Office Rental Market - February 2019

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After a particularly active H1 raised hopes for an increased take-up, take-up in fact decreased by 5% at the end of 2018. It totalled 2,504,000 sqm, i.e., an excellent total well above the ten-year average (2,294,000 sqm).

 

Take-up decrease is a result of fewer transactions for more than 5,000 sqm, which declined by 14% compared with 2017, as well as the significant drop (-34%) in transactions in excess of 20,000 sqm.

 

Only the 1,000-5,000 sqm surface area segment remains dynamic and continues to grow.

 

The take-up decrease is affecting Paris (-6%) and especially Western business districts (-28%).

 

Vacancy rates have again dropped compared to 2017 across all sectors. Property is particularly scarce in Paris, where the vacancy rate is currently at 2.2%. Average rent for new buildings has increased across all sectors, and has reached €711/sqm in the CBD.

 

Our vision of the office rental market
The view of Géraldine LATHAM

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After a particularly active H1 raised hopes for an increased take-up, take-up in fact decreased by 5% at the end of 2018. It totalled 2,504,000 sqm, i.e., an excellent total well above the ten-year average (2,294,000 sqm).

Géraldine LATHAM

Key figures February 2019

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

Source : MBE Conseil according to Immostat

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

  • After an increase in take-up across four successive years, annual take-up has fallen by 5% compared with 2017, with a 23% decrease in H2 2018;
     
  • At 642,000 sqm, Q4 2018 take-up decreased by -26% compared with Q4 2017. Q4 2017 was an exceptional quarter with a take-up of 874,000 sqm, the highest take-up in 15 years;
     
  • Yet despite the decrease, take-up remains comfortably above the ten-year average (2,294,000 sqm).

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

Source : MBE Conseil according to CBRE

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

  • 2018's decrease is primarily the result of a decline in transactions in excess of 20,000 sqm, which decreased by 34% y-o-y;
     
  • Over the course of the year, transactions in excess of 5,000 sqm decreased by 14% y-o-y (982,000 sqm versus 1,144,000 sqm in 2017);
     
  • We have recorded a significant decrease in take-up (at least 30%) across all surface area segments in excess of 5,000 sqm during Q4;
     
  • Only the < 5,000 sqm segment remains dynamic and has grown since 2017, particularly the 1,0005,000 segment.

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

Source : MBE Conseil according to CBRE

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

  • Take-up has decreased by 6% in Paris, which reflects the annual decrease observed in the greater Paris Region;
     
  • It has however clearly decreased in the Western business districts: 28% in La Défense and 29% in the rest of the Western CBD;
     
  • In this context, the PériDéfense sector has jumped ahead with 3 transactions of more than 25,000 sqm, which enabled the area's take-up to increase by +46%;
     
  • The Inner Rim South and East, and the Outer Rim also remain buoyant.

Vacancy rate in Île-de-France

Source: MBE Conseil according to Immostat

Vacancy rate in Île-de-France

  • Vacancy rates have been dropping across all sectors compared with 2017, reaching their lowest levels in 10 years;
     
  • In the Paris and Western business districts, property scarcity continues: the vacancy rate for Paris CBD is 1.7% and 5% for La Défense;
     
  • Parisian business hubs are the only areas where vacancy rates increased to 3.5%.

Evolution of average weighted rental values for new buildings

Source: MBE Conseil

Evolution of average weighted rental values for new buildings

  • Average rent for new buildings exceeded the €700/sqm threshold, rising to €711/sqm in the CBD;
     
  • Rent in the Western CBD has increased thanks to a few high rent leases (CRYSTAL PARK in Levallois and Nestlé in the SHIFT building in Issy-les-Moulineaux);
     
  • Rent for new buildings in suburban areas has also risen, primarily thanks to transactions exceeding €400/sqm for some buildings (€430 in Montrouge for the MAGNETIK; €420 in Nanterre for the ORIGINE).

Selected major transactions over 5,000 sq.m in Q4 2018

Significant transactions for spaces - Février 2019
DATETENANT/PURCHASERLETTING/TRANSACTIONSPACE (sq. m)PRICE € / sq. mADDRESSLOCATIONCONDITION
Q4 2018GROUPE ATLANTICL8000OsmoseARCUEILNEW
Q4 2018HILTIL10442470AntaresBOULOGNE-BILLANCOURTSECOND HAND
Q4 2018VALEOT20702Quartier de la pointe du LacCRETEILNEW
Q4 2018SEQUENSL10400confBe IssyISSY LES MOULINEAUXNEW
Q4 2018AUTORITE BANCAIRE EUROPEENNEL5336Tour EuroplazaLA DEFENSESECOND HAND
Q4 2018MBDAT17400Rue Descartes, Réaumur et NewtonLE PLESSIS ROBINSONNEW
Q4 2018HERMESL6283confCanopyLE PRE SAINT-GERVAISNEW
Q4 2018WPPL27883520EuropaLEVALLOIS-PERRETNEW
Q4 2018CONFIDENTIALT11212AllMONTROUGESECOND HAND
Q4 2018CONFIDENTIALL5300ConfidentialORSAYNEW
Q4 2018CHANELT12012242263 - 5 Boulevard de la MadeleinePARIS 01SECOND HAND
Q4 2018LE BON COINL7894700UFO - 22 rue des jeuneursPARIS 02NEW
Q4 2018LVMHL7335Bayard SeinePARIS 08SECOND HAND
Q4 2018FRESHFIELDL62277 avenue de MessinePARIS 08NEW
Q4 2018ESMAL9084550I BoxPARIS 12NEW
Q4 2018CONFIDENTIALL7397PARIS 12NEW
Q4 2018ADOBEL5831720Code - 94 rue LauristonPARIS 16NEW
Q4 2018WE WORKL7500M - 253 bd PereirePARIS 17SECOND HAND
Q4 2018UBISOFTL16400FlorescoSAINT MANDENEW
Q4 2018RENAULT SAST178261 avenue du GolfSAINT QUENTIN EN YVELINESNEW
Q4 2018ORANGEL15000250NativeSAINT QUENTIN EN YVELINESNEW
Q4 2018ENEDISL6700220Proxima VSAINT QUENTIN EN YVELINESNEW
Source: Immostat

Selected major transactions over 5,000 sq.m in Q4 2018