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From business and coworking-centers to ‘serviced offices’

A fast evolving market with growth expectations

SERVICED OFFICE MARKET IN BELGIUM

Key financial figures

Bobca Conference, October 2015

I. Introduction & situation within ‘Office market’

II. History and evolution of # flexible workspaces

III. The business center market : actual situation

IV. Key financials of the business centres in Belgium

V. Conclusions

INTRODUCTION

Business & coworking-centers in Belgium : See list in annex

What is a business or coworking-center ? Uses this on his website (business center or coworking-space or both)

Business center : full-time reception available – cfr. VAT-regulation for business centers Coworking-center : focus on ‘community’, community manager, no full time reception necessary

For profit, registered companies (excl. not-for-profit organizations) Serviced offices = full time reception services or community-manager

Used figures : Published financial data (Belgian National Bank)

INTRODUCTION“Definitions and limitations”

INTRODUCTIONSituating within the total ‘OFFICE MARKET’

4

Office-market in Belgium Market of ‘larger cities’ very well documented

Own, rough estimation of market in regional cities

Total ca. 21 Mio m², accommodation for appr. 1 Mio collaborators (employees + civil servants in office environments)

Stable market with appr. 21 Mio office space, increasing vacancy

Business center market Definition of ‘business center : ‘

Flexible contracts

Including services

Excluding ‘joint-office-buildings’ with no ‘reception’

Total : ca. 184 business centers, appr. 330,000 m² office space.

Accounts for appr. 1,5 % of total office space in Belgium, growing market-share.

Co working market New, upcoming market

Total of appr. 64 Coworking spaces in Belgium, totaling appr. 25,000 m² office space.

Growth rate of market > 30-50 %, but limited examples of viable business models.

The business center market is a niche market of the ‘Office market’

Offices (x 1,000 m²)Brussel 13.000 Antwerpen 1.900 Gent 1.200 Liège 500 6 'centrum' cities' : 300 - 500

(Charleroi, Namur, Hasselt, Leuven, Mechelen)15 'regioinal cities' 100 - 250

(f.ex. Kortrijk, Roeselare, Brugge, St. Niklaas, Aalst, )Total office spaces in 'cities' : 21.250

# Business centers (in m²)Number : 184 Average surface : 1.788 Total surface occupied : 328.984

in % of office market : 1,55%

# Co working centersNumber : 65 Average surface : 381 Total surface occupied : 24.770

in % of office market : 0,12%in % of business center market : 7,53%

INTRODUCTIONSegmentation of the total ‘OFFICE MARKET’

5The office market is shifting towards the ‘serviced offices’

Serviced Office marketFlexible contracts (month/year/…)

Focus on services and comunity

Office market‘long term contracts’

No flexibilityLimited services (facilities)

Limited ‘new constructions’ < 2 % of market

Decreasing demand due to NWOW

Coworking market< monthly ‘memberships’

Flexible, focus on ‘community’Limited but increasing services Market growth > 50 %/year

Business center marketFlexible ‘yearly’ contracts

Flexible, focus on ‘services’Limited but increasing community Market growth 5-10 %/year

Decreasing market

Increasing market98.5% 97/90 % of the market

II. HISTORY“A market with a rich history”

• 1965 : First business-centres in the U.S.• 1980 – 90 : 1st ‘boom’ of business centres (bedrijvencentra)

– Apr. 120 initiatives in Belgium, 50 % (semi-)public (Bedrijvencentra), 50 % private– Several subvention schemes to stimulate investment

• f.ex. 1989 : Regus, Officenter and more then 50 Bedrijvencentra were created

• 1990 – 2005 : Survival of the fittest– Apr. 1/3th of the initial initiatives seazed to live – Most other initiatives ‘fight to survive’ ( … )

• 2006 – actually :– Market growth the business centre market of 5-15 % pro year– Market becomes profitable under the guidance of Regus – the ‘Gorilla’ in this market.

• 2005 : The first ‘coworking-site’ in San Francisco (Hat Factory by Brad Neuberg)

• 2008 : First coworking site in Brussels (The Hub, Brussels)• 2008 - .. : survival of the fittest coworking-locations

– The Hub and 50 % of the other initiatives in this market have ceased to exist.

• 2014-15 : increase in ‘hybrid’ formula’s evolving to one ‘SERVICED OFFICES market’

II. HISTORY“A market with a rich history”

• First boom of business centre until 1990-95

• Then, 95-2005 : more failures then start-ups in our market until …

• 2005 : start of the ‘New Way of Working’

• From 2005 on, a growth of 5-10 % of the number of ‘business centres'

• From 2008 : an exponential growth of the number of coworking centres

• In 2015 the market will grow to more then 250 flexible workspace offers in Belgium.

Total appr. 185 “business centers” and 68 ‘CW-centers’ identified in Belgium :

35 ‘BC’s’, bedrijvencentra

17 BC + 8 CW centers for Regus

5 Multiburo

Appr. 15 ‘groups’ with 2-4 centers, the fastest growing part of the market.

More then 90 ‘individual business center owners, a stable market-share of 50 % of the business centers

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. 170 business centers of which more than 50 % are stand-alone centers.

III. BUSINESS CENTERS IN BELGIUM3.1. Number of Business Centers

Appr. 60 % of Belgium’s business centers are located in Brussels, Antwerp en Gent

40 % located in Brussels

10 % 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.

2/3th of all business centers in Belgium are located in the three main cities (Brussels, Antwerp and Gent)

III. BUSINESS CENTERS IN BELGIUM3.2 Business centers by location

Cities Business centers Coworking Eind-totaalBrussel 64 16 80Antwerpen 20 12 32Gent 14 8 22Leuven 6 2 8Liège 5 3 8Hasselt 5 3 8Louvain La Neuve 6 1 7Kortrijk 5 1 6Charleroi 2 2 4Mechelen 3 1 4Nivelles 2 1 3Turnhout 2 1 3Oostende 2 1 3Sint-Niklaas 3 3Namen 2 1 3Brugge 1 2 3Ieper 1 1 2Tournai 1 1 2Aalst 2 2Geel 2 2Tielt 1 1 2Genk 2 2

Brussel Antwerpen Gent LeuvenLiège Hasselt Louvain La Neuve KortrijkCharleroi Mechelen Nivelles TurnhoutOostende Sint-Niklaas Namen Brugge

Locatie

Categorie

Aantal van Naam

NF Aktief in 2014

A growing number (increased from 12 to 17 %) of the BC/CW centers belong to an international group :

Regus (growing to 28 locations by the beginning of 2016)

Multiburo (5)

Newcomers like Orega, Tribes, …

They represent > 30 % of the turnover of our market - more then 50 % of the profit.

24 % of the business centers are public of semi-public initiatives

This % is decreasing last years

Nearly 60 % of all BC/CW-centers are fully private initiatives

Most business centers in Belgium are ‘private’ owned, 25 % have ‘public ownership’ and a growing 17 % belong to international chains.

III. BUSINESS CENTERS IN BELGIUM3.3. Ownership – types of the Belgian business center market

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.1. Turnover evolution

• Turnover – Total market turnover appr. 90 Mio €– 1/3th is done by international players

• Own only 17 % of the business centers

– 20 % is done by the ‘semi-public-initiatives– The private owners serve appr. 45 % of the

market. • Growth rhythm

– Exponential market-creation 1980-1995 : more then 100 BC created

– From 1995 – 2005 : no substantial growth of the market (< 2 %/yr)

– 2006-2010 : growth with 5-10 % per year, not abnormal for this market compared with international studies

– 2011 – 2014 : growth 2-5 %, relatively low growth in comparison with international growth ratio’s of 5 – 10 % for EMEA-region’s.

• Due to low ‘entrepreneurship’ level in Belgium ?

The Belgian business center market is lagging behind on the international growth rates of the market of appr. 10 %/year

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.2. Operational profit (EBIT) of business centers

• Although > 25% of the business centers make losses, the ‘market’ has a positive profitability, varying between 0 and 5 %.

• The lack of growth in turnover has halved (!) the profitability of the market from > 4 % in 2012 to 2 % in 2014.

• The main profit generators (> 50 %) are the international players in our market.

• Still 26 % of the business and coworking-centers make losses !

The decline in turnover by center has halved the profitability of the business center market in 2013-14 !

IV. FINANCIAL DATA OF BUSINESS CENTER MARKET4.3. Advantages of scale ?

• 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– After a strong increase of their turnover from 2005-2009,

we see a stabilization of turnover the last years.

• 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.

Conclusions

• The business and coworking market are ‘integrating’ more and more towards a service-office market

• In 2010-14 the growth of locations (>10 %) was much faster then the growth of turnover, which has halved the profitability of the market (Offer>demand prices profit )

• The business center/coworking market in Belgium should be at a ‘turning point’ in 2015

– The lack of growth in 2013-14 must create growth opportunities, since the ‘international’ market has grown with 5-10 % from 2010 until now.

– A lot of new initiatives (coworking, but also a lot of new, international players who are coming to Belgium) have started in 2014, and will continue to create new initiatives in 2015.

Annexe

List of business centre and coworking places inventoried for this study

Categorie Locatie Naam Locatie Naam Locatie NaamBC Geel 4Wings BC Oostende Bedrijvencentrum Regio Oostende BC Brussel Business People Services

BC Aalter Aalters Bedrijvencentrum BC Waregem Bedrijvencentrum Regio Waregem BC Liège CAP Business Center

BC Lier Accentis business center BC Roeselare Bedrijvencentrum Roeselare CW Nivelles Capinnove

BC Egezée Accortise Pactech Business Center BC St Truiden Bedrijvencentrum Sint Truiden BC Louvain La NeuveCEI Louvain

CW Antwerpen Acospace BC Tienen Bedrijvencentrum Tienen BC Brussel Centre d'Entreprises de Saint-Gilles

BC Brussel Acte BC Tongeren Bedrijvencentrum Tongeren BC Liège Centres d'Affaires Afinis

BC Gent Adequat BC Veurne Bedrijvencentrum Veurne BC Louvain La NeuveCercle Du Lac

BC Brussel Agence 86 'creative business center' BC Brussel Bedrijvencentrum Vilvoorde BC Brussel Chambre d'affaire CFCI

BC Gent Ajuinlei 1 Business Center - Growth Phase BC Oudenaarde Bedrijvencentrum Vlaamse Ardennen CW Kontich Clubhouse Coworking

BC Brussel Alnair Business Center BC Sint-Niklaas Bedrijvencentrum Waasland BC Genk C-Mine Crib

BC Louvain La Neuve Alternative Business Center BC Brussel Bedrijvencentrum Zaventem CW Antwerpen Co Buro

BC Antwerpen Antwerp Business Center BC Brussel Bedrijvencentrum Zennevalei CW Mons Co nnexion - coworking

BC Antwerpen Antwerp Business House BC Brussel Belgium Business center CW Brussel Coworking Business Center Brussels

BC Sint-Niklaas Astrid Business Center Sint-Niklaas BC Antwerpen Benelux Business Center CW Hasselt Coworking Hasselt

BC Brussel Ateac Business Center CW Brussel Beta Group Coworking CW Namen Coworking Namur

BC Brussel Ateliersdes Tanneurs BC Brussel BG3 CW Liège Cristal Hub Coworking

BC Louvain La Neuve Axisparc business center BC Leuven Bio Incubator Leuven BC Leuven de Hoorn

CW Brussel Bar Buro BC Brussel Bisschofsheim business center CW Brugge De Huyskamer

CW Brussel Bar D'Office Brussel (Voka) BC Brussel Bizzcenter BC Antwerpen De Wolkammerij

CW Leuven Bar D'Office Leuven BC Kortrijk Bizz-Init BC Antwerpen Diamant Conference & Business Center Antwerpen

CW Oostende Bar D'Office Oostende BC Brussel BLSI BC Brussel Diamant Conference & Business Center Brussel

BC Nivelles BCS Group BC Antwerpen BNO 'The factory' BC Luik Diamant Conference & Business Center Luik

BC Aalst Bedrijvencentrum Aalst BC Brussel BPS Ad Hoc BC Brussel Diegem Grensstraat

BC Beringen Bedrijvencentrum Beringen BC Brussel Brussels Airport Corporate Village CW Antwerpen Dots Coworking

BC Gent Bedrijvencentrum De Punt BC Brussel Brussels Village BC Brussel Double Digit Zaventem

BC Antwerpen Bedrijvencentrum De Winkelhaak CW Sint-Truiden Bur O Bar BC Gent Easy Office Center

BC Dendermonde Bedrijvencentrum Dendermonde BC La Louvi!re Buro Business du Centre BC Brussel EEBIC Business Center

BC Genk Bedrijvencentrum Genk BC Namen Burogest Bouge BC Louvain La NeuveEinstein Business Center

BC Geraardsbergen Bedrijvencentrum Geraardsbergen BC Namen Burogest Office Park CW Brussel Enclume&Co

BC Hasselt Bedrijvencentrum Hasselt CW Antwerpen Burooz CW Tournai ESCO Expace Coworking

BC Ieper Bedrijvencentrum Ieper BC Brussel Burotel BC Brussel Espace Moselle

BC Zelzate Bedrijvencentrum Kanaalzone BC Brussel Burotel 367 BC Brussel EU Business Centre

BC Leuven Bedrijvencentrum Leuven BC Brussel Burotel Congres BC Liège Euregio Business Center Liège

BC Maasmechelen Bedrijvencentrum Maasmechelen BC Antwerpen Business Center Amerikalei CW Brussel Factory Forty

BC Malle bedrijvencentrum Malle BC Charleroi Business Center Charleroi BC Dienze Filad Ondernemingscentrum

BC Maldegem Bedrijvencentrum Meetjesland BC Nivelles Business center services BC Brussel Flagey Digital

BC Overpelt Bedrijvencentrum Overpelt BC Waver Business Center Wavre Nord CW Gent Floating Desk Coworking

BC Brugge Bedrijvencentrum Regio Brugge BC Kortrijk Business Centrum Kortrijk Pottelberg BC Antwerpen Fountain business park

BC Kortrijk Bedrijvencentrum Regio Kortrijk BC Willebroek Business centrum Rivium BC Herentals Frame 21

BC Mechelen Bedrijvencentrum Regio Mechelen CW Fosses La Ville Business One BC Tournai Futur Orcq

Locatie Naam Locatie Naam Locatie NaamBC Mouscron Futur X BC Hasselt Officenter CW Antwerpen Social Media Club Kube8

BC Oostende Greenbridge incubatiecentrum en wetenschapsparkBC Antwerpen Officenter Antwerpen/A12 BC Brussel Solaris Business Center

BC Houthalen Greenville Cleantech Campus BC Turnhout Officenter Turnhout CW Turnhout SPK - Bar D'office

BC Sint-Niklaas Heptagon business center CW Mechelen Ondernemershuis/Bar d'Office BC Turnhout Square Point Business Center

CW Antwerpen Het Bolwerk / Bar d'Office (Fort 5) CW Ieper Ondernemingscentrum Ieper/ Bar D'Office CW Brussel Studio 28

BC Hasselt Huis Vanstraelen CW Gent Oneoffice CW Antwerpen Studio Start

BC Gent Huize Minne BC Bierges Optimalis Business Center CW Antwerpen Swenst

BC Leuven I & I Leuven BC Brussel Oriona Group Cinquantenaire CW Charleroi Switch Coworking Charleroi

BC Gent IBBT-Incubator BC Brussel Oriona Group Louiza BC Mechelen T - Offices

CW Gent Icubes BC Brussel Oriona Group Schumann BC Antwerpen T - Offices

BC Gent I-Cubes BC Brussel Paepsem Business Center BC Antwerpen Talentarena

CW Gent Ihub BC Gent Parkoffice CW Antwerpen Telenet Idealabs - The Squad

BC Estaimpuis Impact Centre Européen d'affaires et de services BC Kortrijk Parkoffice CW La Louvi!re the cowork Factory

BC Leuven In volle Vaart BC Brussel Plug &Work BC Gent The Crescent Ghent

BC Gent Incubatie en Innovatiecentrum Ugent BC Antwerpen Q4 Central Park Building BC Brussel The Crescent Riverside

CW Antwerpen Indian Caps BC Charleroi Quadrature Business center CW Brussel The Flex

BC Brussel Innovatie en incubatiecentrum Brussel BC Brussel Quartier Latin BC Brussel The Hub Brussel

BC Wommelgem Interoffices Antwerp East BC Eupen Quartum Business Center CW Brussel the Library

BC Zaventem Interoffices Brussels Airport BC Antwerpen Re Flex Antwerpen CW Brussel The Loft

CW Antwerpen K85 BC Brussel Regus Airport Meeting Center CW Brussel The Mug

BC Hasselt Kaai 16 BC Braine lalleud Regus Braine Lalleud CW Kortrijk The Studio's

BC Geel Kempens Bedrijvencentrum BC Brussel Regus Brussels South Station CW Ronse TIO3 Textiles Open Innovation Centre

CW Liège La Forge BC Brussel Regus Brussels West Basilix CW Brussel Transforma

CW Louvain La Neuve Lauvain Coworking Space BC Brussel Regus EU Parliament/Leopold BC Kortrijk Twelve

CW Tubize Le Centre d'Entreprises Chapagne Landas BC Gent Regus Gent Zuiderpoort BC Antwerpen UBIS

CW Antwerpen Level 9 BC Brussel Regus Midi BC Antwerpen Universitair bedrijvencentrum

BC Liège Liège business center BC Brussel Regus Park Atrium BC Brussel VIP Offices Headquarter

BC Liège Liège Spatiopôle BC Brussel Regus Pegasus BC Tielt Vlaeminch Business Center

CW Gent Like Birds BC Antwerpen Regus Rubens BC Hasselt Wetenschapspark Limburg

CW Gent Loft169 BC Brussel Regus Schuman BC Louvain La NeuveWetlands Business Center

BC Gent Maaltecenter BC Brussel Regus Stephanie Square BC Brussel Workspaces

BC Brussel MC Square BC Brussel Regus Waterloo Office Park BC Antwerpen WTC business center

BC Mechelen MC Square Mechelen CW Liège Rogier Espace Coworking CW Charleroi Wup Coworking

BC Antwerpen Multiburo Antwerpen Centraal Station BC Brussel Science14 Atrium CW Hasselt Zelfies

BC Brussel Multiburo Brussels Airport BC Brussel Seed Factory BC Zellik Zellik.biz

BC Brussel Multiburo Louise BC Brussel Servcorp Bastion Tower CW Aarschot The Office (coworking Aarschot)

BC Brussel Multiburo Quartier Européen BC Brussel Servcorp Schuman CW Tielt Creatielt

BC Diest Office 21 BC Brussel Silver Square CW Gent Aerey Coworking

BC Brussel Office services Brussels BC Antwerpen Silver Square CW Gent Wolfstraat 9

BC Leuven Officener Leuven BC Brussel Sint Annacenter CW Brussel Co.Station Brussels

BC Antwerpen T - Offices BC Gent Idola Business Center