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MARKET ANALYSIS 2012

DRAFT VERSION – FOR DISCUSSION PURPOSES ONLY

BUSINESS CENTER MARKET IN BELGIUM

Hasselt, 2012-09-20Laurent Andrianne & Koen Batsleer

I. Market overview ‘Business centers in Belgium ‘I. Number of business centersII. Estimation of market-shareIII. Different locationsIV. Types of Shareholders

II. Financial Figures of business centers in BelgiumI. Turnover (Estimated)II. Profitability

INTRODUCTION

Business centers in Belgium : See list in annex Research by a maximum of means

Growing market if you know new centers, please let me now.

What is a business center ? Uses this as name of his business Including ‘bedrijvencentra’, excluding ‘innovation centers’/incubation centers For profit, registered company Serviced offices = full time reception services

Used figures : Published financial data (Bel First & NBB)

INTRODUCTION“Definitions and limitations”

Total appr. 137 business centers in Belgium :

28 ‘BC’s’, bedrijvencentra

10 Regus

5 NCI/Multiburo

12 groups with 2-4 centers

65 ‘individual business center owners (50%)

In 2011 : ca. 120 BC, which means an annual

growth of appr. 10 %.

P.S. April 2012 : bankruptcy of Microbizz

Listing is not ‘clear-cut’

No innovation/incubation-centers

No ‘co-working-spaces’

No Incubation/Innovation centers

In Belgium, we observe appr. 137 business centers of which around 50 % are stand-alone centers.

I. BUSINESS CENTERS IN BELGIUM1.1. Number of Business Centers

Amount of Business Centers owned by groupsGeen GroepBedrijvencentrumRegusMicrobizzMultiburoVIP OfficesDesign/InnovatiecentrumTaminiauThe Crescent/LeasinvestOfficenter Liege Business CenterMC SquareSilver SquareBurogestDouble DigitServcorpParkofficeHeylen2LokaboxHalldisAdd business pointAteac

I. BUSINESS CENTERS IN BELGIUM1.1. Estimation of market-size

5

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 + civel servants in office environments)

Decreasing market volume due to NWC (- 2-3 % / year)

Business center market

Definition of ‘business center : ‘

Flexible contracts

Including services

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

Extimation of Finpower based upon its inventory, the 150 business centers represent appr. 300,000 m² of office-space, hosting appr. 15,000 workstations/employees.

Accounts for appr. 1,5 % of total office space in Belgium.

Estimated market growth 2012 – 15 : ca. 10 %/year (Instant)

Co working markt

New, upcoming market

Rough estimation by Finpower, based upon own market research : appr. 15,000 m², 0,1 % of the business center market.

Impressive growth, but mostly a lot of non-viable business models

The business center market is a small but fast growing market

60 % of Belgium’s business centers are

located in Brussels, Antwerp en Gent

41 % located in Brussels

12 % located in Antwerp

7 % located in Gent

The biggest city of Wallonia, Liege, has only 4

business centers.

Bruges and Leuven, two active cities in

Flanders only have a single business center

each.

2/3th of all business centers in Belgium are located in these main cities

I. BUSINESS CENTERS IN BELGIUM1.2 Business centers by location

Largest cities (rank by population) AmountBrussel 57Antwerpen 16Gent 9Charleroi 2Luik 4Brugge 1Namen 2Leuven 1Bergen 0Mechelen 0Total 92

Brussel Antwerpen Gent Luik Namen Charleroi Leuven Brugge

Business Centers are well distributed

over the different parts of cities.

Only 1 on 3 business centers is located

in the centre of the cities

Appr. 33 business centers are located

in an industrial surrounding, normally

not suited for this purpose.

Airways and highways only attract a

minority of business centers

Business Center in Belgium are situated for approx. 1/3 in the Center of the cities, 1/3 in the industrial areas and 1/3 in the suburban areas

I. BUSINESS CENTERS IN BELGIUM1.3. Business center pro location

39%

24%

2%

35%

Center

Industrial area

Airport

Surroundings

Situation AmountCenter 53Industrial area 33Airport 3Surroundings 47Total 136

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.1. Turnover estimation pro region

• Significant differences between regions

– Brussels leads the market offering an average of 40M turnover, 65 % of the market.

– Beside the capital city , Flanders is the most dynamic market with a turnover reaching 25M in 2011

– Wallonia is the smallest market.• Growth rhythm

– Brussels market seems to have come to maturity and is stable since 2009, also influenced by the diminishing prices in this competitive region

– The total turnover of Flanders was stable form 2000 – 2006 and has since then a average annual growth of 5 %

– Wallonia is the fastest growing market, with a yearly growth of 9% since 2000.

20112010200920082007200620052004200320020

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Total Turnover

Wallonië Vlaanderen Brussels

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.2. Turnover estimation pro ownership type

• Private owners have more then 50 % of the business centers

– Their market-share in turnover has grown from less then 20 % in 2002 tot more then 30 % in 2011

– So, their relative size is limited.• The (semi-) public ‘for profit’ owners

account for appr. 25 % of the number of business centers

– But for less then 20 % of the turnover of the market – limited turnover/center

– This does not include the ‘VZW-structures’, who are not part of this study

• International players – 20 % of the number of centers

– The international owners (mainly Regus and Multibureay) account for nearly 50 % of the turnover of the market.

– After a strong increase of their turnover from 2005-2009, we see a stabilization of turnover the last years.

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.3. Net income after taxes comparison

• The cumulative operational profits of this market where until 2006 negative.

• The private and international players are profitable from 2006 on

• The semi-public players do not generate a positive operational return in general.

Conclusions

• The business center market is a growing market– International studies show market growths of appr. 10 %– The Belgian market is lagging in this growing market, due to several factors.

• The market is covered by 3 types of owners :– International players focus on the big cities, with an international network

and they are operationally more performant then the other market players.– The private investors are gaining market share, but their profitability is still

relatively low– The semi-public market players realised a lower the expected growth, and

appr. 50 % of them do not generate an operating profit – which limits their growth potential.