This Monday, ImmoStat* revealed its Q3 2013 commercial real estate indicators for the Greater Paris Region. Office take-up in Greater Paris stood at 1,302,200 sq m for the first three quarters of 2013; this equates to a 30% fall compared to the first three quarters of 2012.
Marc-Henri Bladier, Managing Director of DTZ Jean Thouard comments: “There was a glimpse of a bright spell in July which saw the best level of transactions of the year, but this was swept away by a complete lack of activity in July and a flat September. Demand is slipping, even stalling and the market is plummeting as a result.”
Jacques Bagge, Head of Agency at Jones Lang LaSalle comments: “One of the key drivers of demand over the last two years has been corporates seeking savings. This driver has completely stopped and companies are now only looking to reduce their real estate costs and are opting to renegotiate leases with landlords who are keen to avoid vacancies.”
“It’s mainly the over 5,000 sq m segment that’s in trouble as it’s fallen by 51% over the last 12 months. Transactions for spaces under 5,000 sq m have shown good signs of resistance and have only fallen by 7%” adds Richard Malle, Research Director, France for BNP Paribas Real Estate.
“The traditional business districts have fared reasonably well, unlike the Inner and Outer Suburbs” explained Roman Coste, Managing Director (Agency) at CBRE.
Result: “Vacancy rates are rising sharply in the Western Crescent and in La Défense and are adding to pressure on rental values” explains Magali Marton, Research Director at DTZ.
According to ImmoStat, take-up for 2013 is expected to come in at around 1.8 million sq m. However, the outlook for 2014 is looking brighter.
“After having fallen in 2013, employment in the Greater Paris Region should stabilise next year. In light of this, office take-up in Greater Paris should reach a low point and an increase in transaction volumes should be seen in 2014” added Richard Malle.
Results on the investment side are much better. The overall volume for the first three quarters of 2013 for the Greater Paris Region stood at €7.9 billion. This represents an 8% increase compared to the first three quarters of 2012.
“Market fundamentals appear to be rather solid, with a plentiful and varied level of supply which is meeting a sustained level of demand which is now more diversified in terms of target assets. The evidence for this is in the reduction of the high concentration of deals in the Capital; since the beginning of the year Paris’s share has fallen to 30% compared to 50% over the same period last year. This shift is benefitting the near outskirts of Greater Paris (with more attractive yields) with transactions for new or recent buildings in areas such as Boulogne, Chatillon, Clichy, Issy, Malakoff, St Ouen and St Denis which saw good activity over the summer. Pressure on prime yields in Paris has therefore fallen a little” comments Nicolas Verdillon, Capital Markets Director at CBRE.
“Major deals are currently underway and acquisition teams are very busy. We expect investment volume to stand at between €10 and €12 billion by the end of 2013” concluded Stephan von Barczy, Head of Investment at Jones Lang LaSalle.
*ImmoStat is an Economic Interest Grouping, Immostat (formed by real estate advisors BNP Paribas Real Estate, CBRE, DTZ and Jones Lang LaSalle).
Translated from an original French article on BusinessImmo.
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