Office Rental Market - July 2019

DOWNLOAD 2017 CATELLA PROPERTY'S ANNUAL STUDY

* required fields
pdf-cover

The first half 2019 has been dynamic with a take-up of more than 1.1 million sqm in the greater Paris region. However this represents a 20% y-o-y decrease. 
 

This is mainly due to fewer large space transactions (-41%) above all the collapse of transactions for very large surface areas in excess of 20,000 sqm (-60%).
 

The slowdown has affected Paris (although Paris CBD has remained resilient) and inner rim areas, with the exception of the North.
 

Rents continue to increase in the CBD. Average rent for new buildings reached a record €726/sqm, which has been unheard for more than 25 years.
 

The difference between average rent for new buildings and average rent for used buildings is shrinking. Rent for used buildings exceeded €600/sqm, levelling out at €615/sqm.
 

In other sectors, rents are mostly stabilising. Vacancy rates remain low. Available large space decreased to 318,000 sqm.

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

SUBMARKETS MAP

The first half 2019 has been dynamic with a take-up of more than 1.1 million sqm in the greater Paris region. However this represents a 20% y-o-y decrease. 

Géraldine LATHAM

Key figures July 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  ​

  • With a take-up of 1,102,000 sqm as of H1 2019, take-up in the greater Paris region decreased by 20% compared with H1 2018;
     
  • This slowdown began at the start of Q1 2019, which recorded a decrease of 23%;
     
  • Take-up for H1 2019 nevertheless remains above the ten-year average.

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

Source: MBE Conseil

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

  • Transactions for large surfaces (in excess of 5,000 sqm) has decreased by 41% y-o-y. and very large transactions for more than 20,000 sqm have all but collapsed;
     
  • However, demand for small to medium surface areas remains relatively stable. It has however decreased for surface areas of 1,000-5,000 sqm. These transactions have decreased for the first time since the start of the year.

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

  • The slowdown is affecting both Paris and its suburbs;
     
  • The only area that has grown is the North, thanks to the largest transaction of the quarter: 30,000 sqm leased to the SOCIETE DU GRAND PARIS in MOODS;
     
  • Central Business District transactions are stabilising thanks to an increase in transactions in excess of 5,000 sqm;
     
  • 6 transactions in excess of 5,000 sqm have been completed since the start of the year in the Centre West of Paris (4 for coworking spaces).

Vacancy rate in Île-de-France

Source: MBE Conseil according to Immostat

Vacancy rate in Île-de-France

  • The vacancy rate has remained stable since Q4 2018;
     
  • At 1.8%, it has fallen under the 2% threshold and continues to decrease in the western business district, excluding La Défense which has experienced a slight vacancy rate increase.

Evolution of average weighted rental values for new buildings

Source: MBE Conseil

Evolution of average weighted rental values for new buildings

  • Rent continues to increase in Paris CBD reaching an average of €726/sqm for new buildings, a record that has not been reached in more than 25 years;
     
  • Rents remain stable in business areas;
     
  • However there has been a significant rent increase in certain Paris neighbourhoods, notably the 9th (excluding CBD), 10th and 11th for average-sized transactions (1,000-5,000 sqm), most signed by digital tech companies;
     
  • Rent in the western business district dropped to €466 due to the absence of transactions for new properties in La Défense;
     
  • In inner rim areas, the decrease is limited to €10/sqm.

Selected major transactions over 5,000 sq.m in S1 2019

Significant transactions for spaces - Juillet 2019
DATETENANT/PURCHASERLETTING/TRANSACTIONSPACE (sq. m)ADDRESSLOCATIONCONDITION
S1 2019SOCIÉTÉ DU GRAND PARISL30000MoodsSAINT-DENISNEW
S1 2019WEWORKL13200Bercy YonnePARIS 12SECOND HAND
S1 2019WOJOL12500Bocador (ex Ilot Gaité)PARIS 14NEW
S1 2019DOCTOLIBL11997Le SémaphoreLEVALLOIS-PERRETNEW
S1 2019MEDIAWANL948846 Avenue de BreteuilPARIS 07NEW
S1 2019HPEL7797SenseLA DÉFENSENEW
S1 2019VALEOL7605Le CortisPARIS 17NEW
Source: MBE Conseil

Selected major transactions over 5,000 sq.m in S1 2019