Q3 2021 confirmed the office market’s recovery in the Paris region. Take-up increased by 79% compared to Q3 2020.
However, it remains below the ten-year average. Companies are reducing the size of their offices due to the increase in remote working, and are also taking a long time to finalise decisions in this post-health crisis context.
Annual take-up should total 1.7 million sq. m, i.e. at least +20% compared to 2020, but well below the 2,400,000 sq. m average recorded between 2015 and 2019.
42% of take-up is in Paris. The <5,000 sq. m segment is very active and has increased by 57% in Paris (+89% in Paris CBD).
Large transactions are returning, with the exception of those >20,000 sq. m.: 36 leases for more than 5,000 sq. m have been signed since the beginning of the year, vs. a total of 21 in 2020.
Vacant space has fallen slightly in Q3 2021 thanks to this renewed demand and the slowdown in project completions. It peaked in Q2 2021 at more than 4 million sq. m.
Vacancy rates have risen y-o-y across all sectors; however, Paris experienced a quarterly decline as the vacancy rate fell from 4.8% in Q2 to 4.5%.
Average rents for new buildings have proven resilient given the context (and even increased in Paris CBD to €824/sq. m). This excludes La Défense, where rents have been revised downwards. Rents for used buildings are falling across all sectors outside the CBD.
Incentives are still the key variable. For large transactions, incentives remain very high at 27.2%; they have also increased for the 1,000 - 5,000 sq. m segment to 24.4%.

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Q3 2021 confirmed the office market’s recovery in the Paris region. Take-up increased by 79% compared to Q3 2020.

Géraldine LATHAM

Key figures October 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  ​

  • Q3 2021 take-up totalled 438,700 sq m, i.e. +79% compared to Q3 2020.
     
  • This points to the market recovering, even if take-up remains below the long-term Q3 average, i.e., 508,200 sq m for 2001 - 2021.

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

Source: MBE Conseil according to Immostat

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

  • Only leases >20,000 sq.m have declined compared to 2020.
     
  • 36 leases >5,000 sq.m were signed totalling 368,000 sq m (compared with 15 in the first 9 months of 2020 and 21 in 2020). Although this is an improvement on 2020, it is still 35% less than the 10-year average;
     
  • Take-up for small and medium-sized space clearly improved (+31%), and showed a smaller decline (-11%) compared to the ten-year average.

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
 

  • Only Paris business districts and La Défense have experienced a decline in take-up. However, if we reconsider 2020 take-up in La Défense and exclude the mega transaction of TOTAL’s lease for THE LINK building, take-up increase would total 58%.
     
  • Paris remains the most active sector, and has attracted 42% of all take-up since the beginning of the year. The market for space <5,000 sq m was particularly active (+57%).
     
  • The western business district accounts for 22% of all take-up, with 247,000 sq.m.
     
  • In suburban areas, excluding business districts, take-up was driven by 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

  • Vacancy rates have risen y-o-y across all sectors; however, Paris experienced a quarterly decline where the vacancy rate had risen to 4.8% in Q2 2021.
     
  • The annual vacancy rate increased slightly in the Paris CBD to 4.3%, having risen to 5% in Q2.
     
  • In La Défense, the vacancy rate continued to rise, reaching 14.2% with the completion of LANDSCAPE;
     
  • The vacancy rate increased very slightly in the rest of the western business district, to 8.5% vs. 8.1% in Q2.

Evolution of average weighted rental values for new buildings

Source: MBE Conseil according to Immostat

Evolution of average weighted rental values for new buildings

  • Rent rises for new builds in the Paris CBD continues with a top rent of €930/sq.m. One lease >5,000 sq.m was signed for €900/sq.m on Rue François 1er in the RENAISSANCE building.
     
  • In the western CBD, there has been a very moderate rise. Rents in La Défense have fallen, whereas rents remain high in Neuilly-sur-Seine (€622/sq.m for 168 CHARLES DE GAULLE/AG2RLAMONDIALE) and Issy-les-Moulineaux (€520/sq.m for ICADE's FRESK).

 

  • In the suburbs, rents have risen mainly as result of large contracts for new buildings in the Péri-Défense (Bois-Colombes) and the Emerging North District (Clichy, Saint-Ouen).

A selection of large leases >5,000 sq.m signed in Q3 2021:

Significant transactions for spaces - October 2021
TENANT/PURCHASERSPACE (sq. m)ADDRESSLOCATIONCONDITION
NEWEN (GROUPE TF1)6 434123 Boulevard de GrenellePARIS 15NEW
B2V GESTION ASSOCIATION5 582Tour Alto LA DEFENSENEW
PARIS SANTE CAMPUS13 500Fresk ISSY LES MOULINEAUXNEW
DOC CITY6 154 Le FranklinSURESNESSECOND HAND
SAGEMCOM19 533AlphabetBOIS COLOMBESNEW
SAMSUNG9 080So PopSAINT OUENNEW
AIR LIQUIDE INDUSTRIE6 031SymbioseBAGNEUXNEW
CIC15 700Centre d'affaires Paris VictoirePARIS 09SECOND HAND
SANOFI9 207GreatPARIS 17NEW
ALLEN & OVERY6 600Le RenaissancePARIS 08NEW
FACEBOOK5 064#CloudPARIS 02SECOND HAND
SNCF32 500HAMØ - Tranche 1SAINT DENISNEW
Source: MBE Conseil

A selection of large leases >5,000 sq.m signed in Q3 2021: