Belgian coworking market: evolution 1990-2024

Detailed analysis of all Belgian business center and coworking operators. We analyse their figures over the last 40 years, including an analysis of their accounts over the last 20 years.

1. fin POWER Presentation at the Belgian Workspace Association, 2024 Available on ‘SlideShare’ for every-one The flex office market in Belgium Update on the coworking sector and its operators in Belgium B.W.A. Conference , 10 October 2024 1

2. History and evolution of # flexible workspaces Evolution within the Belgian Office market The flexible office market : actual situation Key financials of the flexible offices in Belgium Topic of the year: management - contracts Conclusions INTRODUCTION 2

3. Flexible office market in Belgium : Slides available on internet What was a business or coworking-center ? Was ‘fundamentally’ different in 2015 : business centers were ‘bricks and morter ’, selling workplaces – coworking was based upon community-building, selling memberships. Actually, all of them evolving towards ‘flexible offices’ – covering both models. We still make a distinction, but it becomes more and more difficult to do that. In our analysis, we use define Business center : full-time reception available – cfr . VAT-regulation for business centers Coworking-center : focus on ‘community’, community manager, no full-time reception necessary Serviced offices = full time reception services or community-manager Used figures : Own data-base of active centers Published financial data (Belgian National Bank) INTRODUCTION “ Definitions and limitations” 3

4. I. HISTORY “A fast-growing market with a rich history ” First ‘hype’ of business centres was between 1985 and 1990. First Regus-office in 1989 in Brussels Then, 90-2005 : more closings than new centres ! From 2005 on : : start of the ‘New Way of Working ’ (mobile devices), first ‘motor’ of growth (5-10%/year) From 2012 on: additional growth of our market by the coworking-movement – growth rate of 15-20 %/year Thanks to the ‘ Wework -hype’ Covid en energy-crisis have ‘stopped’ our marketgrowth from 2021 untill 2024 ! In 2024 : limited ‘net growth’ of number of business centres and coworking spaces in Belgium Net growth of ‘business centres’, decrease in ‘coworking-centres’ 4

5. II. BELGIAN OFFICE MARKET Market share of ‘coworking’ 5 Office-stock in Belgium Stable/decreasing volume with appr. 25 Mio office space Market of ‘larger cities’ very well documented Estimate of regional cities and total market in collaboration with CBRE. Total ca. 25 Mio m², accommodation for > 1 Mio collaborators (employees + civil servants in office environments) Business center & coworking – locations : More than 500 locations in Belgium, with an average of 1,624 m² surface Both account for 3,36 % of the total office space in Belgium The flexible office-market covers more than 3 % of the total office market in Belgium.

6. II. BELGIAN OFFICE MARKET Evolution of office and coworking market’ 6 The office market is shifting towards the ‘serviced offices’ Flexible Office market Flexible contracts (month/year/…) Focus on services and community Office market ‘long term contracts’ Limited flexibility Limited services (facilities) Decreasing demand due to NWOW Decreasing market Increasing market

7. II. BELGIAN OFFICE MARKET Expected evolution 2025 – 2035 Office-market : stable evolution or a decrease of 1 % pro year ? After growth of 1-2 % from 90-2010 and stable evolution from 2010 on. Serviced office market : increase of 10 or 15 % pro year ? A fast growth market or a new hype ? 7

8. Total > 500 “serviced office locations” in Belgium : IWG is the biggest ‘operator’ with appr. 100,000 m², followed by Officenter and Silversquare. > 20 operators have 3 or more centers  increasing professionality. > 50 % of the market remain ‘stand-alone initiatives In Belgium, we have a relatively fragmented market, where less then 50% of the centers is operated by or within a ‘group’. III. FLEXIBLE OFFICES IN BELGIUM 3.1. Operators of business and coworking -centers 8

9. IV. FINANCIAL DATA OF COWORKING MARKET 4.1 Turnover and profitability evolution 2020 - 2022 In 2023, our market has recovered to a break-even operational result – from a > 10 Mio loss in 2020. Turnover growth of > 10 % pro year The total EBITDA increases with 20 % to nearly 60 Mio The EBITDA margin increases towards 20 % The substantial operational losses of our market has been absorbed, and we have reached the break-even level over all players in the market. We can expect for the coming years a further turnover growth and a return to ‘substantial’ profitability of our market by 2024-2025 Our market has been hit hard in 2020 – 2022, but the figures of 2022 and 2023 give us good hope that our market will return to profitability the following years. 9

10. IV. FINANCIAL DATA OF COWORKING MARKET 4.2. Turnover evolution Turnover Total market turnover has reached nearly 330 Mio in 2023, a third uear of more than 10 % turnover growth The turnover grows faster then the number of locations – which indicates an increase in occupancy and/or increase in prices. Growth rhythm The ‘market’ growth in turnover has been fluctuating between 10 an 20 % from 2007 on. After the ‘crisis’ of 2020-2022, we see actually a return to a 10 % yearly growth. The question will be if we will return to the 20% expansion rate of the 2013-2019 period. After a ‘decline’ in turnover in 2020 due to covid, we see from 2021 on a renewal of our growth path towards 10-20 % turnover growth. 10

11. IV. FINANCIAL DATA OF COWORKING MARKET 4.3 Operational profit (EBIT and EBITDA) Our market had limited profit in its ‘expansive’ years 2013-2019, due to the start-up costs of new locations In 2020 and2021, covid has hit our market very hard, with > 15 Mio ‘losses’ in 2020 Since 2021 we see a yearly recovery of our profitability In 2023, our market was operationally profitable, and had an EBITDA increased to nearly 60 Mio € More than our tuernover 10 years ago The main reason for this evolution is that the growth of our turnover (ca. 10 % pro year) is higher than the growth of the number of locations (. We see clearly a return to break-even in 2023 – but it will take some more years to reach our ‘normal’ profitability (5% EBIT, 25% EBITDA) 11

12. V. Topic of the year Towards management contracts ? The ‘rental model’ is too expensive and too risky for operators A management contract could make a operator 20 % more competitive, where the net rent for the landlord will only be 10 % lower. Mainly due to the win-win by combing and not ‘adding’ management costs and occupancy-risks 12

13. Conclusions The business and coworking market are ‘integrating’ more and more towards a service-office market, filling more the 3 % of the Belgian office market The number of ‘service office centers’ has remained stable around 500 locations in 2024. We expect that in 2025 a renewal of the growth of our sector with a growth rate of 10-20 % a year. This could mean that our market would occupy to 10 % of the office-market by 2030. It can be expected that the demand will grow faster, but it remains a question if the actual market-structure will be able to respond to this greater market demand. This should have a positive effect on the occupation rate en profitability of the coworking-market the following years. The profitability of the market was under much stress due to the covid-crisis, but the limited growth of the offer (number of coworking spaces) combined with an increased demand (= turnover) has turned our market to operational profitability in 2023 ! 13

14. Annexes Advantages of scale in our market Penetration of flex offices pro city Different ‘business models’ pro segment 14

15. Annex 1 : Advantages of scale in our market There are clearly a lot of advantages of scale in the business center market Commercially (website, referrals, …) Purchasing power, also on management-level Strategically and ‘best practices’ But, the medium turnover of a business center is declining …. And, we have not included the coworking-centers in this comparison … We have put the ‘profitability’ of a center compared with the ‘size’ of each center. Profitability = profit margin on turnover Size = turnover by center The ‘regression-line’ clearly demonstrates The substantial losses that a business center makes in his 1-2 starting years (between 100 and 500 k€) A ‘break-even’ level of a ‘median’ center around 500 k€ turnover Above 600-700 k€ turnover, most of the business centers are profitable. 15

16. Medium ‘penetration’ is 3,5% in Belgium Brussels has with 2,5 % a ‘low’ penetration of BC/CW-centers Most cities have between 3 and 5 % of ‘service offices’ (incl. Antwerp, Gent, Brugge , Aalst and Leuven) Hasselt, Turnhout, Geel and Nivelles have a more then 5 % market penetration of serviced offices Namur, Roeselare and Kortrijk are cities with still less then 2 % of their offices operational as serviced offices. The local presence of BC/CW is very different for the main cities in Belgium, due to some strong, local initiatives (or the absence of… ) Annex 2 : Flexible offices by location Sources: CBRE, Finpower 16

17. Annex 3 : Different financial models in our market Asset – efficiency of ‘International market’ is very high – no investment in ‘own’ buildings Private and public sector operators mostly have invested in the building Financial leverage of public sector very limited (cash > loan volume) The ‘international’ operators focus optimizing their financial leverage with ‘renting’ their buildings, the private (partially) and public sector (mainly) focus on owning the real-estate. 17