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Demographic growth and household consumption keep retail property leases up to the mark

Demographic growth
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Demographic growth in Belgium is significantly higher than in most neighbouring countries and Brussels is even one of the fastest-growing cities in Europe. Planned retail developments (such as Docks Bruxsel or Uplace in the Brussels suburb of Machelen) are certainly justifiable in the context of this population growth, particularly because this growth is strongest in the north-western section of the Brussels region according to a new report from Cushman & Wakefield, the world’s largest privately owned real estate advisor. 

 Demographic growth

  • Unlike various neighbouring countries, retail spending has not experienced a downturn in Belgium. Domestic spending has remained strong, although many retailers are concerned about the impact of a slowdown in sales during the second half of 2013. 

    press letting

    Demand for retail outlets is still high but fewer and fewer locations are oversupplied: rental values in top locations are holding up but pressure there has certainly declined. Of the 236 retail locations for which Cushman & Wakefield has tracked the rental values, exactly 50% have risen over the past 5 years, with 33% experiencing a reduction, particularly in secondary retail locations. 

    Demographic growth

    The market for retail parks and out of town stores is doing relatively well. There is a clear move towards upgrading locations going on in this market: the increasing trend is away from the classic ‘shoe box’ type of outlet with architecture of greater quality. A number of the ‘better’ brands are following suit, so that retail warehousing is gradually getting away from its discount image. 

    Demographic growth

    E-commerce is viewed by many retailers as an opportunity, although it is also perceived equally as a threat. There are doubts about the profitability of pure e-commerce players such as Zalando: the cost of home deliveries and the high percentage of returns will make it hard for them to be profitable. 

    Expectations for the coming year are moderate: only if retail sales pick up again, including in other countries, demand will improve. A general increase in retail rents is not in the immediate offing.