The Ile-de-France Office Rental Market - January 2021

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2020 recorded a historic decline in take-up. With a total take-up of only 1.3 million sq m in the Paris Region, the market has contracted by -45% in one year, and this despite two major transactions of 126,000 sq m (TOTAL in La Défense) and 83,000 sq m (ENGIE in La Garenne-Colombes).

Large surface leases were most significantly impacted by the decline. Only 21 transactions of more than 5,000 sq m were signed in the Paris Region in 2020, versus 72 transactions in 2019 and an average of 65 per annum, i.e. a -55% decline. Transactions of 0 to 5,000 sq m suffered a more limited fall of -39%.

Overall, transactions within Paris have fallen by -48% compared with 2019. Tertiary districts have suffered most, as take-up has dropped by -49% and there has not been a single signature for more than 5,000 sq m in this sector. Only 5 transactions of more than 5,000 sq m were signed in the CBD, versus 12 last year. However, a few small and medium-sized prime rent transactions were signed, and even reached €930/sq m/year for refurbished buildings.

Vacancy rates have increased significantly. Although the Paris region market remains balanced with a 6.3% vacancy rate, it could easily tip into oversupply.

Incentives have generally increased across all surface areas, and particularly in sectors where supply is becoming abundant. Rents in La Défense have started to be revised.

Average rent for new space has generally started to fall slightly in tertiary districts and the Western business district. It has however continued to rise in Paris CBD, primarily due to the number of leases signed for top rent and the low number of transactions.

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2020 recorded a historic decline in take-up.

Géraldine LATHAM

Key figures January 2021

Take-up in Île-de-France region per quarter ​

Source: MBE Conseil according to Immostat

Take-up in Île-de-France region per quarter  ​

  • Take-up totalled 1,321,000 sq m, i.e., a -45% decline compared with 2019 and with the ten-year average of 2,299,000 sq m pa. Q4 2020 was less impacted by the decline (-40%) than the two previous quarters, which suffered considerably from the effects of the first lockdown.

 

Take-up in Île-de-France region by size

Source: MBE Conseil according to Immostat

Take-up in Île-de-France region by size

  • Take-up of space greater than 5,000 sq m has collapsed: -55% y-o-y, despite the signature of 2 exceptional transactions of 126,000 sq m (TOTAL in La Défense) and 83,000 sq m (ENGIE in La Garenne Colombes). 21 leases were signed for space of more than 5,000 sq m, compared with 72 the previous year.
     
  • The <5,000 sq m segment was more resilient: take-up fell by only -36%, and rebounded slightly in Q4 2020.

Take-up in Île-de-France region by geographic area

Source: MBE Conseil according to Immostat

Take-up in Île-de-France region by geographic area

  • Paris recorded a 48% yo-y decline.
     
  • In Paris, tertiary districts suffered most, and did not record a single transaction of more than 5,000 sq m. In the CBD, 5 leases for more than 5,000 sq m were signed (versus 12 in 2019).
     
  • TOTAL's 126,000 sq m lease enabled La Défense to record a 32% increase. Without this transaction, La Défense transactions would have fallen by 53%, with only 3 transactions for more than 5,000 sq m signed in 2020.
     
  • Take-up in the Western business district and Eastern district fell considerably (-73% and -72% respectively), and they did not record a single transactions for more than 5,000 sq m.

Vacancy rate in Île-de-France

Source: MBE Conseil according to Immostat

Vacancy rate in Île-de-France

  • Vacant space continues to increase in the Greater Paris Region: +36% compared with the end of 2019. The market is precariously balanced with a 6.4% vacancy rate, and could easily become oversupplied, as is already the case in La Défense (11.2%) and the Western business district (7.9%).
     
  • Vacancy rates are rising across all sectors, with a marked increase in the Paris CBD where it rose from 1.6% to 4%, although the market remains tight.
     
  • In areas outside of the business district, all sectors have recorded a vacancy rate increase.

Evolution of average weighted rental values for new buildings

Source: MBE Conseil according to Immostat

Evolution of average weighted rental values for new buildings

  • Vacant space continues to increase in the Greater Paris Region: +36% compared with the end of 2019. The market is precariously balanced with a 6.4% vacancy rate, and could easily become oversupplied, as is already the case in La Défense (11.2%) and the Western business district (7.9%).
     
  • Vacancy rates are rising across all sectors, with a marked increase in the Paris CBD where it rose from 1.6% to 4%, although the market remains tight.
     
  • In areas outside of the business district, all sectors have recorded a vacancy rate increase.

Selected major transactions over 5,000 sq.m in Q4 2020

Significant transactions for spaces - January 2021
TENANT/PURCHASERLETTING/TRANSACTIONSPACE (sq. m)ADDRESSLOCATIONCONDITION
NEUFLIZE OBC (ABN Amro)L8 900121 Boulevard HaussmannPARIS 08SECOND HAND
ENGIEL83 138Campus Harmony - 18 rue des FauvellesLA GARENNES COLOMBESNEW
NEXITYL25 000Reiwa (ex-Colisée 1) - 67 rue AragoSAINT OUENNEW
EUROPE ASSISTANCEL13 000Le WilloSAINT DENISSECOND HAND
AIR LIQUIDEL6 260Symbiose - 46-48 avenue Victor HugoBAGNEUXNEW
ADPL11 144Belaïa - Coeur d'Orly 1ère tranche - Av de l'EuropeORLYNEW
Source: MBE Conseil

Selected major transactions over 5,000 sq.m in Q4 2020