Over the full year 2016, office take-up in Île-de-France came to 2,410,000 m². It saw marked growth over one year (+7%) and exceeded its 10-year average (2,280,000 m²) for the first time since 2012. “The segment of large units (over 5,000 m²) bounced back (+23%) to around 900,000 m² across 65 transactions. The market for small and medium-sized units (less than 5,000 m²) stabilised at a particularly high level, exceeding 1.5 million m². Within these overall impressive figures, there are nevertheless major regional disparities, notably with a particularly high share of take-up in Paris (46%) as well as a record level at La Défense, with 275,000 m² transacted (+93%)” notes Guillaume Delattre, Vice-President of BNP Paribas Real Estate Advisory France.
The office vacancy rate in Île-de-France has fallen significantly in the space of a year, from 7.4% to 6.7% as of January 1, 2017. The steepest fall in supply was in the capital, where the vacancy rate now stands at just 3.3%. This has prompted a sharp increase in Parisian rents, particularly in the Central Business District (+9% on average over the last two years) which has also seen more moderate incentives (16%). Conversely, as supply is still abundant in the Western Crescent (12.2%), headline rents have not moved by much and incentives remain high in both Péri-Défense (27%) and on the Southern River Bend (23%).
There was a sharp increase in supply of offices under construction to 1.1 million m² as of January 1, 2017 (+38% over one year), throughout the Paris region, boosting completions available for take-up in 2017 and 2018 in most districts. “In this context, the fall in the vacancy rate is likely to give way to upward pressure on office availability in Ile-de-France in 2017. However, speculative building intentions are already falling, enabling us to rule out any ballooning of supply” indicates Richard Malle, Head of Research for BNP Paribas Real Estate.
Against a global backdrop full of economic and geopolitical events, the French real estate market confirmed its appeal, with about 30% of investments made by international buyers, notably US, British and Chinese. “Investment in commercial real estate in France came in at € 30.4bn over 2016, making it the third best year ever, not far behind 2015 (€ 32bn) and 2007 (€ 31bn). The mega deals continued throughout 2016, with about 80 transactions for over €100m” observes Laurent Boucher, Chairman of BNP Paribas Real Estate Advisory France. In Q4 2016, there was little change in prime office yields in Paris CBD (3.15%) or the Western Crescent (3.65 %), but they narrowed in La Défense (4.75%) as well as the Inner Rim (4.35%).