Office Rental Market - July 2018

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In the first half 2018, Paris region leasing market activity increased by 15% YoY.

 

With a take-up of 1,333,000 sqm, it is the best first half since 2008.

 

This growth is due to a buoyant > 5,000 sqm segment (+24%), with 41 transactions completed during H1 2018. Co-working continues to grow, with 5 new transactions in this period.

 

The leasing market is also sustained by Paris CBD transactions. This market has grown by 10%, and is highly active across all surface area segments. There has been a significant decrease in incentives for small surface areas; in fact, owners often receive several offers for the same property.

 

Vacancy rates have decreased across all Paris region segments, and scarcity is the order of the day in Paris with an overall vacancy rate of 2.4%, and 2.2% in Paris CBD.

 

2018 leasing volume could reach 2.7 to 2.8 million sqm if the current trend continues, i.e. a figure close the records achieved in 2006 and 2007.

 

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

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In the first half 2018, Paris region leasing market activity increased by 15% YoY. With a take-up of 1,333,000 sqm, it is the best first half since 2008.

Géraldine LATHAM

Key figures July 2018

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

Source : MBE Conseil according to Immostat

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

  • Q2 2018 take-up was 644,000 sqm, i.e., an increase of 25% YoY;
  • Take-up reached 1,333 million sqm, which is the best first half since 2008.

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

Source : MBE Conseil according to CBRE

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

  • Highly active large surface area market: +24% increase in leases for properties > 5,000 sqm, with a take-up of 573,000 sqm across 41 transactions (of which 5 were for co-working spaces) in the first half 2018. The 5-10,000 sqm segment increased by 78%, and the 10-20,000 sqm segment caught up, despite an earlier slowdown in Q1;
  • Stability of > 20,000 sqm transactions, with 2 transactions in Q2 (Danone in Rueil, and Nestlé in Issy les Moulineaux).

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

  • Leasing activity in Paris continues to grow with 18 transactions > 5,000 sqm completed in H1 2018 thanks to the CBD (+10%) and particularly the "Other Paris" sector (+30%);
  • The La Défense market has decreased by 6% and the rest of the Western CBD has decreased by 58% since last year;
  • Activity is burgeoning in peripheral areas (excluding business districts): +85% for the Péri Défense sector, with 3 transactions of more than 20,000 sqm in the first half-year, and excellent activity in the Inner Rim East and South and the Outer Rim.

Vacancy rate in Île-de-France

Source : MBE Conseil according to Immostat

Vacancy rate in Île-de-France

  • The vacancy rate has again decreased across all Paris region sectors;
  • Scarcity is intensifying in Paris: particularly in Paris CBD (2.2%);
  • In the Western CBD: the vacancy rate has stabilised in La Défense despite weak take-up, and decreased in the rest of the Western CBD despite a slump in take-up;
  • A rate decrease is also generally widespread in peripheral areas, with the exception of the Inner Rim North and the Outer Rim where the vacancy rate has increased slightly.

Evolution of average weighted rental values for new buildings

Source : MBE Conseil

Evolution of average weighted rental values for new buildings

  • In Paris: average rents for new buildings have increased slightly to €694 in the CBD, and has stabilised in business districts;
  • Rent for new buildings in the Western CBD has increased, and has exceeded the €500 threshold. This is primarily thanks to MSD's 10,000 sqm lease in Carré Michelet and Nestlé's 46,700 sqm lease in the Shift building in Issy-les-Moulineaux;
  • Suburb rental value increase stimulated by the high values of 3 large transactions: Magnetik in Montrouge for €430/sqm, Origine in Nanterre for €420, and Convergence in Rueil for €370; elsewhere rents range from €190 200 (St Quentin, Vélizy), €285 in Villejuif, and €320 (Malakoff, Montrouge).

Selected major transactions over 5,000 sq.m in Q2 2018

Significant transactions for spaces - Juillet 2018
DATETENANT/PURCHASERLETTING/TRANSACTIONSPACE (sq. m)PRICE € / sq. mADDRESSLOCATIONCONDITION
Q2 2018NESTLEL46 752495ShiftISSY LES MOULINEAUXNEW
Q2 2018DANONEL25 100370ConvergenceRUEIL MALMAISONNEW
Q2 2018WE WORKL19 195525Le FrancePARIS 13NEW
Q2 2018AKKA TECHNOLOGIET18 100549Parc de RocquencourtROCQUENCOURTSecond hand
Q2 2018ORANOL14 363270Le PrismeCHATILLONSecond hand
Q2 2018CHRONOPOSTL14 000430MagnetikMONTROUGENEW
Q2 2018LACOSTEL13 826540MAPPARIS 16NEW
Q2 2018WE WORKL11 980570123 Bd de GrenellePARIS 15NEW
Q2 2018WE WORKL11 0927407 rue de MadridPARIS 08NEW
Q2 2018MSDL9 926530Carré MicheletLA DEFENSENEW
Q2 2018KAUFMAN & BROADL9 073440HighlightLA DEFENSENEW
Q2 2018OTISL8 102460Défense PlazaLA DEFENSESecond hand
Q2 2018DISNEYL7 904210Le Bellini - Bât CMARNE LA VALLEENEW
Q2 2018DIOT (Group Burrus)L7 765690PrimopéraPARIS 09Second hand
Q2 2018EPA ORSAL7 405Immeuble ASKIAORLYNEW
Q2 2018MOET HENNESSYL7 385680115 rue du BacPARIS 07Second hand
Q2 2018WE WORKL7 30037-39 ave TrudainePARIS 09Second hand
Q2 2018MUTUELLE SOCIALE AGRICOLET6 3404 890AtriodeGENTILLYNEW
Q2 2018SPIE BATIGNOLLESL6 217305NéonNANTERRENEW
Q2 2018SODDIALL6 205470Le JourPARIS 14NEW
Q2 2018PERIALT5 70011 930Le NeptunePARIS 17Second hand
Q2 2018CHAUMETL5 323740H- 79-81 bd HaussmannPARIS 08NEW
Q2 2018PRIMONIALL5 1626506-12 rue du Gal FoyPARIS 08Second hand
Source : Immostat

Selected major transactions over 5,000 sq.m in Q2 2018