Retailing floor area per inhabitant is relatively low in, comparison to other European countries.The high street retail sector dominates the retail market and shopping centres are visibly less present as in most other European cities.The retailing warehousing market is on the contrary very popular.
After having lagged behind in terms of retail space per inhabitant, Belgium is finally catching up with some 1.000.000 m² of retail space currently in the pipeline for the coming 10 years. Many of these projects are in the design phase and have not yet received any permits. The amount of projects that will make it to an opening is expected to be considerably lower. Development is especially concentrated in Wallonia, were an important gap with was present.
The significant expansion plans of already present retailers and newcomers on the Belgian retail market have caused the rental values to rise. This is especially true for high streets, where the offer of good quality properties is very low. As rental values remain relatively low compared to other European cities, international retailers are prepared to pay higher rents, thereby chasing local, often smaller players to secondary streets. The highest rental levels can be found in Brussels and Antwerp
Dimensions in commercial real estates are expressed in square metres. Zoning is applied when valuating a property: the first 10 metres of the shop are evaluated as zone A, the next 10 metres as zone B and the remaining floor area is evaluated as zone C. The ground floor is evaluated at a higher level than upper floors or basements. These are evaluated at one third of the ground floor, unless automatic stairs are available, in case they are evaluated at 50%. The length of the window surface is another very important factor in the valuation of a commercial property.
Market transparency
There is a certain degree of transparency on the market, however details on rental values and key money are often kept secret.
Rent payment
Rent is generally due monthly, but might be charged quarterly.
Rent escalation / Rent review
A rental review can be proposed by the landlord, as well as by the tenant every three year period in case the rental price is 15% higher or lower then the market value. Rents are every year subject to indexation.
Tenants' covenant
The covenant is of key importance to all landlords. Usually the covenant takes the form of a bank guarantee of three to six months. More and more landlords request for a bank guarantee on first appeal.
Service Charge
No service charges are as a general rule due for high street shop units. Services charges are relevant in shopping centres, usually at an approximate rate of 115 euro/m²/year (including promotion costs).
Property Taxes and Other Costs
The commercial leases stipulate that property taxes are to be paid by the tenant once a year and they are generally equivalent to 1,5 months rent. Leases are, as a general rule, not subject to VAT, except in shopping centres, where rents are split in two parts: a small part is rent without VAT and the other part is rent with VAT. The VAT is 100% reclaimable.
Agents Fees
Landlord and tenants each employ their own consultants.Each will take responsibly for their own fees.They will expect to pay a fee equivalent to 15% of the annual base rent and about 5% of any key money paid, excluding VAT.
Incentives
Rent free and capital contribution is not common in retail transactions.
Lease Length and Term
Normal lease terms are nine years, with the possibility of renewing the lease three consecutive times with nine years.The tenant can terminate the lease every three years, taking into account a notification of six months. After every nine year period, the tenant has to request a lease renewal following a legal procedure.
Selling a lease
A lease can be sold when the new tenant is exercising the same kind of activity as the original tenant. The landlord’s consent is only necessary if the new tenant is operating another activity. Subletting on the other hand is only possible with the landlord’s consent.
Repairing Liability
Large reparations, touching the structure of the building are the landlord’s responsibility.
Alterations to Shop Interior and Exterior
Any alternations to the exterior of the property need the authorisation of the tenant and require building permissions from the local authorities. The tenant is free however, to make any changes to the interior of the property that are necessary for the exercise of the activity
