Paris. Research. Office market report - Q Contents. Market Summary

Transcription

1 Research Paris Office market report Contents Paris 2 Ile-de-France map Market breakdown 3 Market data 4 Market Summary With more than 590,000 sq m let in the second quarter of 2008, the office market remains strong in Ile-de-France. The total take-up from the beginning of the year is almost 1.2 million sq m and although this figure is lower than the record years of 2006 and 2007, it still compares well with levels over the last decade. A further sign of market strength can be found in the positive net absorption, an estimated 320,000 sq m over the last six months. Rental activity continues to be driven by large transactions (over 5,000 sq m) which have accounted for 40% of take-up from January Several other big deals are expected to be confirmed in the coming months, and we believe that our forecast of total take-up of 2.4 million sq m remains attainable. Supply is rising slowly, yet despite this, the average vacancy rate of 5.2% in Ile-de-France remains low. Importantly there is a noticeable difference in rates depending on the submarket; the established areas such as central Paris, or the Southern Bend maintain the lowest levels of vacant stock. Due to the strong rental market, particularly in relation to large transactions of good quality offices, the pressure on rising rental values remains. The average rent in Ile-de-France rose from 312 to 318 /sq m per annum in quarter two. This change has become most apparent in the Central Business District where the average has seen a sharp increase of 17/sq m to 547/sq m per annum in just three months. Having seen a large increase in 2007, prime rents seem to have stabilised, although there remain exceptions to this general trend, notably in the 7th and the 15th districts of Paris where the delivery of new buildings with exceptionally high-quality office space has set new benchmarks. The property investment market continues to suffer the consequence of tightening financial markets, with transactions over the past three months totalling 2.1 billion, a similar level to that of the first quarter of In total, 4.6 billion has been invested in Ile-de-France since the beginning of the year. This is far below the 10.9 billion of investment recorded in the first half of 2007 and large transactions (over 150 million) remain notable by their absence. The prevailing wait and see sentiment within the market has led to a re-evaluation of yields. Evidently prime yields are rising and within the Paris CBD they are currently between 4.60% and 4.90%, an increase of almost 100 basis points over the last twelve months. It is likely that this outward movement will make Ile-de-France a more attractive investment opportunity. This should lead to an increase in investment activity in the second half of 2008 with a potential annual investment total of between 10 and 12 billion.

2 2 Paris - Office market report Knight Frank Paris CBD Paris Centre West (excluding CBD) Paris 5/6/7 Paris 12/13 Paris 14/15 Paris 3/4/10/11 Paris 18/19/20 Northern Bend Neuilly Levallois Peri Défense Southern Bend Northern Inner Rim Eastern Inner Rim Southern Inner Rim Southern Outer Rim Outer Rim

3 3 Paris - Office market report Knight Frank Market breakdown as at 08 Area Prime rents Average rents Estimated stock (sq m) Take-up (sq m) in H Vacancy rates (%) Prime yields bands Paris CBD ,692, , % % Paris Centre West (exclu. CBD) ,827,000 39, % - Paris 5/6/ ,221,000 17, % % Paris 12/ ,722,000 23, % % Paris 14/ ,846,000 26, % % Total Southern Paris ,789,000 66, % - Paris 3/4/10/ ,678,000 25, % % Paris 18/19/ ,231,000 15, % % Total North Eastern Paris ,909,000 40, % - Total Paris ,217, , % ,168, , % % Northern Bend ,517,000 33, % % Neuilly Levallois ,363,000 50, % % Péri Défense ,853, , % % Southern Bend ,274,000 79, % % Total Western Crescent ,007, , % - Northern Inner Rim ,990,000 74, % % Eastern Inner Rim ,305,000 47, % % Southern Inner Rim ,063,000 65, % % Total Inner Rim ,358, , % - Total Outer Rim ,057, , % - Total Ile de France ,807,000 1,175, % - /Orie/Immostat Key leasing transactions ( 2008) Asset Sub-market Tenant Size (sq m) Rent Tour T1 & immeuble B, Courbevoie Suez Energie 67, Terrasse 13, Nanterre Peri Défense Axa 17, rue Pierre Brossolette, Malakoff Southern Inner Rim Accor Services 16, rue du Général Foy, Paris 8 th Paris CBD Nexans 6, Rue Cambon, Paris 1 st Paris CBD Foreign bank 1, Key investment transactions ( 2008) Asset Sub-market Purchaser Size (sq m) Price (M ) Perspective Défense, Colombes Northern Bend AXA for a German fund 27, Portfolio (14 assets) Ile-de-France LFPI 53, Cap Sud, Montrouge Southern Inner Rim Commerz Real 13, boulevard Haussmann, Paris 8 th Paris CBD Dutch fund 3, Borromées 3, Saint-Denis Northern Inner Rim Bank Of Ireland 3,

4 4 Paris - Office market report Knight Frank Take up in Ile-de-France ( 2008) Vacancy rate in Ile-de-France ( 2008) 3,500,000 sq m (%) 9.0 3,000, ,500, , , ,000, , , , , ,500,000 Rue Général Foy - Paris 8 th 6,600 sq m let to Nexans 498, , , ,300 1,000, , , , , , , , , , Ile-de-France CBD Prime rents in Ile-de-France ( 2008) Average rents in Ile-de-France ( 2008) Cap Sud - Montrouge 13,200 sq m sold to Commerz Real 300 Paris CBD Paris CBD Ile-de-France Investment in Ile-de-France ( 2008) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 (in million ) Prime yields in Ile-de-France ( 2008) (%) Ile-de-France data Population Paris City 2,168,000 Population Ile-de-France Total Ile-deFrance workforce Unemployment rate Ile-de-France (December 07) 11,491,000 5,750, % Unemployment rate France (Dec.07) 7.50 % GDP Ile-de-France (M ) 500,840 GDP France (M ) 1,792,000 GDP growth France (2007) 1.90 % CBD Paris 12/13 Paris 14/15 Paris 18/19/20 Northern Bend Péri Défense Neuilly/Levallois Southern Bend Northern Inner Rim Eastern Inner Rim Southern Inner Rim Inflation rate France (May 08) 3.30 % Sources : Knight Frank/INSEE/Experian

5 Research Contacts in Paris Philippe Perello CEO France +33 (0) Cyril Robert Director of Research +33 (0) Contacts in London Chris Bell Managing Director, Europe Joe Simpson Partner, International Research Matthew Colbourne Research Analyst Knight Frank Commercial Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independant advice customised to their specfic needs. Knight Frank Research Reports are also availaible at Americas USA Bermuda Brazil Caribbean Australasia Australia New Zealand Europe United Kingdom Belgium Czech Republic France Ireland Italy Poland Portugal Russia Spain Africa Botswana Kenya Malawi Nigeria South Africa Tanzania Uganda Zambia Zimbabwe Asia Cambodia China Hong Kong India Indonesia Macau Malaysia Singapore Thailand The Netherlands Ukraine Knight Frank SNC 2008 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Commercial Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Commercial Research. Knight Frank LLP is a limited liability partnership registered in England with registered number OC Registered office: 20 Hanover Square, London W1S 1HZ.