Luxembourg commercial real estate initiatives 2011

RealCorp’s winter newsletter, Hiver 2010-11 (in French), is now available for download. The editorial content is summarised below in English, but please refer to the newsletter itself for statistical graphs and for photographs and details of the excellent buildings on offer at the beginning of 2011. This new year we remain cautiously optimistic for the following reasons:

Firstly, vacancy rates in Luxembourg decreased slightly (7.4% in Q4 2010 against 8.2% in Q3 2010). This should allow rents to stabilize, as they have already done in the business districts of the CBD and Kirchberg. Average headline rents (contractual rents) decreased only very slightly in Q4 2010, and net effective rents are still accessible (lower by 10-15% than contractual rents on average). If vacancy rates continue to decline, as expected in 2011, downward pressure on rents will cease and the gap between headline and net effective rents could reduce.

Secondly, registered demand for space increased somewhat in the second half of 2010 while the fragile economic climate and delays in reaching decisions meant many transactions were concluded only in the last quarter. Overall, take-up in the Luxembourg market in 2010 was at a level slightly higher than, but still comparable to, that of 2009, at around 115 000m².

Despite slight market improvements over the latter part of 2010, it is still not certain that the real estate market will recover sustainably (remember that the end of 2009 also suggested a possible improvement). Luxembourg property practitioners thus continue to seek solutions to revive the market. As in other European markets, some have focused on developing “Green Buildings”, with no fewer than a dozen green projects in Luxembourg for the next three years, totalling about 80 000m² to be completed by 2013.

As its name implies, the primary purpose of the “Green Building” is to reduce environmental impacts by rationalizing energy expenditures through specific techniques such as:

• Use of solar panels
• Geothermal energy (heating and cooling soil)
• Waste management
• Recovery of rainwater
• Better management of costs associated with building use

A “Green Building” also offers better occupant experience than buildings of traditional construction, thus contributing to the health and wellbeing of workers through:

• Natural lighting
• Better acoustics with noise reduction
• Improved quality of ambient air
• Ideal working environments

All these innovations will allow future tenants to:

• Control their spending through substantial savings (e.g. amount of common costs);
• Evolve in a framework in line with the welfare of the environment and their employees.

Many projects are now being built to attain valued eco-certificates. Stargate, One on One and Charlotte, all three located in the Centre, all have BREAM certification “Very Good”. Recent buildings such as Cubus in Howald (see newsletter front page), Vertigo (first in Luxembourg to be certified) at the Cloche d’Or, or the Serenity on Strassen were also awarded the highest certification level labels (see the newsletter’s Special File on Green Buildings).

DIFFERENT ECOLABELS

The LEED (Leadership in Energy and Environmental Design), issued by the USGBC (Green Building Environmental Council of the United States), confirms that a building or a community has been designed and constructed using strategies to improve performance by saving energy, treating water, reducing CO2 emissions, and improving indoor environmental quality, etc. Certification levels: Certificate, Silver, Gold, Platinum.

BREEAM (Building Research Establishment Environmental Assessment Method) is the oldest British standard and most used worldwide. It is the standard reference in terms of sustainable construction. BREEAM has a special advantage in that it can easily be adapted to local regulation.
Certification levels: Pass, Good, Very Good, Excellent, Outstanding.

NF Bâtiments Tertiaires – Démarche HQE ® (High Environmental Quality) certification for commercial buildings is issued by Certivéa, distinguishing in France and abroad buildings whose environmental performance and energy reflect best practices. This certification covers the phases of planning, design and construction for new buildings, as well as those undergoing major renovation and refurbishment. Certification levels: Pass, Good, Very Good.

The DGNB (Deutsche Gesellschaft für Nachhaltige Bauen eV/German Sustainable Building Council), one of the leading certifiers in the world, promotes environmental protection, and protection of health and socio-cultural objects.
Certification levels: Bronze, Silver, Gold.