Belgium Retail MarketView

March 2013 CBRE Research

2012 GDP -0.2%

2013 GDP +0.3%

UNEMPLOYMENT 7.3%

RETAIL SALES +3.51%

INFLATION +2.6%

CONSUMER CONFIDENCE

RETAILERS CONTINUE TO EXPAND OUT-OF-TOWN DESPITE FALLING CONSUMER CONFIDENCE

Quick Stats
2012
Take up Prime rent Prime yield 214,406 m 1,850 m/y 4.00 %

Quick Links
The Belgian retail market has recorded a rise in trading numbers Consumer confidence deteriorated in the last quarter of 2012 In total, retailers agreed terms on 316,712 m of leases and purchases in 2012 Close to 600 million have been invested in retail in Belgium in 2012.

600 million EUR invested in retail in 2012 (image: Esplanade II) Retail sales volume in Belgium rebounced in the last quarter of 2012, making up for negative volume growth at the start of the year 2012. After a brief period of relief and hope at the start of the year, consumer confidence deteriorated in the last quarter of 2012, as fears over another economic slowdown materialised and layoffs at several large companies made headlines in the press. Retailer expansion continued throughout 2012, with Q4 take-up adding another 102,306 m in transactions. In total, retailers agreed terms on 316,712 m. While letting transactions in both highstreets and shopping centers have slowed down, new out-of-town retail parks have been pulling in demand. Most development activity in 2012 and 2013 is focused on out-of-town retail, with numerous schemes being marketed or coming online. Close to 600 million have been invested in retail in Belgium in 2012. Noteworthy, retail outperforms all other property segments in Belgium in terms of investment volume.

THE ECONOMY

March 2013 CBRE Research | Belgium Retail MarketView

CONSUMER CONFIDENCE IMPROVES IN FEBRUARY 2013

Chart 1: Retail sales volume growth Chart 2: Consumer confidence & inflation

6% 4% 2% 0% -2% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Retail sales (nominal) Retail sales (real)
Source: CBRE

10 0 -10 -20 -30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Consumer confidence (left) Inflation (right)

8% 6% 4% 2% 0% -2% -4%

Source: CBRE

Retail sales volume improve IN Q4 2012, BUT YEAR-END SALES DISSAPOINT

The Belgian retail market has recorded a rise in trading numbers over 2012, despite a strong decrease in consumer confidence towards the year-end. Amid a number of high-profile company lay-offs, worries built over unemployment and the ability to save money. Retail sales volume up Retail sales volume in Belgium rebounded in the last quarter of 2012, making up for negative volume growth at the start of the year 2012. Especially in the months of October (+4.73%) and November (+6.61%), retail sales volume was up considerably year-on-year. The end-of-year sales period in December was somewhat disappointing however, as the monthly retail sales volume conceded -0.55% as compared to December 2011. While more aggressive pricing strategies can be one reason for the drop in nominal volume, the quantity of goods sold was down as well.

1.15% deflated. No significant differences were noted between product categories, as food, fashion, home & household all advanced by approximately 3.5% over the year 2012. Consumer confidence down at year-end After a brief period of relief and hope at the start of the year, consumer confidence deteriorated in the last quarter of 2012, as fears over another economic slowdown materialised and layoffs at several large companies made headlines in the press. More recently, consumer confidence recovered in February 2013, as households have become more optimistic about the general economic outlook. Government to spare households in 2013? GDP growth for 2013 has been revised downwards, to 0.3% (from 0.6%). The federal government will therefore have to identify new measures to reach the required deficit target of -2.15 % for 2013. Instead of more taxes on households, pressure is building to undertake more structural savings.

Overall, retail sales volume in 2012 increased by 3.51% nominally, and

DEMAND

March 2013

RETAILER EXPANSION CONTINUES OUT-OF-TOWN

Retailer expansion continued throughout 2012, with Q4 take-up adding another 102,306 m in transactions. In total, retailers agreed terms on 316,712 m of leases and purchases in 2012 (excluding renegotiations). While letting transactions in both highstreets and shopping centers have slowed down, new out-oftown retail parks have been pulling in demand. Out-of-town retail schemes very popular Demand for retail units in both highstreets and shopping centers has stabilised over recent years. With nearly no new development, retailers are looking into a limited offer of opportunities at the best locations. In 2012, highstreet retail attracted 86,342 m in transactions. 44,729 m were transacted in shopping centers. Out-of-town retail continues to grow Chart 3: Take-up per quarter Chart 4: Take-up per segment 185,641 m unabated, with new modern retail parks coming online in a number of locations across Belgium. In total, a record number of 185,641 m in deals were registered. Albert Heijn among the most expansive brands of 2012 The international brand making the most significant impact on the Belgian retail market today is, perhaps surprisingly, in the grocery sector. Albert Heijn, part of the Dutch Alhold Group, has some six stores open with leases signed for a further 10 to 12. Other retailers in full expansion concern Hunkemller, Veritas, Action, Rituals, ZEB and Ava Papierwaren.

CBRE Research | Belgium Retail MarketView

a record number of 185,641 m in deals were registered FOR OUT-OF-TOWN RETAIL

400,000 m 350,000 m 300,000 m 250,000 m 200,000 m 150,000 m 100,000 m 50,000 m 0 m 2007 2008 Q4 2009 Q3 2010 Q2 2011 Q1 2012
highstreets shopping centres 44,729 m 86,342 m

retail warehousing

Source: CBRE

Source: CBRE

Table 1: Notable transactions in Q4 2012 Date 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 12/2012 11/2012 11/2012 11/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 10/2012 Address 8500 Kortrijk, St-Jansstraat (K in Kortrijk) 4020 Lige, Boulevard Raymond Poincar 7 (Mdiacit) 9600 Ronse, Cesar Snoecklaan 51 (Shopping Ronse) 3500 Hasselt, Hoogstraat 17-21 3500 Hasselt, Grote Markt 1 8520 Kuurne, Ter Ferrants 6 8400 Oostende, Torhoutsesteenweg 7700 Mouscron, Boulevard des Allis (Les Dauphins) 3740 Bilzen, Tongerenstraat 3700 Tongeren, Luikersteenweg 152 1599 St-Pieters-Leeuw, Bergensesteenweg 306 3000 Leuven, Kolonel Begaultlaan (Van der Elst) 2900 Schoten, Bredabaan 978 2300 Turnhout, Steenweg op Gierle 228 (Scapino Site) 1080 Bruxelles, Chausse de Gand 1255 3000 Leuven, Diestsestraat 145 2000 Antwerpen, Huidevettersstraat 44 6040 Jumet, Avenue Jules Bastin 7 (Park Redevco Jumet) 2627 Schelle, Boomsesteenweg 35 (A12 Shopping) 1050 Bruxelles, Avenue Louise 72 3500 Hasselt, Demerstraat 16 2800 Mechelen, Bruul 98 6010 Couillet, Route de Philippeville 10 5100 Jambes, Avenue Prince de Lige 115 9700 Oudenaarde, Gentstraat 47 (Frunpark Gentpoort) 8800 Roeselare, Brugsesteenweg 333 (Dino Center) 5100 Jambes, Chausse de Lige 649 2400 Mol, Molderdijk 2400 Mol, Molderdijk m 418 m 422 m 1,780 m 500 m 876 m 1,000 m 1,200 m 1,405 m 1,898 m 1,692 m 1,117 m 4,350 m 1,700 m 1,200 m 2,000 m 125 m 145 m 4,100 m 717 m 300 m 300 m 150 m 1,134 m 1,000 m 1,842 m 1,082 m 1,278 m 1,966 m 1,203 m Type Letting Letting Letting Extension Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Letting Occupant Mango Cool Cat H&M Zara Bershka ZEB Ava Papierwaren Maisons du Monde Brico Facq Ava Papierwaren Dreamland/Dreambaby X2O Ava Papierwaren Just Fit CKS Natan Jardiland Veritas The Kooples Paris Londres Mick Ava Vanden Borre Albert Heijn Leen Bakker Ava Papierwaren Albert Heijn Vanden Borre
Source: CBRE

March 2013 CBRE Research | Belgium Retail MarketView

Table 2: Most expansive retailers in 2012

March 2013 CBRE Research | Belgium Retail MarketView

7 stores 11,738 m

7 stores 1,671 m

7 stores 3,791 m

7 stores 7,690 m

6 stores 630 m

6 stores 5,294 m

5 stores 5,795 m

5 stores 1,400 m

4 stores 4,400 m

Source: CBRE

DEVELOPMENT

March 2013 CBRE Research | Belgium Retail MarketView

MULTIPLE RETAIL PARKS BEING CONSTRUCTED

T-Forum (Tongeren) 32,000 m

development activity is focused on out-of-town retail

Most development activity in 2012 and 2013 is focused on out-of-town retail, with numerous schemes being marketed or coming online. Multiple out-of-town schemes coming online Notable schemes include Les Dauphins in Mouscron, the extension of the Portes de Charleroi Sud in Couillet and CrescendEau in Verviers. A number of new retail schemes are coming from Redevco. Redevco is in the process of restructuring some of its retail parks across the country, following the downsizing of the Carrefour network.

Limited shopping centre development With no new shopping centre openings in 2012, the only notable addition of new space came with the 5,000 m extension to the Shopping Nivelles scheme at Nivelles. The future development pipeline is rather limited, at least until 2014 and possibly beyond. New shopping center projects are plagued by delays as environment and construction permits are increasingly difficult to obtain. Also the commercialisation and financing of brand new retail projects proves to be difficult.

March 2013

Table 3: New out-of-town retail schemes (2012/2013)

CBRE Research | Belgium Retail MarketView

Redevco Retail Park (Flmalle) 21,000 m

Cascade Shopping (Drogenbos) 29,000 m

V-Markt (Brugge) 11,000 m

Les Portes de Charleroi Sud (Couillet) 26,000 m

Ring Shopping (Kortrijk) 9,000 m

CrescendEau (Verviers) 21,000 m

Brico Plan-it (Ghent) 12,000 m

RentS
Stad Antwerpen

March 2013 CBRE Research | Belgium Retail MarketView

RENTAL VALUES DIVERGE

Meir (Antwerp) 1,850 per sq m/year

rents stable or trending upwards in prime locations, while declining elsewhere

The leasing market continues to diverge, with rents stable or even trending slightly upwards in prime locations, while declining elsewhere, particularly in poorer secondary and tertiary locations. Flight to quality Demand for retail space at the prime end of the market, particularly towards the best highstreets and shopping centers, continues to propel rental growth in our largest cities. Both the Rue Neuve in Brussels and the Meir in Antwerp now trade at 1,850 per sq m/year for the best 200 m retail units. Wijnegem and Woluwe both trade at 1,400 per sq m/year Many retailers are opting for prime retail space in an attempt to secure the best long-term prospects for their business in an uncertain market. This flight to quality even exists within prime zones, as variations can be recorded in trading/rental performance magnified to unit, not just street, level. The Meir, one of Antwerps main shopping streets, is an example where certain units located in lower quality space are

struggling to maintain current rent levels, often resulting in temporary occupation. The development shortage in terms of shopping centers gives room to existing schemes with good locations and proven track records, such as Waasland Shopping Center in the Flandrian region of Waasland and Belle Ile in Lige, to increase rents by anything up to 30% due to retailers willingness to pay a premium in order to preserve their positions. Out-of-town remains hugely popular Within the out-of-town sector, there has been a further power shift to the top quality parks that offer an attractive, well-conceived retail and leisure environment, while some of the older standalone parks are struggling. Rents in the top parks have remained broadly at the level of 175 per sq m/year, with the average for the sector a little below 100 per sq m/year.

March 2013

Table 4: Rents for highstreets (for 200 m units) Street Meir Steenstraat Rue Neuve/Nieuwstraat Goulet Louise/Louizalaan Rue de la Montagne Veldstraat Hoogstraat Kustlaan Diestsestraat Vinave d'le Rue de Fer City Antwerpen Brugge Brussels Brussels Charleroi Gent Hasselt Knokke Leuven Lige Namur 2010 1,700 euro/m 1,100 euro/m 1,600 euro/m 1,250 euro/m 600 euro/m 1,200 euro/m 1,100 euro/m 800 euro/m 800 euro/m 1,000 euro/m 1,000 euro/m 2011 1,750 euro/m 1,150 euro/m 1,700 euro/m 1,300 euro/m 550 euro/m 1,300 euro/m 1,150 euro/m 775 euro/m 850 euro/m 1,000 euro/m 900 euro/m 2012 1,850 euro/m 1,150 euro/m 1,850 euro/m 1,350 euro/m 500 euro/m 1,350 euro/m 1,200 euro/m 750 euro/m 900 euro/m 1,100 euro/m 900 euro/m

Both the Rue Neuve in Brussels and the Meir in Antwerp now trade at 1,850 per sq m/year for the best units

CBRE Research | Belgium Retail MarketView

Table 5: Rents for shopping centers (for 200 m units) Shopping center Wijnegem SC City2 Woluwe SC Belle Ile L'Esplanade Grands Pres Waasland SC City Antwerpen Brussels Brussels Lige Louvain-la-Neuve Mons St-Niklaas 2010 1,300 euro/m 1,050 euro/m 1,250 euro/m 650 euro/m 750 euro/m 700 euro/m 825 euro/m 2011 1,350 euro/m 1,050 euro/m 1,325 euro/m 650 euro/m 800 euro/m 750 euro/m 825 euro/m 2012 1,400 euro/m 1,100 euro/m 1,400 euro/m 750 euro/m 850 euro/m 800 euro/m 850 euro/m

Table 6: Rents for out-of-town retail (for 2,000 m) Location Rue de Stalle Kortrijkse Steenweg Bredabaan Chausse de Tongres t Gouden Kruispunt Chausse de Bruxelles Boomsesteenweg Leuvensesteenweg City Drogenbos Gent Merksem/Schoten Rocourt Tielt-Winge Waterloo Wilrijk Zaventem 2010 165 euro/m 150 euro/m 165 euro/m 130 euro/m 150 euro/m 150 euro/m 150 euro/m 145 euro/m 2011 165 euro/m 150 euro/m 170 euro/m 130 euro/m 150 euro/m 150 euro/m 150 euro/m 150 euro/m 2012 165 euro/m 150 euro/m 175 euro/m 130 euro/m 150 euro/m 150 euro/m 150 euro/m 155 euro/m
Source: CBRE 9

INVESTMENT

March 2013 CBRE Research | Belgium Retail MarketView

RETAIL REMAINS VERY POPULAR

Close to 600 million have been invested in retail in Belgium in 2012. Noteworthy, retail outperforms all other property segments in Belgium in terms of investment volume. Small is beautiful In total, 158.5 million was invested in highstreet retail. A noteworthy feature of this investment segment has been the sharp increase in the number of private investors buying retail assets worth anything up to 3 million. These buyers typically see such assets as less risky than equity and bonds. Larger investors are focussing on shopping centers and retails parks. Recently, Klpierre agreed terms on the further extension of their Esplanade shopping center in Louvain-la-Neuve. With the acquisition of the CrescendEau in Verviers, Retail Estates grew its portfolio with another new retail park. Popularity of retail pushes yields further down Further yield compression has been noted for all retail sectors. The best highstreet units trade at yields between 4 and 5%. Shopping centres are valued in between 5.5% and 6% today, while out-of-town retail is acquired at yields of 5.75% to 6.25%.

600 million invested in retail in Belgium in 2012

Chart 5: Investment volume (all properties in Belgium)

6 bio EUR Offices (Brussels) 5 bio EUR 4 bio EUR 3 bio EUR 2 bio EUR 1 bio EUR 0 bio EUR 2005 2006 2007 2008 2009 2010 2011 2012 Offices (Regions) Industrial Retail Hotels & Leisure Elderly homes Residential
Source: CBRE

Chart 6: Investment volume for retail 2008 High Street Retail Shopping Centers Retail warehouses Total
10 Source: CBRE

2009 105,430,063 euro 360,000,000 euro 75,962,143 euro 541,392,206 euro

2010 70,481,061 euro 23,000,000 euro 138,660,000 euro 232,141,061 euro

2011 129,618,878 euro 199,050,000 euro 119,943,668 euro 448,612,546 euro

2012 158,500,469 euro 264,750,000 euro 172,210,000 euro 595,460,469 euro

292,725,830 euro 110,940,000 euro 320,930,541 euro 724,596,370 euro

contacts
For more information about this Retail MarketView, please contact:

March 2013 CBRE Research | Belgium Retail MarketView

BELGIUM Research
Kim Verdonck Head of Research t: +32 2 643 33 33 e: kim.verdonck@cbre.com

BELGIUM RETAIL
Patrick Tacq Head of Retail t: +32 3 248 68 60 e: patrick.tacq@cbre.com John Collin Head of Retail t: +32 3 248 68 60 e: john.collin@cbre.com

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CBRE RESEARCH
This report was prepared by the CBRE Belgium Research Team which forms part of CBRE Global Research and Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. Disclaimer CBRE s.a. confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

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