM3.2Businesscentersbylocation
Cities AantalBrussel 81Antwerpen 31Gent 21Liège 10Leuven 8Hasselt 8LouvainLaNeuve 7Kortrijk 7Mechelen 5Charleroi 4Namen 3Sint-Niklaas 3Nivelles 3Oostende 3Ieper 3Brugge 3Total 257
32%
12%
8%4%3%
3%
3%
3%2%
2%
1%
1% 1%
1%1%1%1%1%1%1%1%0%
NumberofBC/CW-centersprocityBrusselAntwerpenGentLiègeLeuvenHasseltLouvainLaNeuveKortrijkMechelenCharleroiNamenSint-NiklaasNivellesOostendeIeperBruggeTurnhoutAalstGenk
Locatie
Aantal
Aktief in 2016
§ A growing number (45 %) of the coworking and business centers are located in the center of the cities
§ This was only 34 % in 2010 !
§ Actually, still more centers are located on the ringways or in industrial area’s
§ Recently, locations within stations are opened by Regus
The percentage of business and coworking centers located in city-centers is growing in Belgium.
III.BUSINESSCENTERSINBELGIUM3.3.Ownership– typesoftheBelgianbusinesscentermarket
IV.FINANCIALDATAOFBUSINESSCENTERMARKET
4.1.Turnoverevolution
• Turnover– Totalmarketturnovernearly100Mio€– 1/3thisdonebyinternationalplayers
• Ownonly17%ofthebusinesscenters
– Theprivateownersservenearly50%ofthemarket
• Growthrhythm– Exponentialmarket-creation1980-1995:
morethen100BCcreated– From1995– 2005:nosubstantialgrowthof
themarket(<2%/yr)– 2006-2010:growthwith5-10%peryear,not
abnormalforthismarketcomparedwithinternationalstudies
– 2011– 2014:growth2-5%,relativelylowduetoprice-pressure.
– 2015:turnovergrowthof6,5%- increasing,butstilllowertheninsurroundingmarkets.
The Belgian business center market is lagging behind on the international growth rates of the market of appr. 10 %/year
IV.FINANCIALDATAOFBUSINESSCENTERMARKET
4.2Operationalprofit(EBIT)ofbusinesscenters
• Although>25%ofthebusinesscentersmakelosses,the‘market’hasapositiveprofitability,varyingbetween0and5%.
• Theprivateandinternationalcentershavein2015anacceptableprofitofappr.4%operatingprofitonturnover.
– Acceptablesince5-10%seemstobethetarget
– But,clearlydecreasingvs.the5-10%levelsinthe‘golden’years2006-2010
• Alotofsemi-publicinitiativesdomakesubstantiallosses,althoughappr.50%areprofitable
The price pressure since 2010 has decreased the profit margins of our market, which is still pushing the turnover downwards.
IV.FINANCIALDATAOFBUSINESSCENTERMARKET
4.3Differentfinancialmodels
• Asset– efficiencyof‘Internationalmarket’isveryhigh– noinvestmentin‘own’buildings– Privateandpublicsectoroperatorsmostlyhaveinvestedinthebuilding
• Financialleverageofpublicsectorverylimited(cash>loanvolume)
The ‘international’ operators focus optimizing their financial leverage, where the public sector needs 4 x more own funds for the same 1 € turnover.
Turn-over
FixedAssets
Assets/Turnover
OwnFunds
OwnFunds/Assets
Ownfunds/Turnover
International 26.295 5.480 0,2 -8.223 -1,5 -0,3Private 45.944 132.465 2,9 63.353 0,5 1,4Semi-public 25.241 112.922 4,5 107.489 1,0 4,3
IV.FINANCIALDATAOFBUSINESSCENTERMARKET
4.4.Advantagesofscale?
• Thereareclearlyalotofadvantagesofscaleinthebusinesscentermarket
– Commercially(website,referrals,…)– Purchasingpower,alsoonmanagement-level– Strategicallyand‘bestpractices’
• But,themediumturnoverofabusinesscenterisdeclining….
– And,wehavenotincludedthecoworking-centersinthiscomparison…
• Wehaveputthe‘profitability’ofacentercomparedwiththe‘size’ofeachcenter.
– Profitability=profitmarginonturnover– Size=turnoverbycenter
• The‘regression-line’clearlydemonstrates– Thesubstantiallossesthatabusinesscentermakesinhis1-2startingyears
(between100and500k€)– A‘break-even’levelofa‘median’centeraround500k€turnover– Above600-700k€turnover,mostofthebusinesscentersareprofitable.
Conclusions
• Thebusinessandcoworkingmarketare‘integrating’moreandmoretowardsaservice-officemarket
– And,themarket-shareofthismarkethasincreasedfrom1,4to1,6%ofthetotalofficemarketinBelgium.– StilllaggingbehindthelevelsintheU.K.andtheNetherlands(2-4%)
• Theturnoverofourmarkethasincreasedwith6%in2015,inthe‘normal’5-10%growthrateandreachesnearly100Mioturnover.
• Theprofitabilityofthemarketisregainingnormallevels
– Onlythepublicsectorremainsasegmentofthemarketwheresubstantiallossesoccur.
Categorie Locatie Naam Locatie Naam Locatie NaamBC Geel 4Wings BC Oostende BedrijvencentrumRegioOostende BC Waver BusinessCenterWavreNord
BC Aalst AalstCityCenter BC Waregem BedrijvencentrumRegioWaregem BC Kortrijk BusinessCentrumKortrijkPottelberg
BC Aalter AaltersBedrijvencentrum BC Roeselare BedrijvencentrumRoeselare BC Willebroek BusinesscentrumRivium
BC Lier Accentisbusinesscenter BC StTruiden BedrijvencentrumSintTruiden CW FossesLaVille BusinessOne
BC Egezée AccortisePactechBusinessCenter BC Tienen BedrijvencentrumTienen BC Liège CAPBusinessCenter
CW Antwerpen Acospace BC Tongeren BedrijvencentrumTongeren CW Nivelles Capinnove
BC Brussel Acte BC Veurne BedrijvencentrumVeurne BC LouvainLaNeuveCEILouvain
BC Gent Adequat BC Brussel BedrijvencentrumVilvoorde BC Brussel Centred'EntreprisesdeSaint-Gilles
CW Gent AereyCoworking BC Oudenaarde BedrijvencentrumVlaamseArdennen BC Liège Centresd'AffairesAfinis
BC Brussel Agence86'creativebusinesscenter' BC Sint-Niklaas BedrijvencentrumWaasland BC LouvainLaNeuveCercleDuLac
BC Antwerpen ALMAntwerpen BC Brussel BedrijvencentrumZaventem BC Brussel Chambred'affaireCFCI
BC Brussel AlnairBusinessCenter BC Brussel BedrijvencentrumZennevalei CW Kontich ClubhouseCoworking
BC Antwerpen AntwerpBerchemCentralStation BC Brussel BelgiumBusinesscenter BC Genk C-MineCrib
BC Antwerpen AntwerpBusinessHouse BC Antwerpen BeneluxBusinessCenter CW Antwerpen CoBuro
CW Antwerpen AntwerpCentralStation CW Brussel BetaGroupCoworking CW Mons Connexion-coworking
BC Antwerpen AntwerpCityCenter BC Leuven BioIncubatorLeuven CW Brussel Co.StationBrussels
BC Sint-Niklaas AstridBusinessCenterSint-Niklaas BC Brussel Bisschofsheimbusinesscenter CW Hasselt CordaIncubator
BC Brussel AteacBusinessCenter BC Brussel Bizzcenter CW Brussel CoworkingBusinessCenterBrussels
BC Brussel AteliersdesTanneurs BC Kortrijk Bizz-Init CW Hasselt CoworkingHasselt
BC LouvainLaNeuve Axisparcbusinesscenter BC Brussel BLSI CW Namen CoworkingNamur
CW Brussel BarBuro BC Antwerpen BNO'Thefactory' CW Tielt Creatielt
CW Brussel BarD'OfficeBrussel(Voka) BC Brussel BPSAdHoc CW Liège CristalHubCoworking
CW Leuven BarD'OfficeLeuven CW Brugge BruggeStation BC Leuven deHoorn
CW Oostende BarD'OfficeOostende CW Brussel BrusselCentralStation CW Brugge DeHuyskamer
BC Nivelles BCSGroup CW Brussel BrusselLuxemburgStation BC Antwerpen DeWolkammerij
BC Aalst BedrijvencentrumAalst BC Brussel BrusselsAirportCorporateVillage BC Brussel DiamantConference&BusinessCenterBrussel
BC Beringen BedrijvencentrumBeringen BC Brussel BrusselsCityCenter BC Liège DiamantConference&BusinessCenterLuik
BC Gent BedrijvencentrumDePunt BC Brussel BrusselsGrootBijgaarden BC Brussel DiegemGrensstraat
BC Antwerpen BedrijvencentrumDeWinkelhaak BC Brussel BrusselsITTower CW Antwerpen DotsCoworking
BC Dendermonde BedrijvencentrumDendermonde BC Brussel BrusselsVillage BC Gent EasyOfficeCenter
BC Genk BedrijvencentrumGenk BC Brussel BrusslesEUSchuman BC Brussel EEBICBusinessCenter
BC Geraardsbergen BedrijvencentrumGeraardsbergen CW Brussel BrusslesSouthStation BC LouvainLaNeuveEinsteinBusinessCenter
BC Hasselt BedrijvencentrumHasselt CW Sint-Truiden BurOBar CW Brussel Enclume&Co
BC Ieper BedrijvencentrumIeper BC LaLouvi!re BuroBusinessduCentre CW Tournai ESCOExpaceCoworking
BC Zelzate BedrijvencentrumKanaalzone BC Namen BurogestBouge BC Brussel EspaceMoselle
BC Leuven BedrijvencentrumLeuven BC Namen BurogestOfficePark BC Brussel EUBusinessCentre
BC Maasmechelen BedrijvencentrumMaasmechelen CW Antwerpen Burooz BC Liège EuregioBusinessCenterLiège
BC Malle bedrijvencentrumMalle BC Brussel Burotel CW Brussel FactoryForty
BC Maldegem BedrijvencentrumMeetjesland BC Brussel Burotel367 BC Dienze FiladOndernemingscentrum
BC Overpelt BedrijvencentrumOverpelt BC Brussel BurotelCongres CW Brussel Firma
BC Brugge BedrijvencentrumRegioBrugge BC Antwerpen BusinessCenterAmerikalei BC Brussel FlageyDigital
BC Kortrijk BedrijvencentrumRegioKortrijk BC Charleroi BusinessCenterCharleroi CW Gent FloatingDeskCoworking
BC Mechelen BedrijvencentrumRegioMechelen BC Nivelles Businesscenterservices BC Antwerpen Fountainbusinesspark
Locatie Naam Locatie Naam Locatie NaamBC Herentals Frame21 CW Gent Loft169 BC Brussel SeedFactory
BC Tournai FuturOrcq BC LouvainLaNeuve Louvain-La-Neuve BC Brussel ServcorpBastionTower
BC Mouscron FuturX BC Gent Maaltecenter BC Brussel ServcorpSchuman
BC Oostende GreenbridgeincubatiecentrumenwetenschapsparkBC Brussel MCSquare BC Brussel SilverSquare
BC Houthalen GreenvilleCleantechCampus BC Mechelen MCSquareMechelen BC Brussel SilverSquare
BC Gent GrowthFase BC Antwerpen MultiburoAntwerpenCentraalStation BC Brussel SilverSquare
BC Antwerpen HAVN-Buzzispace BC Brussel MultiburoBrusselsAirport BC Brussel SintAnnacenter
BC Sint-Niklaas Heptagonbusinesscenter BC Brussel MultiburoLouise CW Antwerpen SocialMediaClubKube8
CW Antwerpen HetBolwerk/Bard'Office(Fort5) BC Brussel MultiburoQuartierEuropéen CW Turnhout SPK-BarD'office
CW Aalst Hopmarkt50 BC Diest Office21 BC Turnhout SquarePointBusinessCenter
BC Hasselt HuisVanstraelen BC Brussel OfficeservicesBrussels CW SintNiklaas StNiklaasStation
BC Gent HuizeMinne BC Leuven OfficenerLeuven CW Brussel Studio28
BC Leuven I&ILeuven BC Hasselt Officenter CW Antwerpen StudioStart
BC Gent IBBT-Incubator BC Antwerpen OfficenterAntwerpen/A12 CW Antwerpen Swenst
CW Gent Icubes BC Turnhout OfficenterTurnhout CW Charleroi SwitchCoworkingCharleroi
BC Gent I-Cubes CW Mechelen Ondernemershuis/Bard'Office BC Mechelen T-Offices
CW Melle IdeeKids CW Ieper OndernemingscentrumIeper/BarD'Office BC Antwerpen Talentarena
BC Gent IdolaBusinessCenter CW Gent Oneoffice CW Antwerpen TelenetIdealabs-TheSquad
BC Ieper IdolaBusinessCenter BC Bierges OptimalisBusinessCenter CW LaLouvi!re thecoworkFactory
CW Gent Ihub BC Brussel OrionaGroupCinquantenaire BC Gent TheCrescentGhent
BC Estaimpuis ImpactCentreEuropéend'affairesetdeservices BC Brussel OrionaGroupLouiza BC Brussel TheCrescentRiverside
BC Leuven InvolleVaart BC Brussel OrionaGroupSchumann CW Brussel TheFlex
BC Gent IncubatieenInnovatiecentrumUgent BC Brussel PaepsemBusinessCenter BC Brussel TheHubBrussel
CW Antwerpen IndianCaps BC Gent Parkoffice CW Brussel theLibrary
BC Brussel InnovatieenincubatiecentrumBrussel BC Kortrijk Parkoffice CW Brussel TheMug
BC Wommelgem InterofficesAntwerpEast BC Brussel Plug&Work CW Aarschot TheOffice(coworkingAarschot)
BC Zaventem InterofficesBrusselsAirport BC Charleroi QuadratureBusinesscenter CW Kortrijk TheStudio's
CW Antwerpen K85 BC Brussel QuartierLatin CW Ronse TIO3TextilesOpenInnovationCentre
BC Hasselt Kaai16 BC Eupen QuartumBusinessCenter CW Brussel Transforma
CW Antwerpen KBCStartigAntwerpen CW Mechelen RE:FlexMechelen BC Brussel TribesBrussel
CW Antwerpen KBCStartigGent CW Antwerpen RE:flexBerchem BC Kortrijk Twelve
CW Hasselt KBCStartigHasselt BC Brussel RegusAirportDiegem BC Antwerpen UBIS
CW Brussel KBCStartitBrussel BC Brussel RegusAirportMeetingCenter BC Antwerpen Universitairbedrijvencentrum
CW Kortrijk KBCStartitKortrijk BC Brainelalleud RegusBraineLalleud BC Brussel VIPOfficesHeadquarter
BC Geel KempensBedrijvencentrum BC Brussel RegusBrusselsSouthStation BC Tielt VlaemynckBusinessCenter
CW Liège LaForge BC Brussel RegusBrusselsWestBasilix BC Hasselt WetenschapsparkLimburg
CW LouvainLaNeuve LauvainCoworkingSpace BC Brussel RegusCentralStattion BC LouvainLaNeuveWetlandsBusinessCenter
CW Tubize LeCentred'EntreprisesChapagneLandas BC Brussel RegusCommision CW Gent Wolfstraat9
CW Leuven LeuvenStation BC Brussel RegusEUParliament BC Brussel Workspaces
CW Antwerpen Level9 BC Gent RegusGentZuiderpoort BC Antwerpen WTCbusinesscenter
BC Liège Liègebusinesscenter BC Brussel RegusMidi CW Charleroi WupCoworking
CW Liège LiègeGuillemains BC Brussel RegusWaterlooOfficePark CW Hasselt Zelfies
BC Liège LiègeSpatiopôle CW Liège RogierEspaceCoworking BC Zellik Zellik.biz
CW Gent LikeBirds BC Brussel Science14Atrium