BRUSSELS, BELGIUM-Last year saw more stabilisation than recovery in the Brussels office market, with investment rising 34% to $688 million– though still well below pre-crisis levels, says BNP Paribas Real Estate. Several encouraging factors should boost investor confidence this year as the Belgian economy outperforms other Eurozone nations.
In a new report it said demand for office space in Brussels continued to be driven last year by cost-reduction strategies, with take-up increasing 12% to five million square feet from Q4 2009, the highest in three years. The vacancy rate has begun a modest decrease to its January 2010 level of 11.5%, as a result of a slowdown in development and an increase in lettings. Prime rents stabilised and second-tier office space remains under upward pressure due to a fall in the vacancy rate to 7.7% in the CBD but as high as 22% in the periphery.
Investors remained focused on high-quality assets in prime locations on long-term leases, where fierce competition forced down yields. The year was characterised by a return of investors to shorter-lease assets, with prime yields at 6.25% in the CBD, although slow recovery in the occupier market will mean short-lease investment will also improve slowly, BNP said.
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