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the PMT document

Property
Market Trends
FRANCE
MARCH - 2014
TABLE OF CONTENTS
INTRODUCTION
4
Main trends
5
Summary data table
THE ÎLE-DE-FRANCE RENTAL MARKET
8
Submarket profiles
10
A sharp drop in take-up
19
Vacancy rates have begun to rise again,
especially in outlying areas
24
Headline rental averages have been relatively
stable except in Paris CBD: the only market
to demonstrate real adjustment.
THE FRENCH INVESTMENT MARKET
28
2013 among the most active
of the past 16 years
30
Increase in single-asset sales over €50 million
32
Despite a downturn, offices still the most
popular investment choice
34
Speculative investments at their lowest level
35
A major increase in investments made
through OPCIs
37
Far greater geographical distribution
39
Prime yields stabilize
CONCLUSION
This report has been written by Catella based
on information from MBE Conseil and Catella Property.
The assessment was concluded on March 2014. This
report is based on information that we believe is reliable.
Whilst every effort has been made to ensure its accuracy,
we cannot offer any guarantee that it contains no factual
errors and accept no responsibility for any liabilities that
may arise as a result of such errors.
Photo credits: Paul Maurer, Gregory Copitet,
Jean-Marc Lavigne, Cyrille Dubreuil, Sacha Lenormand,
Luc Perenom, Francois Renault.
Legally responsible publisher: Monique Benisty
Design by: www.thalamus-ic.fr
Translation by: David Hayhurst
To subscribe to Catella’s research, please email
your request to: [email protected]
Property Market Trends - France - March 2014
MAIN TRENDS
MAIN TRENDS
> The French economy actually performed better
than forecasted in 2013 including an unexpected growth
in fourth quarter GDP. However, the full-year GDP
growth rate, also of 0.3%, can only be described as
modest.
> Growth has been more balanced, reflecting both
rising domestic and external demand. It has been
driven by higher consumer spending, despite rising
unemployment, as well as by a sharp rise in business
investment, despite a continued decline in margins.
Growth has also been stimulated by a rebound in
exports, driven by renewed dynamism within the
Eurozone, particularly late in the year.
> But the potential constraints working against
any substantial rebound for the French economy
are still very strong. The continuing restrictive fiscal
policies, a lack of competitiveness, and the risk of an
overvalued Euro will continue to weigh on France’s
growth potential. Economists widely predict a slight
recovery over 2014, nevertheless, with GDP growth
unlikely to exceed 0.8%. However, improvement is
expected to strengthen in 2015 when growth could
reach 1.1% to 1.2%.
> Employment should continue to improve, but
only gradually, driven by an increase in subsidized
employment and the establishment of the CICE scheme
(Crédit d’Impôt pour la Compétitivité et l’Emploi, or
“tax credit for competitiveness and employment”)
which could also help to generate a general recovery
in margins.
> The property markets have evolved very differently
in this overall climate. Despite a slight rebound in
service-sector employment in Île-de-France, the rental
market has declined by 25% in 2013. In contrast,
the investment market has remained very healthy,
supported by continued substantial liquidity and
weakness in bond rates.
4
> On the rental market, take-up has experienced a
sharp decline of 25%. However, unlike in 2011 and 2012,
the large-surface market has, by far, been hit the hardest.
Demand for large surfaces has decreased by 46%, while
transactions involving small and medium-sized surfaces have
dipped only slightly, by 3%. Three factors have contributed
to this decline in large-surface take-up: a massive drop in
transactions involving public-sector bodies (down 72%
compared to 2012), a sharp decline in turnkey projects,
and fewer transactions involving second-hand buildings.
> Vacancy rates are beginning to rise in certain areas:
vacancy is slowly, yet steadily increasing in the Paris
CBD, but has been increasing strongly in La Défense,
due to the delivery of the first office towers developed
under the area’s Renewal Plan, as well as the return
onto the market of several redeveloped large-surface
buildings. Vacancies have also grown significantly in the
South District, but much less so in the outer suburbs.
However, they have stabilized (though at high levels)
in the rest of the West CBD and in the Boucle Nord,
while falling in the Paris Secondary Business Districts,
in the Emerging North and in the East Districts.
> While the level of supply available within one year in
the form of new and redeveloped surfaces remains high,
future supply levels continue to shrink. The high level
of pre-lettings over the past three years has reduced
future supply in some areas. However, future supply
remains high in La Défense and the rest of the West
CBD. Rising vacancy rates may be only short-term in
most areas, especially if take-up for already delivered
buildings manages to recover.
> Changes in rental values continue to be a paradox.
Despite the sluggish economy and weak corporate
margins, headline rents have managed to remain
relatively stable. The exception to this has been in the
Paris CBD, where the absence of top-value transactions
has resulted in a significant decrease of the average
rents. Adjustments have once again affected economic
values, with incentives having increased.
> The French non residential investment market has
been experiencing a robust 2013. Investment volumes
have been up by 5% from 2012, reaching €17.9 billion.
They have been driven by a significant increase in singleasset sales, while portfolio sales have declined.
> The investment market was both more balanced and
more diversified in 2013. Investment volumes increased
in all categories valued at more than €20 million, mainly
in the €50-to-€100 million range.
> While the office market has remained the most
attractive, the biggest phenomenon of the year has been
the increase in investments in the retail and hotel sectors.
> Geographically, the desire for greater diversification
has influenced activity, with an increased investment
focus on the regions, the inner suburbs and the
West CBD – largely at the expense of the various
submarkets in Paris.
> In terms of investor types, investment funds have
remained the dominant players, due to a remarkable
return to the French market by American funds.
Domestically-listed property companies have also
increased their acquisition activities; OPCIs have been
very successful, and insurance companies and SCPIs
have maintained their presence.
> Prime yields in the office market have been stable
in most markets. The notable exceptions have been
in La Défense, where they have grown, and in the
regions, where they have fallen slightly. Risk premiums
however, have been shrinking both due to a drop in
prime yields generated by high liquidity levels and rising
government bond rates, in a context of low inflation.
This decrease limits the prospects of any further decline
in yields, which are expected to stabilize, or even grow
in some areas.
SUMMARY DATA TABLE
Office market in Île‑de‑France in 2013
TOTAL STOCK
SQ.M
TAKE UP
SQ.M
VACANCY RATE
%
TOP RENT
€/SQ.M/p.a.
PRIME YIELD
%
Paris CBD
8 632 200
446 300
5.80 %
750
4.25 %
West CBD
6 742 500
434 000
11.50 %
580
6.00 %
Paris Secondary BD
3 808 000
131 700
3.20 %
490
5.20 %
Emerging North
2 415 200
97 500
11.20 %
335
6.00 %
East Districts
1 490 000
58 600
7.50 %
295
5.90 %
South Districts
1 697 000
29 100
7.70 %
325
5.75 %
Boucle Nord 92
1 564 600
66 800
14.30 %
420
7.25 %
Greater Paris
55 822 900
1 853 000
7.00 %
Source : MBE Conseil/Catella Property/Immostat
Property Market Trends - France - March 2014 5
01
The
Île-de-France
Rental Market
After the exceptional performance of 2012, the rental market in ile‑de‑France has slumped
in 2013. A downturn in the economy, with growth failing to exceed 0.3%, has led to a sharp
drop in take‑up for large surfaces, which have thereby been unable to provide the level of
market support for overall take‑up seen in 2012.
Only 1.85 million sq.m have been commercialized in 2013: a drop of 25% compared to 2012,
with take‑up for large spaces down 46%. Take‑up in the private sector has continued to decline,
while public‑sector activity has virtually collapsed in 2013.
in such a weakened and uncertain economic environment, many companies, especially major
corporations, have chosen to renegotiate their existing leases, thereby delaying any decisions on
relocating. Vacancy rates have been trending upward again, but have stayed within acceptable
levels in almost all locations, with the exception of the West CBD which is clearly experiencing
oversupply.
Overall, Île de France’s vacancy rate has increased to 7%, but remains close to equilibrium.
Again, adjustments in rental values have affected economic values while headline value averages
have remained relatively stable. The exception to this latter point has been in the Paris CBD,
where a lack of transactions agreed at top values has resulted in a drop in overall averages.
01 | RENTAL MARKET
SUBMARKET PROFiLES
Île‑de‑France office stock: 55,8 million sq.m in 2013
Airport
Roissy
Charles de Gaulle
Railway C
ARGENTEUIL
Railway B
COLOMBES
Boucle Nord
du 92
Railway A
A
Emerging North
86
BOBIGNY
PANTIN
La Défense
East district
NANTERRE
Paris
CBD
PARIS
VINCENNES
West
CBD
Railway A
FONTENAY
SOUS-BOIS
IVRY-SUR
SEINE
BOULOGNE
BILLANCOURT
ISSY-LESMOULINEAUX
VILLEJUIF
CLAMART
A 86
ANTONY
Railway B
Paris CBD
Stock: 8.6 million sq.m
Paris Secondary BD
8
CRÉTEIL
South district
Other West CBD
La Défense
Railway C
Airport
Orly
Emerging North
South district
Boucle Nord 92
East district
With a total stock of more than 55.8 million square meters,
the office market in the Ile-de-France region is among the
best organized and most “readable” in Europe, as well as
being one of the most diversified. Stock is largely centered
around Line A of the RER regional railway network, which
forms the transportation backbone for the Île-de-France
office market as a whole. Away from the main business
districts (ie. all of the Paris districts, the West CBD), suburban
areas are currently organized primarily around the main
transportation networks: the A86 secondary ring road for
road traffic as well as the various metro, RER and tram lines.
The ongoing Grand Paris Express “regional super metro”
project should not fundamentally change the organization of
the market, at least in the medium term. The initial effects of
this project will be to strengthen not only the more mature
business districts, but also the region’s emerging business
districts. These include the Emerging North with the ongoing
development of the Pleyel district of Saint-Denis, as well as
the inner suburban cities of Saint-Ouen and Clichy.
> The Paris Central Business District (CBD). With a
stock of 8.63 million sq.m, or 15.5% of the total stock
in Île-de-France, the Paris CBD has maintained its status as the prime business district in Île-de-France. This
submarket has the highest rental and market values - as
well as the lowest yields - and is also the area where the
rental market is the most stable.
>T
he West CBD, which includes La Défense, is the second
most developed market. It also incorporates the cities of
Neuilly-sur-Seine, Levallois-Perret, Boulogne-Billancourt,
and Issy-les-Moulineaux. Office stock amounts to nearly
6.7 million square meters, or about 12.1% of the total
in Île-de-France, of which more than half is located
within La Défense.
> The Paris Secondary Business Districts consist of
three major clusters of office stock. In addition to the
Front de Seine and Montparnasse districts, the district formed by the Gare de Lyon, Bercy and Paris Rive
Gauche cluster has been the most dynamic market in
terms of new development in recent years. These three
secondary districts now have a combined stock of 3.76
million square meters, and should continue to expand
in the coming years.
> The Emerging North submarket is continuing to evolve
as a natural extension of both the Paris CBD and the
West CBD. It consists of the cities of Clichy, Saint-Ouen
and Saint-Denis. Its rapidly developing office stock is currently estimated at about 2.4 million sq.m and continues
to demonstrate high growth potential.
> The East District, centered around the suburban city
of Montreuil, has been the site of many major transactions and subsequent developments in recent years.
This submarket has a stock of 1.5 million sq.m in 2013.
> The South District extends from Vanves through
Montrouge to Ivry-sur-Seine. This area extends beyond
the inner suburbs, and includes cities such as Châtillon,
where most commercial development has occurred
near the Chatillon-Montrouge metro station. Office
stock in this submarket totals 1.7 million square meters.
> Finally, the “Boucle Nord” area of Hauts de Seine
includes the cities of Asnières, Colombes, Bois-Colombes,
La Garenne-Colombes and Gennevilliers. This area has
experienced major development in recent years, with
available stock in 2013 measuring 1.5 million square
metres, and should continue to mature. This district
is currently divided into two sectors. The cities of
Colombes, la Garenne-Colombes, and Bois-Colombes,
in the western sector are closer to La Défense and have
the higher rental values. The eastern sector consists of
Asnières and Gennevilliers.
01 | RENTAL MARKET
A SHARP DROP iN TAKE‑UP
Take-up has fallen by 25%
Take-up has endured a sharp decline of 25% in 2013
with transaction volumes of only 1,853,000 sq.m. This
represents a fall in take-up to 2009 levels: well below
the historical annual average of 1.98 million sq.m.
While we had expected a decline, its severity has
surprised us. We had anticipated take-up in the order
of around 2.1 million sq.m.
Take‑up in Île‑de‑France: 1995 ‑ 2013
Thousand sq.m
Trend
3 000
2 500
2 000
1 500
1 000
500
0
1995
1996
1997
1998
1999 2000
2001
2002
2003
2004
2005
2006
2007
2008 2009
2010
2011
2012
2013
Source: MBE Conseil/Immostat
Stabilization in the below
5,000 sq.m market
This sharp decline is primarily due to a 46% fall in
transactions for surfaces of over 5,000 sq.m. However,
take-up for small and medium-sized surfaces fared
relatively well in 2013. With nearly 1.2 million square
meters commercialized, the decline was only 3.4% in
these size categories.
Take‑up in Île‑de‑France by size category
3 200
3 000
> 5 000 sq.m
Thousand sq.m
< 5 000 sq.m
Trend
2 500
2 000
1 500
1 000
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: MBE Conseil/CBRE
10 Property Market Trends - France - March 2014
Transaction activity involving small and medium surfaces
typically varies the most in accordance with changes in
employment levels. This fell in 2012 in conjunction with
rising unemployment in Ile-de-France.
slump at the national level). Moreover, employment in the
services sector is beginning to recover slightly (+0.2%)
compared to 2012. Although this has helped to slow the
decline in take-up for small and medium surfaces, this,
along with the slight improvement in employment, has
not been enough to generate any take-up recovery in
the present context of mounting economic uncertainty.
In 2013, however, the employment rate has begun to
stabilize in Ile-de-France, (although it has continued to
Take‑up and employment in Île‑de‑France
Transactions < 5 000 sq.m
Thousand sq.m
Transactions > 5 000 sq.m
1 800
Employment growth in Greater Paris %
4
(moving average)
1 500
3
2
1 200
1
900
0
600
-1
300
-2
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
-3
Source: MBE Conseil/Catella - Immostat and Crocis *: Annual change calculated on third-quarter 2013 employment statistics
However, large-surface transactions, which since the
early 1990s have been the mainstay for overall take-up
levels in times of crisis, have not played their traditional role in 2013. These have been trending strongly
downward since 2012, when they were exceptional
despite the economic downturn.
Take-up involving surfaces of over 5,000 sq.m has fallen
by 46%. Meanwhile, total commercialization activity
has amounted to 668,000 sq.m in the form of 54
transactions, with activity decline having affected all
surface size categories
46% decline in take-up in
the over -5,000-sq.m market
Transactions of over 5,000 sq.m by size category
Thousand sq.m
5 000 à 10 000 sq.m
10 000 à 20 000 sq.m
> 20 000 sq.m
1 300
1 040
780
520
260
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: MBE Conseil/CBRE
In the 5,000-to-10,000 sq.m range, demand has been
down 30% compared to 2012. Twenty-nine transactions
totaling 196,700 sq.m have been concluded, compared
to 40 deals totaling nearly 280,000 sq.m in 2012. The
remarkable drop in take-up (-83%) on the part of the
public sector (ie., national or local governments and
public enterprises) is chiefly responsible for this decline,
while private-sector take-up has fallen by only 5%.
Take-up has also dropped off in the 10,000-to-20,000
sq.m. category. Sixteen transactions have been completed
in 2013 for a total of 223,700 sq.m, down from 25 deals
for a total volume of 346,400 sq.m in 2012 : a 35% decline.
While the sharp fall in public-sector activity is the main
factor behind this decrease, private sector take-up also
fell sharply, by 25%.
services sectors, which have sharply reduced their
demand for surfaces in 2013. In contrast, take-up in
this size category has been robust on the part of the
auditing and consultancy services sector, as seen in the
leasing agreements by Technip in the Newside Building
in La Garenne-Colombes, by Fidal in La Défense and by
CMS Bureau Francis Lefebvre in Neuilly. This was the
most active business sector, followed by banking and
financial services.
These include the electronics/IT, and distribution and
A 30% drop for spaces of
5,000 to 10,000 sq.m
A drop of 35% in the
10,000-20,000- sq. m range
01 | RENTAL MARKET
A 30% rise in take-up
for spaces between 20,000
and 40,000 sq.m…
…but no activity whatsoever
for surfaces of over
40,000 sq.m
In the over-20,000 sq.m category, the 60% overall
decline of transactions is due to a total lack of activity involving spaces of over 40,000 sq.m. However,
take-up for surfaces of between 20,000 and 40,000
sq.m has seen an increase of 30%, with 247,000 sq.m
commercialized in the course of nine transactions,
marking a substantial break with the downward trend
that had been seen in this size category.
Among the most signifi cant transactions this year
have been the leasing by GE of 38,000 sq.m in the
Tours Citylights and by Cetelem of 36,000 sq.m
in the Unicity program in Levallois-Perret. SAP has
also rented a major part of the So Ouest Building in
Levallois-Perret, delivered in late 2011.
However, no transactions concerning surfaces of more than
40,000 sq.m. have occured in 2013. This is in stark contrast
to 2012, when the market as a whole was supported by
agreements for six transactions of over 40,000 sq.m, the
largest being the letting by the Ministry of Defence of
135,000 sq.m in the Balard program in Paris.
strategies based on having buildings designed and delivered
that are suited to a company’s specific needs. Examples
include the turnkey projects undertaken by Orange in
Chatillon, Sanofi in Gentilly, Crédit Agricole in Montrouge,
the Ministry of Defence in the Balard district of Paris for
2012, and by SFR in Saint Denis in 2011, to mention only
the most noteworthy.
In total, these six transactions represented a volume of
nearly 421,000 sq.m: a volume completely absent from the
market in 2013. It should be noted that both the number
and surface sizes of the transactions in this category were
exceptional in 2012. Since 2000, there have generally
been only one or two transactions of this size type per
year. Three years haved proved an exception to this rule:
2008 and 2011, with four transactions in each, and 2012
with six such transactions. Although we had expected a
significant market adjustment due to a return to more
historic average levels for very large transactions, its
magnitude was nevertheless unanticipated.
Decline in turnkey and
second-hand transactions
However, in a period marked by mounting economic
uncertainty and a changing tax environment, companies
may become very wary of making decisions that amount
to major future commitments. The falling demand for
turnkey projects at the outbreak of the financial crisis has
done much to explain the subsequent decline in take-up
for large surfaces.
The decline in large-surface take-up has mainly affected
turnkey projects and second-hand buildings, while activity
involving new buildings, either delivered or still under
construction, has been largely stable compared to 2012.
Furthermore, 14 transactions were concluded in 2013
concerning second-hand buildings, totaling 117,000 sq.m,
compared to 33 deals for 329,000 sq.m in 2012. The
preference for new buildings shown by tenants needing
large surfaces was clearer in 2013. Only the Paris CBD
has recorded an increase of transactions in second-hand
buildings, the vast majority of which have been or are
being renovated.
Thus, only six turnkey transactions took place in 2013,
totaling 121,000 sq.m, compared to 11 in 2012 for nearly
520,000 sq.m. Among those occuring in 2013, only two
have surface areas of over 20,000 sq.m, compared to nine
in 2012 (including five of more than 40,000 sq.m). However,
activity involving turnkey projects in 2013 has had far less to
do with overall economic conditions than to a combination
of long-term trends. These relate to corporate business
Conversely, the commercialization of new buildings, whether
delivered or still under development, has actually shown
a slight upward trend (+5%) over 2012 levels, with nearly
410,000 sq.m taken up. But while pre-letting activity has
remained high, confirming the rising take-up levels seen
in 2012, transactions involving newly delivered buildings
have remained relatively weak, actually approaching levels
last seen in 2002 during the previous economic downturn.
Take‑up for surfaces of over 5,000 sq.m by property type
1 500
Second hand offices
Thousand sq.m
1 200
900
600
300
Pre-letting
Turnkey projects
519
304
22
180
14
138
279
286
201
232
345
297
211
0
New Available
2008
2009
2010
369
218
260
195
129
329
289
2011
2012
140
271
140
117
2013
Source: MBE Conseil
The drop in take-up for large surfaces is also due to
the massive downturn in public-sector demand, which
has been down 72% compared to 2012. As mentioned
previously, 2012 was an exceptional year in terms both
of the quantity, but especially the size of the surfaces in
transactions involving public-sector enterprises.
Public vs. private sector activity involving
transactions for surfaces over 5,000 sq.m
Private Sector
Public Sector
Thousand sq.m
1 400
1 200
1 000
781
958
800
600
542
400
456
In 2013, only seven transactions involving public entities have been finalized, totaling 125,000 sq.m, the
largest being the acquisition by the Conseil Général
des Hauts-de-Seine of 31,000 sq.m of office space in
the Aréna 92 program. This stands in stark contrast
to the 23 such deals agreed in 2012, totaling 456,000
sq.m, including four transactions involving surfaces of
over 30,000 sq.m. Moreover, no transactions involving
governmental ministries were concluded, whereas in
2012 there were three such transactions for surfaces
totaling nearly 221,000 sq.m.
Collapse in public-sector
take-up activity
Meanwhile, private-sector demand has also continued
to decline, falling by 25% in 2013 after being down 19%
the previous year. In 2013, faced with a difficult economic
climate and the lack of clear indications regarding market
direction in the short and medium terms, many large
companies have chosen, when they could renegotiate
existing leases, to stay put and wait for better days.
This tendency has been aided by property owners,
who have preferred to grant rent reductions rather
than risking tenants choosing to relocate.
200
0
131
2011
2012
125
2013
Source: MBE Conseil
01 | RENTAL MARKET
The banking / financial services sector has been the
main consumer of large surfaces in 2013, having
taken up more than 101,000 sq.m. This industry
has been responsible for 15% of take-up for spaces
of over 5,000 sq.m. However, this result, while
3% higher than in 2012, is modest compared to
historical levels for these industries.
in take-up over the previous year. The largest transaction of the year in this sector again involves a
turnkey project: Eiffage Velizy’s agreement on a plot
belonging to the Foncière des Régions. All other
transactions agreed by companies in the real estate
or construction industries have involved spaces of
less than 10,000 sq.m.
Most notable among the larger transactions in
the banking/financial services sector is Cetelem’s
turnkey project for the construction of its new,
nearly 35,000 sq.m headquarters in the Unicity
Building in Levallois-Perret.
The auditing and consulting sectors were also
among the main consumers for large surfaces in
2013. Among the major transactions involving these
industries were those finalized by CMS Bureau
Francis Lefebvre for a building owned by Unibail
at 2-8 rue Ancelle in Neuilly-sur-Seine; by Technip
in the Newside Building owned by Gecina in La
Garenne-Colombes, and by Fidal in the Tour Prisma
in La Défense.
Despite its strong decline in take-up activity, the
public sector remained the second most active
participant in large-surface transactions, accounting
for 93,000 sq.m, or 14% of the total.
Of the other business sectors that have been largesurface consumers, two have been particularly active
in 2013, despite the economic crisis. First, the real
estate and construction sectors, with take-up levels
of nearly 69,000 sq.m, were the third most active
sectors in 2013, accounting for a growth of 125%
The manufacturing sector should also be mentioned,
although its development has been less significant
due mainly to GE’s 38,000 sq.m leased in Boulogne.
All other business sectors have reduced their takeup activities for large surfaces by varying degrees
in 2013.
The ten main consumers for large surfaces by business sector: 2012 vs. 2013
2012
2013
Bank/Finance
Public
Administrations
Real estate,
construction
Consultancy
Industry
Electronics, IT
Insurance
Telecommunications
Advertising/
communication
Energy
0
50 000
100 000
150 000
200 000
250 000
sq.m
300 000
Source: MBE Conseil
Selected transactions of over 5,000 sq.m in Île‑de‑France : 2013
TENANT
General Electric
SURFACE
AREA (sq.m)
ADDRESS
CITY
SUBMARKET
STATUS
38 086
CityLights
Boulogne‑Billancourt
West CBD
New
Cetelem
34 640
Unicity
Levallois‑Perret
West CBD
New
SAP
27 900
So Ouest
Levallois‑Perret
West CBD
New
Eiffage construction
23 240
Campus Eiffage
Vélizy
Outer suburbs
New
ERDF
21 500
Tour Blanche
La Défense
La Défense
New
L'Oréal
21 475
Le Nuovo
Clichy‑Sur‑Seine
Emerging North
New
Orange
20 260
Eastview
Bagnolet
East
New
Technip
17 955
Newside
La Garenne‑Colombes
Boucle Nord
New
CMS Bureau Francis Lefebvre
16 500
2‑8 rue Ancelle
Neuilly‑sur‑Seine
West CBD
New
Rectorat de Paris
15 200
Visalto
Paris 19
Other Paris
New
Klesia
13 800
Rezzo
Paris 17
Other Paris
New
Fidal
13 627
Tour Prisma
La Défense
La Défense
Second‑hand
Coca Cola
13 165
Le Noda
issy‑Les‑Moulineaux
West CBD
New
Ericsson
12 843
Hélios
Massy
Outer suburbs
New
Haute Autorité de La Santé
12 307
Green Corner
Saint‑Denis
Emerging North
New
Groupe Lafarge
11 070
Le Panoramic
Clamart
Outer suburbs
New
Ozeo (BPi)
10 505
6/8 bd Haussmann
Paris 09
Paris CBD
Second‑hand
Alcatel
8 700
Brahms ‑ Parc Silic
Colombes
Boucle Nord
New
Klépierre
6 997
Carré Edouard Vii
Paris 09
Paris CBD
Second‑hand
Svp
6 726
Docks en Seine
Saint‑Ouen
Emerging North
New
Poste immo
5 081
Eiffel O2
Montrouge
South
New
Source : MBE Conseil/CBRE
Although the geographical location of large transactions regarding take-up is heavily influenced by the
presence or absence of operations involving spaces of
over 20,000 sq.m, some major trends have nevertheless
become clear.
In these times of ongoing economic crisis, the outer
suburbs have remained the most common areas for
transactions by larger companies, despite the sharp
decline in volumes due to the absence of major turnkey
operations. These areas have accounted for 28% of
transactions larger than 5,000 sq.m, with a total volume
of 184, 000 sq.m.
However, such transactions still do not generally
involve a particular company’s wholesale movement
from established centers to more peripheral and
less expensive areas. The vast majority of relocations
involve companies that already have an established
presence in or near their newly selected area.
Outer suburbs still top
choice for transactions,
but at a far lower rate
Moreover, relocations frequently involve companies
moving from old to new buildings (the case for 13
of the 15 such transactions in the outer suburbs),
or into renovated buildings when new supply does
not match their particular needs in terms of size,
location or price.
01 | RENTAL MARKET
Geographical distribution
influenced by activity in over
-20,000 sq.m market
Transactions of over 5,000 sq.m in Île‑de‑France by submarket
2012
Thousand sq.m
2013
320
240
160
Dynamism in West
CBD outside La Défense
Decline in La Défense…
… and in the suburbs
In 2013, the West CBD has seen its market share in the
large-surface market grow from 8% to 26% by volume,
with take-up for spaces of more than 5,000 sq.m increasing
82% over 2012. This submarket has accounted for three
of the nine transactions involving spaces of more than
20,000 sq.m concluded during 2013, including some of
the largest in terms of surface size.
These are General Electric’s lease of 38,000 sq.m in the
Tours CityLights in Boulogne-Billancourt; Cetelem’s turnkey project of nearly 35,000 sq.m in the Unicity program
in Levallois-Perret, and SAP’s renting of 27,900 sq.m in
the So Ouest Building, also in Levallois-Perret.
Almost all of these companies already had an established
presence in these cities, The exception is GE, which will
consolidate all of its operations in Ile-de-France in this
new building. However, this transaction will enable GE,
co-owner of the Tours CityLights, to begin redeveloping
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However, it is the West CBD (excluding La Défense)
that has shown the greatest dynamism in 2013 among
the various submarkets, with take-up having grown in the
over-5,000 sq.m market. This is particularly remarkable in
the current period of both economic crisis and an overall
decline in transactions.
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this property, which would not have been possible without the company’s prior commitment to occupy part
of the premises. Therefore, GE’s activity in this instance
should not be seen as indicating any strategic relocation
or reorganization on its part.
The Paris CBD, despite seeing total take-up for surfaces
of more than 5000 sq.m fall by 27%, saw its proportional
share increase from 5% to 7% in this size category. Such
transactions have all been of between 5,000 and 11,000
sq.m in 2013, while in 2012 a 23,000 sq.m deal was
concluded in the Solstys Building in the 8th arrondissement.
In La Défense, after a year distinguished by two transactions of over 30,000 sq.m in 2012, the downward trend
that had begun in 2009 for large-surface take-up continued.
Despite being the pre-eminent location for large-surface
transactions between 1990 and 2008, La Défense, has
struggled ever since to regain its former status, despite
having a very extensive supply of high-quality surfaces.
In other submarkets, the presence or absence of takeup activity for surfaces over 20,000 sq.m has been the
main factor driving local market trends in 2013. The Paris
Secondary Business Districts have suffered from the
absence of any transactions comparable to that involving
the Ministry of Defence in 2012. Similarly, the South
District has seen no major turnkey activity comparable
to the 2012 deals agreed by Sanofi, Credit Agricole,
and Orange.
Bagnolet, and BETC Euro RSCG’s lease in a 15,600 sq.m
building redeveloped by Nexity in Pantin.
This has also occured in the Boucle Nord, with Technip’s
agreement for 18,000 sq.m in the Newside Building in La
Garenne-Colombes. In the Other Paris submarket, there
have been three transactions in 2013 involving spaces of
over 5,000 sq.m. All of these have taken place in the 17th
arrondissement outside the local business district, of which
two are within the ZAC Clichy Batignolles.
In the Emerging North, 2012 was also an exceptional
year, but for different reasons; no transactions for spaces
of more than 30,000 sq.m have occured, but there were
ten involving surfaces of over 5,000 sq.m, including seven
of between 10,000 and 21,000 sq.m. In 2013, only four
large transactions have been finalized. The leasing agreement by L’Oréal for 21,500 sq.m. in the Nuovo Building
in Clichy has not statistically offset the overall decline in
the number of operations.
These latter two are the letting by Klesia of the 13,800
sq.m Rezzo Building in the Saussure district, and of the
29,000 sq.m. of office space to be available in the Cité
Judiciaire project, currently under development.
However, the East District, the Boucle Nord and the
Paris Secondary Business Districts have all benefitted in
2013 from one or two transactions for spaces of over
10,000 sq.m. Examples include in the East District, where
Orange has rented 20,000 sq.m in the Tour EastView in
The geographical locations of transactions in all size categories has been affected by the trends in take-up for
over-20,000 sq.m surfaces as a whole. As seen in 2012,
this has not been clearly indicative of companies’ decisions
in a fragile economic environment.
Transactions in Île-de-France : 2012-13
700
2012
Thousand sq.m
Paris: ˉ 19 %
2013
Suburbs excluding business districts: ˉ 40 %
600
500
ˉ 32 %
400
+34 %
ˉ6 %
300
ˉ4 %
200
ˉ 50 %
-34 %
100
+66 %
-58 %
-76 %
ˉ 11 %
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01 | RENTAL MARKET
Take-up lower in Paris …
but CBD holding up well
Paris as a whole has seen take-up down 19%, a decline
that can be explained mainly by the negative conditions
affecting the secondary business districts for the reasons
detailed above.
Take-up in the Paris CBD, however, has been down by
only 6%: low considering the extent of the ongoing economic crisis. Take-up in small and medium surfaces has
dipped only slightly (-2%) compared to 2012. However,
activity in the less expensive districts within the Paris
CBD has done much to sustain the overall take-up
level, especially in the 9th arrondissement, where takeup volumes have increased by 40% in 2013. In the 8th
arrondissement, however, take-up has actually declined
by 22% compared to 2012.
Lower take-up in La Défense,
but a rebound in the
1,000-5,000 sq. m range
Robust activity in the rest of
the West CBD, including
the under-5,000 market
In the Other Paris areas, transactions of less than 5,000
sq.m have been down by 9%. The market has been
driven by the large-surface transactions concluded in the
Clichy Batignolles district. The drop in transaction activity
has been most severe in the 7th arrondissement which,
with only 8,100 sq.m of space having been taken up, has
endured a decline of 76%. Paris North East has also
seen a drop in take-up: down 12% compared to 2012.
After a good year in 2012, La Défense has suffered a
significant decrease in total take-up of 34%. This has
been due entirely to the weakness of transactions in
the over-20,000 sq.m category.
However, transactions in the below-5,000-sq.m
range have increased significantly. In 2013 they have
totalled 54,000 sq.m, with particularly high activity in
the 1,000-to-5000-sq.m range. This is a rise of 71%
compared to 2012, accounting for 42% of total take-up.
The return to the market of high-quality surfaces,
particularly in the form of renovated office towers, is
a major factor in this recovery.
Decline in all size categories
in the suburbs
In the rest of the West CBD, however there has been
a strong increase in activity involving large-surface
transactions. Take-up in small and medium surfaces
has also been increasing, but less robustly.
This has been most notable in Boulogne-Billancourt
(+51%) and Neuilly-sur-Seine (+38%). The two cities
have displayed the highest overall activity, with a 16%
increase in transactions in small and medium surfaces in
Boulogne and a rise of 5% in Neuilly-sur-Seine.
Levallois-Perret has seen the strongest increase in take-up
activity (+96%). However, this is due entirely to two large
transactions, whereas transactions in the below-5,000sq.m range have been down 10%. Issy-les-Moulineaux
has been the only city in the area to experience a drop
in take-up in 2013, both for small (-17%) and large
surfaces (-30%).
In both the inner and outer suburbs, transactions for
spaces of less than 5,000 sq.m have been down in all
areas, falling by 17% compared to 2012. These areas
have also seen a decline in large-surface activity
These suburban markets have all suffered from the overall
climate of crisis, a situation that has had the strongest
negative effect on lower-margin businesses. However,
the types of businesses that have historically been among
the most active in their business districts (ie., banking/
financial services, communications, IT services, etc.) have
proved far more resilient.
VACANCY RATES
HAVE BEGUN TO RISE AGAIN,
ESPECiALLY iN OUTLYiNG AREAS
Immediately available supply grew by nearly 9% in 2013,
breaking with the general pattern of stability observed
during the previous four years. The supply level at the
end of 2013 amounted to 3,925,000 sq.m, leading to
an increase in the vacancy rate from 6.5% at the end of
2012 to 7.1% one year later. This increase has been due
not only to the sharp decline in transactions involving
second-hand buildings, but also to the rise in deliveries
of new buildings, the latter being particularly high in
the West CBD.
Global vacancy rates higher
Île de France vacancy rates
%
Paris
Greater Paris
Suburbs
15
12
12,1
10,8
9
10,3
6
3
0
4,7
2,4
7,3
7,4
6,5
6,9
5,7
4,9
8,1
7,1
4,8
1,1
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Vacancy rate growth has been higher in suburban
areas than in Paris. In the former areas, the vacancy
rate has risen by 0.6 point, exceeding 8.1%. This has
had the strongest impact in La Défense and the rest
of the West CBD.
vacancy rate is gradually moving closer to equilibrium.
Once again, the situation in the capital is mixed;
the CBD’s status is already somewhere between
equilibrium and a slight oversupply, while the Paris
Secondary Business Districts suffer from a clear lack
of short-term supply.
In Paris, the vacancy rate has increased more gradually,
from 4.4% in 2012 to 4.8% in 2013. While this still
indicates a lack of supply in the shorter term, the
01 | RENTAL MARKET
Vacancy rates in the main Île de France business districts
December 2012
%
16
December 2013
14,9
12,6
12
11,2
10,4
8,7
7,9
8
7,7
5,8
3,7
4
Paris CBD approaching
oversupply
In the Paris CBD, the vacancy rate has continued to
climb, despite the relative strength in take-up activity.
The rate stood at 5.8% at the end of 2013, up from
5.2% at the end of 2012.
This rise reflects a steady flow of releases, while the
proportion of new or redeveloped spaces as part of total
immediate supply has stabilized at 10%. Second-hand
surfaces represent 53% of immediate supply as of the end
of 2013, an increase of three points compared to 2012.
Shortage in the Paris
Secondary Business Districts
The proportion of supply that has been renovated and
returned to the market amounted to 37% at the end of
2013. However, a general decline in the quality of supply
available in the Paris CBD serves to limit the likelihood
of future oversupply, since some of the released supply
is not easily rentable in its current condition.
In the Paris Secondary Business Districts, the previous
overall shortage problem has worsened in 2013. The
vacancy rate has dropped again, from 4% at the end
2012 to 3.7% at the end of 2013. Large-surface supply
is non-existent in either the Paris Rive Gauche or the
Front de Seine districts.
West CBD outside
La Défense remains stable
In Montparnasse, only a single large surface (6,500 sq.m)
is available. In the neighborhood surrounding Gare de
Lyon, an 18,400 sq.m building is listed as for sale in its
present condition.
As we predicted last year, the vacancy rate has risen
sharply in La Défense, from 7% to 12.6%, No commercialization activity has been observed involving buildings
either under construction or renovation, and deliveries
made over the course of 2013 have added to the current
oversupply situation.
In 2013, three new or redeveloped buildings were delivered for a total area of 135,000 sq.m. These are the
41,900 sq.m Tour Carpe Diem; the 70,800 sq.m Tour
ur
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Source: MBE Conseil/CBRE/Immostat
Eqho, and the 22,300 sq.m. Between Building in the
Miroirs program. Some renovated surfaces, in particular the 13,500 sq.m Tour W, have also returned to
the market, as have releases such as the Easy Building,
vacated by Coface, in which there are presently 10,500
sq.m available.
As a result, if take-up activity does not improve quickly,
the vacancy rate could continue its steady rise at the end
of the first quarter of 2014. The delivery of the 57,900
sq.m Tour Majunga alone could add 1.6 points to La
Défense’s vacancy rate. Moreover, the second quarter
will see the return to market of 28,800 sq.m in the Tour
Egée, following its renovation. The 50,900 sq.m Tour D2
will also be delivered at the end of the year.
The vacancy rate of La Défense could conceivably be
as high as 16% by the end of 2014, if take-up involving
large buildings does not improve significantly.
In the rest of the West CBD, the overall vacancy rate
has stabilized as of the end of 2013 to 10.4%, compared
to 10.2% at the end of 2012. The high level of activity in
the rental market has limited the effect of large buildings
deliveries, particularly in Boulogne.
After falling to 10.4% in 2012, Boulogne’s vacancy rate
has risen again to 12.9%. This is due to the delivery of
three new large surfaces: the In/Out Building (35,200
sq.m), the Kinetik (14,400 sq.m) and the Ardeko, in
which 13,500 sq.m are still available.
In Issy-les-Moulineaux, the vacancy rate has grown
slightly to 8.2%: a 0.2 point increase. In contrast, in
Levallois the letting of the So West Building has allowed
for a drop of 1.7 points in the vacancy rate, from 14.1%
in 2012 to 12.4% at the end of 2013. Neuilly has also
seen a decline, from 7.5% at the end of 2012 to 6.3%
at the end of 2013.
In suburban areas that are not considered part of the
more developed submarket business districts, vacancy
rates have either been trending downward, or have been
largely stable. The exception has been in the southern
inner suburbs, where vacancy has increased significantly.
Despite a sharp drop in take-up levels, the Emerging
North saw its vacancy rate decline significantly, from 13.4%
in 2012 to 11.2% in 2013. Although weak, take-up has
been sufficient to allow for some new supply absorption.
However, a rise in office stock has been responsible for
most of the decline in vacancy levels in 2013.
Office stock effectively increased by almost 175,000 sq.m
between December 2012 and December 2013, thereby
contributing to a decline in the vacancy rate. Large-surface
supply remains considerable, however, despite some indications of a decline, and again made up 4.6 points of
total vacancy.
Clichy has seen the most significant vacancy rate drop of
all the suburban submarkets, down from 16.6% in 2012
to 12.5% in 2013. Although the transaction finalized in the
Nuovo Building has not affected existing supply levels, the
significant increase in transactions in the 1,000-to-3,000
sq.m range has helped to initiate an actual absorption of
overall supply.
In Saint-Denis, the rise in office stock has been the main
factor behind the drop in the vacancy rate, which stood at
9.8% at the end of 2013, compared to 11.6% at the end of
2012. The situation has been comparable in Saint-Ouen,
where immediate supply has fallen by only 8,000 sq.m,
while the vacancy rate has decreased from 15.6% at the
end of 2012 to 13.1% at the end of 2013.
In the East District, the vacancy rate has fallen to 7.9%,
due to the rental of 20,300 sq.m in the Tour Eastview in
Bagnolet. This building alone accounted for 1.5 points in
the vacancy rate.
Alone among the suburban submarkets, the South District
has seen its vacancy rate increase to 8.7%, thereby ending
its previous supply shortage.
Immediate supply has increased in Montrouge with the
release of a 11,600 sq.m old building on rue de la Vanne,
along with the release of several surfaces of between
3,000 and 5,000 sq.m. This has led to an increase in the
vacancy rate from 5.3% in 2012 to 7.4% at the end of 2013.
This has also risen in Châtillon with the delivery of the
21,350 sq.m Area Prima Building. As a consequence,
there has been a very significant rise in the local vacancy
rate, to 19.5%. In Malakoff, the delivery of the Viva
Building, (in which 8,000 sq.m remain unmarketed)
has caused a vacancy rate rise from 5.1% in 2012 to
7.1% in 2013.
The Boucle Nord has maintained a high, but stable
vacancy rate of 14.9%. However, the rate has increased
very strongly in Colombes (11% in 2012 to 16.5%
in 2013) due to a strong increase in the supply of
large surfaces, particularly due to the delivery of the
29,000 sq.m West Plaza Building. The vacancy rate was
divided by 2.5 in La Garenne-Colombes, due to the
letting areement in the Newside Building. Asnières and
Gennevilliers have experienced high, but stable vacancy
rates of 22.1% and 12.5%, respectively.
Little change in vacancy rates
in the Emerging North
and East Districts
A higher vacancy rate
in the South District
In the outer suburbs, the overall vacancy rate rose in
2013 from 7.5% at the end of 2012 to 7.7%, marking a
return to 2011 levels. In the “micro markets” in these
outlying suburbs, the situation is improving in Vélizy
and Saint-Quentin, where the market has returned
to equilibrium with vacancy rates of 6.7% and 7%,
respectively, down sharply from 2012.
The rate has worsened again in Rueil-Malmaison, where
after a lull in 2012, it resumed its rise to 15.4% at the
end of 2013, compared to 14.1% in 2012. The Massy
market has maintained a short-term supply shortage
despite the vacancy rate rising from 1.3% in late 2012
to 3.7% at the end of 2013 as a result of the release
of one large surface.
Boucle Nord and outer
suburbs also see little change
Vacancy rates may continue to increase slightly in 2014 in
Ile-de-France as a result of continued deliveries of large
buildings in some areas, most notably in La Défense.
However, this increase should be somewhat counterbalanced by the 5% drop in the supply deliverable
or releasable within one year. The evolution of the
vacancy rates will depend very much on take-up activity,
particularly with regard to take up of large surfaces in
already-delivered buildings.
If these latest transactions do not occur at a level significantly higher than that seen in 2012 and 2013, vacancy
rates will continue to rise. Otherwise, rates could begin
to shrink again in late 2014.
Little change in
vacancy rates in 2013
…except in La Défense
01 | RENTAL MARKET
Supply available within one year in the Greater Paris Area
Thousand sq.m
Immediate supply
To be delivered or vacated within one year
5
1 460
1 247
1 348
1 210
1 110
4
1 435
1 143
1 040
3 740
1 050
1 182
967
3
920
2 699
3 249
3 330
462
2 665
2 509
2 399
2 378
2
0
1 070
3 490
2 939
2 811
1
3 455
1636
1 248
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Future supply limited, both
in volume and location
The supply level of new or redeveloped spaces of over
5,000 sq.m available within one year is still significant,
and has even increased from 2012. Such supply has now
reached 978,000 sq.m: a volume that could significantly
impact vacancy rates if take-up does not start to recover.
However, as of 2015, the presently considerable number of ongoing construction projects will begin to fall
sharply. Moreover, the number of future projects will
be far fewer, mainly due to the very high level of pre-
lettings agreed in 2012.
In 2015 and 2016, the total rate of deliveries for the
whole of Ile-de-France should be below the current
equilibrium level of around 700,000 sq.m annually.
This could significantly help in absorbing much of the
current within-a-year oversupply, provided that there
is a revival in activity involving transactions for existing
stock: a situation that would be contrary to what has
been seen in the past three years.
Future supply for new buildings in the Greater Paris Area
Available
Under construction
Building Permit Granted with an investor
Building Permit Granted within an investor
Application Filed with an investor
Application Filed within an investor
Project with an investor
Project within an investor
2 800
2 450
2 100
1 750
1 400
1 050
700
350
0
Immediate
within 1 year
2015
2016
2017
2018
2019
Project
Source: MBE Conseil/Catella, CBRE, developers and investors
Only 318,000 sq.m of space is currently under
construction for delivery during 2015.
This volume could actually be lowered very quickly,
since two buildings under construction could be
marketed in the first quarter of 2014. These are
the Garance Building in the 20 th arrondissement
of Paris, which was selected by the Ministry of the
Interior after a tender launched in 2013, and the
CityLights Building in Boulogne, in which negotiations
for the remaining space are presently very advanced.
Moreover, current buildings under construction
are concentrated in only a few areas: the West
CBD (excluding La Défense, but including especially
Boulogne and Issy-les-Moulineaux), the Other Paris
districts, and the outer suburbs.
In the Paris CBD, only two buildings are presently
under construction for delivery in 2015: the 24,700
sq.m Cloud building (formerly the Cardinal) on
rue de Richelieu, and a 10,000 sq.m building at 3-5
avenue de Friedland. One other project has been
launched in the South District: the White building
in Montrouge.
Furthermore, only 59,000 sq.m now under construction
are scheduled for delivery in 2016. To this figure must
be added 450,000 sq.m of projects for which permits
have been granted, and 196.000 sq.m for which permits
are pending.)
Due to a lack of support by investors, certain other
projects have only limited chances of being launched
speculatively. These could easily be delayed, and some
may well be terminated if building permit validity periods
expire.
In total, future supply delivered in 2015 and 2016 should
be low. This situation has led us to conclude that the
current growth in vacancy rates is not sustainable, and
that they should thereby start to fall as of the beginning
of 2015 in all markets. However, the overall decline in
vacancy rates will not result in shortages in all markets.
Nevertheless, we anticipate a gradual return to equilibrium for certain markets currently in oversupply. Namely:
La Défense and the rest of the West CBD, the Emerging
North, the Boucle Nord, and the South District. The risk
of short-term shortages is greatest in the Paris CBD, the
Paris Secondary Business Districts, and the East District.
01 | RENTAL MARKET
HEADLiNE RENTAL AVERAGES HAVE BEEN
RELATiVELY STABLE EXCEPT iN PARiS CBD:
THE ONLY MARKET TO DEMONSTRATE
REAL ADJUSTMENT.
Drop in rental values in
Paris CBD
Despite the economic downturn being experienced since
2012, headline rents have now remained relatively stable in
Ile-de-France for four consecutive years. The one exception has been the Paris CBD: so far the only submarket to
display real value adjustments in headline rent averages.
Such adjustments are always applied to economic rents,
with discrepancies typically occurring in connection with
the growth of rent-free-period incentives being proposed
by owners. These were still usually of between 1.5 and
two months per year in most lease agreements in 2012,
but are now commonly being agreed at two to 2.5 months
per year in fixed-lease agreements.
Average values for new buildings in the Paris CBD fell by
10% in 2013 to €654/sq.m. This trend is mainly due both
to the scarcity of deals being agreed at top values, and
to the overall decline in top values, which have dropped
from €850/sq.m in 2012 to €750/sq.m in 2013. Median
values have stayed relatively stable at €620/sq.m. For
second-hand properties, average values have also been
stable following the increase recorded in 2012.
Evolution of weighted average rental values for new buildings
€/sq.m/p.a
Paris CBD
Paris Secondary BD
West CBD
Suburbs
750
654
473
500
462
250
0
283
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: MBE Conseil
In the Paris Secondary Business Districts, the apparent decline in average values involving new buildings
is due to the market effect created by Altedia’s
transaction in the Tour Cristal in 2013, concluded
in a context where very few agreements were being
made involving new spaces, due to extremely limited
supply.
The values being seen in 2013 are chiefly indicative
of the discrepancy between values for a redeveloped high-rise building and a new, non-high-rise
building in the ZAC Paris Rive Gauche. In the Paris
Rive Gauche area, new building projects are being
quoted at values of between €500 and €530/sq.m.
Transactions involving second-hand buildings were
concluded on the basis of significantly lower average
values: 12% lower, based on transactions agreed in
the Front de Seine and Gare de Lyon areas, but not
in the Paris Rive Gauche area, where second hand
values are generally higher. Second hand values
ranged in 2013 between €340 and €470/sq.m.
In the West CBD, headline rents have increased from
€428/sq.m in 2012 to €462/sq.m in 2013. While this
increase in averages is due in part to the deal agreed
by CMS Bureau Francis Lefebvre for a property at 2-8
rue Ancelle in Neuilly for €580/sq.m, values have still
increased, to average €440/sq.m., even when disregarding the market effects resulting from this transaction,
This increase is hard to explain in an area experiencing
such excessive oversupply. However, this statistic conceals
the real decline in economic rent averages, with incentives
of as much as 30% being offered in certain transactions.
Higher average rents
in West CBD
Values for second-hand properties have remained stable
in 2013, averaging €384/sq.m. Downward adjustments
for headline rents in new buildings remain a major priority if this area is to regain its former strong appeal.
Such a strategy is the only practical method available to
the West CBD in its efforts to see a gradual return to
market equilibrium.
Evolution of weighted average rental values for second‑hand buildings
€/sq.m/p.a
550
Paris CBD
Paris Secondary BD
West CBD
Suburbs
527
404
440
384
330
199
220
110
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: MBE Conseil
In the suburbs, average values for new buildings have
remained stable at €283/sq.m, after the areas saw
significant increases in 2012. In the inner suburbs,
however, average rents in the new-building market
have fallen by 9.5% compared to 2012. Rents for
new surfaces have ranged from €240/sq.m in the
Eastern inner suburbs to €335/sq.m in Saint-Denis.
In the outer suburbs, average values have been
stable at €269/sq.m. However, rents have varied
widely, from €210/sq.m in Clamart to €420/ sq.m
in La Garenne-Colombes, (the latter being the
value agreed by Hyundai Motor for its lease in a
3,400 sq.m building).
The values for second-hand buildings in the suburbs
have fallen over the course of 2013 by nearly 6%,
averaging €199/sq.m. However, values are ranging
greatly between the various areas. Values in the inner
suburbs have fallen by nearly 14%, from €258/sq.m
in 2012 to €221/sq.m a year later. In 2012, however,
the Innovatis 2 Building was leased at €270/sq.m:
an exceptional value for a second-hand building.
Stability in the suburbs
In 2013, a top value was also agreed for a building
in the Emerging North: the Eurosquare 1 Building
in Saint Ouen, leased at €325/sq.m. In other outer
suburbs locations, however, values remained stable
at €190/sq.m. These have continued to range
widely, from €170/sq.m for an office building in
Marne-La-Vallée, to €340/sq.m for a small surface in
Rueil-Malmaison, and to €290/sq.m in Colombes to
€225/sq.m in Vélizy for recent buildings.
02
The French
investment
market
in contrast to the rental market, the investment market was robust in 2013. €17.9 billion
have been invested, up 4.6% compared to 2012. Unlike in the previous year, single‑asset
sales of between €50 and 200 million have done much to support the market in 2013,
which has been more balanced and diversified than in 2012.
The investment market has been more diverse in terms of geography as well as product
type, with a distinct growth in value added asset sales, often involving properties lacking
long‑term leasing agreements. Values relating to these assets have experienced significant
adjustments, leading to both the return of U.S. opportunistic funds and the arrival on the
market of other foreign players.
Transaction activity has been facilitated by an easing of certain financing conditions.
Morover, French actors such as insurance companies, real estate investment funds, OPCis
and publicly listed property companies have remained very active in the French market.
Property
PropertyMarket
MarketTrends
Trends- -France
France- -March
Mars 2014
2013 27
02 | THE INVESTMENT MARKET
2013 AMONG THE MOST ACTIVE
OF THE PAST 16 YEARS
Nearly €18 billion
invested in French
non-residential market
For the third consecutive year, volume has remained
stable at between €17 and €18 billion, making 2013
one of the most active years for investment activity
since 1997. 2013 was only surpassed in 2006 and 2007,
which were record-breaking periods, seeing very high
degrees of leverage.
The investment volumes reached in 2013 have been well
above the annual post-2000 average of €15.6 billion.
While these volumes may appear high for France, it
should be noted that the French investment market has
experienced much lower levels than either the United
Kingdom or Germany, where investment volumes were
€55 and €30 billion respectively in 2013.
French investment volume for non‑residential property: 1997‑2013
Trend
€ billion
35
30
25
20
15
10
5
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: MBE Conseil/Catella
Rise in single-asset sales…
drop in portfolio activity
The French market’s dynamism notwithstanding,
portfolio sales fell in 2013 after two years of strong
growth. They have reached €4.3 billion representing
a 15% fall from 2012, although sales of individual
assets grew 14%, providing firm overall support for
the investment market in 2013.
While the decline in portfolio sales was evident
in all property size categories, assets in the less-
than-€100 million and over-€500 million ranges were
the most badly affected.
Thirty-one portfolios valued at less than €100 million
were sold in 2013 for a total of €685 million, compared
to 36 portfolios in 2012 valued at just over €1 billion.
At the other extreme, two portfolios of more than
€500 million were transacted in 2013 for a combined
value of €1.44 billion, down from three in 2012
totaling €1.67 billion.
Portfolio vs. single‑asset sales
€ billion
Portfolios
Single Asset Transactions
20
15
10
5
0
2008
2009
2010
2011
2012
2013
In 2013, portfolio sales activity was strongest in retail
outlets, shopping centres, and hotels. This is a marked
change from 2012, when the greatest activity was seen
in office portfolios.
for 33% of portfolio acquisitions. Three transactions
involving hotels, valued at more than €200 million, were
the main factor resulting in such an increase in overall
volumes for diversification products.
Thus, the sale of retail-related asset portfolios has shown
a significant increase of nearly 30% compared to 2012,
with investment volumes having exceeded €1.6 billion.
Such sales in 2013 amounted to 37% of all portfolio
transactions. Among the most important of these were:
These were:
• A Qatari fund’s purchase of four luxury hotels from
Starwood Capital for €750 million.
• ACM’s acquisition of a portfolio of four Club Med
resorts from Gecina for €280 million.
• The acquisition from Ivanhoé Cambridge by a fund
managed by Morgan Stanley of a portfolio of four
hotels in Paris for €200 million.
• The acquisition by Allianz of 50% of a portfolio of five
shopping centres belonging to Altarea for €395 million
• The sale by Metro Properties of one retail portfolio
concerning the wholesaler chain Metro Cash and
Carry through an OPCI managed by La Française
AM, for an amount exceeding €200 million
• CNP’s aquisition from Immochan of a portfolio of
four retail parks and three shopping centres in various
regional areas for €160 million.
Similarly with regard to the diversification seen
regarding sales activities, hotels and health clinics have
experienced a 37% increase over 2012, accounting
Conversely, sales of office portfolios fell very sharply,
by 63%. Totaling only €754 million, 92% of portfolio
sales in this sector consisted of a single transaction: the
acquisition by Adia of a portfolio belonging to Dock
Lyonnais for €694 million.
Sales up for retail portfolios…
as well as for
hotel portfolios…
Sales of logistics-related portfolios have also been
down in 2013. With seven transactions occurring at a
total value of €509 million, volume decreased by 26%
compared to 2012.
iNCREASE iN SiNGLE‑ASSET SALES
OVER €50 MILLION
In the past 20 years, this level has been exceeded only
once, in 2007. While almost all actors have increased
their investment volumes in this price range, the main
participants have been investment funds (30%) and
insurance companies (22%).
In 2013, single-asset sales have increased by 14% to nearly
€13.6 billion. While clearly signalling a more dynamic
market in 2013, this volume has been due to the higher
levels invested in all price ranges above €20 million. This
has been most notable for transactions valued at between
€50 and €100 million, whereas 2012 saw most activity
in the over-€100 million market.
Near-historic investment
for assets valued at €50
to €100 million
In 2013, investment activities were quite evenly balanced
between different geographic areas of France: 17%
occured in the Paris CBD, 22% in the regions, 23% in
the inner suburbs of Paris, 13% in the outer suburbs
and 11% in the West CBD.
Properties valued at between €50 and €100 million
were particularly popular in 2013, accounting for 27% of
investment in single-assets in 2013, compared to 22% in
2012. Investment volumes recorded in this price range
have been up by 42% compared to 2012, approaching
their 2006 levels, with more than €3.6 billion invested
in the form of 53 transactions.
Non‑residential investment volumes by price range: single‑asset sales
2012
€ million
+20%
2013
4 000
+42%
+3%
3 000
+11%
+14%
+7%
2 000
1000
0
+3%
< 5 M€
¯ 12%
5 - 10 M€
¯ 15%
10 - 20 M€
20 - 50 M€
50 - 100 M€
100 - 200 M€
>= 200 M€
Rise of 11%
in the €100-to-€200-million
range
Activity in the €100 to €200 million range was also very
dynamic: volumes invested in this category increased by
11% to €3.36 billion over 2012, forming 25% of total
investment. Interest mainly concerned the office market,
but also extended to retail outlets and shopping centres.
Among the most significant transactions have been
the acquisition by Cardif and Sogecap for more than
€185 million of the Nuovo in Clichy, a new building
being rented by L’Oréal; Gecina’s purchase of the Tour
Mirabeau in the 15th district of Paris for €186 million, and
the acquisition by Generali of the Passy Plaza shopping
center for €141 million.
One of the few speculative acquisitions of the year
concerned the Ardeko Building in Boulogne, bought
by Ivanhoé Cambridge for an estimated €140 million.
Although not the most important category in terms
of size, 29% of investment transactions of €100 to
€200 million occured in the Paris CBD. Among these
were the acquisition by Generali of a building at 4 Ave.
de l’Opera for €177 million; by ACM of a property
at 42 Ave. de Friedland for nearly €161 million, and
Pramerica’s purchase of a building at 118 Ave. des
Champs-Elysées for €135 million.
Finally, single-asset sales of properties valued at more than
€200 million have also been up 7%, after experiencing a
decline in 2012. Eight transactions occured in this price
range: the same number as in 2012, but for a higher
valuation of €2.36 billion. These deals concerned seven
office buildings and a hotel.
at 33 rue La Fayette for €280 million. The other three
transactions were conducted by American funds. Blackstone
acquired the Hotel Concorde Opéra for €250 million;
Thor Equities purchased a property at 65-67 Ave. des
Champs-Elysées for €250 million and Tishman Speyer
acquired the Tour Pacific for €215 million.
As in 2012, investment funds and insurance companies
have been the only industries to have been active in this
price range. Insurance companies were far more present
in this market in 2013, with their investment volumes
up 82% compared to 2012, whereas investment funds
decreased their investment levels by 31%.
In total, transactions valued at over €50 million were up
20% compared to 2012, amounting to 69% of the total
single-asset investment deals made in France.
Insurance companies were behind four of the eight
deals valued at more than €200 million. The largest of
these were the acquisition through an OCPI managed
by Primonial of the Tour Adria in La Défense for
€450 million; Crédit Agricole Assurance’s buying of the
Eco Campus Orange in Chatillon for €380 million, and
the purchase by SMABTP of the Technopole of Bouygues
Télécom in Meudon for €218 million.
Investment funds have mainly been active in the lowerpriced markets, the most noteworthy deal being the
acquisition by the German fund Deka of a building
Sales for assets
over €200 million up by 7%
Single-asset sales valued at less than €50 million have also
risen, but less significantly. This price range has been up by
only 3% overall compared to 2012, most notably in the €20
to €50 million range, where volumes have increased by 14%.
Investment in retail properties has been the prime driver
for these increased volumes. This sector has accounted
for 21% of acquisitions in the €20 to €50 million range:
an increase of 121% from 2012. SCPIs and insurance
companies have increased their respective presence in
this range by 42% (up from 36% in 2012), and 20% (up
from 8% in 2012).
3% rise in under
€50 million market,
with strongest activity in the
€20-to-€50 million range
In the below-€20-million range, however, volumes have
been down nearly 11% compared to 2012.
Major investment transactions in France
ADDRESS
Portefeuille Docks Lyonnais
Tour Adria ‑ La Défense
Portefeuille Altarea
MARKET
SELLER
BUYER
France
Docks Lyonnais
Adia
West CBD
Testa
Preim Defense 2
SURFACE PRICE
YIELD
(SQ. M) €/SQ.M)
TYPE
143 800 m² €694 M*
Office
53 841 m²
€450 M
6.63 %
Office
Shopping
center
France
Altarea Cogedim
Allianz
Outer suburbs
Nexity
interconstruction
Predica
72 000 m²
€380 M
6.00 %
Office
Tour Sequana ‑ issy‑les‑Moulineaux
West CBD
Docks Lyonnais
Hines Pour NPS
42 615 m²
€320 M
7.00 %
Office
33, rue La Fayette ‑ Paris 9
Paris CBD
ivanhoé Cambridge
Deka
28 667 m²
€280 M
5.40 %
Office
Outer suburbs
CGi
(Haust invest)
SMABTP
53 600 m²
€218 M
6.23 %
Office
West CBD
ivanhoé Cambridge
Tishman Speyer
Properties
53 419 m²
€215 M 10.00 %
Office
inner suburbs
Nexity
Cardif/Sogecap
33 000 m²
€193 M
6.00 %
Office
Paris secondary BD
Degi/Aberdeen
Gecina
35 000 m²
€186 M
8.00 %
Office
France
Vivarte
La Française AM
€178 M
5.40 %
Retail
4, avenue de l’Opéra ‑ Paris 1er
Paris CBD
Ofi Reim
Generali
10 561 m²
€177 M
4.90 %
Office
ilot Panhard ‑ Paris 13ème
Other Paris
Emerige ‑AOG
Primonial
21 700 m²
€165 M
5.50 %
Office
42, avenue de Friedland ‑ Paris 8ème
Paris CBD
ivanhoé Cambridge
ACM
10 500 m²
€161 M
4.20 %
Office
Region
icade
Apollo
370 000 m² €145 M 12.00 % Warehouse
CC Passy Plaza ‑ Paris 16ème
Other Paris
Eurocommercial
Properties
Generali
8 115 m²
€141 M
5.20 %
Shopping
center
Eco campus Orange ‑ Châtillon
ème
Technopole Bouygues Télécom
‑ Meudon
Tour Pacific ‑ La Défense
Le Nuovo ‑ 189, Bd Victor Hugo
‑ Clichy
Tour Mirabeau ‑ Paris 15
ème
Portefeuille Vivarte
Portefeuille Logicad
€395 M
8, place Vendôme ‑ Paris 1er
Paris CBD
AXA Reim
Sofaz
5 406 m²
€135 M
2.80 %
Office
118, avenue des Champs‑Élysées
‑ Paris 8ème
Paris CBD
Risanamento
Pramerica
3 800 m²
€135 M
3.60 %
Retail
Les Miroirs A & B ‑ La Défense
West CBD
Saint Gobain
€116 M
9.70 %
Office
Le Silky ‑ Villeurbanne
Region
DCB international
Perella Weinberg
33 492 m²
ANF
Caisse d’Épargne
36 600 m²
Rhône Alpes / DCB
€100 M
6.20 %
Office
Le Kappa ‑ Saint‑Ouen
inner suburbs
Hines
€85 M
6.00 %
Office
Source: MBE Conseil/Catella Property
Selectivest
Épargne Foncière
Pierre Privilège
15 800m²
* Estimation
DESPITE A DOWNTURN, OFFICES STILL
THE MOST POPULAR iNVESTMENT CHOiCE
Offices still main
investment target, but
down 6% in investment volume
Investor behavior in 2013 has closely resembled the
previous year in terms of interest in asset types. Offices
(single assets and portfolio sales combined) firmly remain
the top choice, accounting for 60% of total investment
activity. However, investment volumes were down 6%
compared to 2012.
This decrease, however, is only due to the absence
of portfolios for larger office spaces: a major feature
of the investment market in 2012 but one that has
declined substantially in 2013. The only significant transaction in this sector was the ongoing portfolio sale by
Risanamento, with the deal’s finalization having been
postponed to 2014.
However, single-asset sales for offices have risen by
nearly 10%, further illustrating the attractiveness of
the office market for investors.
Geographically, investment in office space has remained
stable in the Paris CBD while falling sharply in all other
Paris submarkets. It has climbed sharply in the inner
suburbs, particularly in the Emerging North, with many
investment opportunities in Saint-Denis, Saint-Ouen
and Clichy. Growth has been more moderate in the
French regions, the West CBD and in the outer suburbs.
Retail properties, especially shopping centres, have
proved very attractive in 2013. Volumes have been
Non‑residential investment volumes by property type
€ million
2012
2013
12 500
10 000
7 500
5 000
2 500
0
Offices
Light industrial
Warehouses
Shopping centers
Retail
Diversification
up slightly by 1.7% to reach €2.7 billion for the former,
but have soared by a remarkable 154% for shopping
centres. Investment levels in the latter have reached
€938 million: still low when considering the sector’s
demonstrable attractiveness.
Although such assets were less available on the market
in 2013, this trend supports expectations for strong
growth in 2014 due to several high-value transactions,
initiated in 2013, being ready to be finalized in mid-2014.
Seven transactions involving shopping centres were
agreed in 2013, the most significant being the acquisition by Allianz of a 50% stake in five centres owned
by Altarea for €395 million.
Diversification products, mainly hotels and clinics,
have continued to attract investors in 2013. But while
investment volumes in clinics fell sharply compared to
2012, (-41% to only €323 million), investment in hotels
increased by 121% over 2012. Investments in hotels
(excluding acquisitions by the present hotel operator),
reached €1.74 billion in 2013. A single transaction has
accounted for 43% of the total: the acquisition by a
Qatari investor of a portfolio of four luxury hotels in
various locations for €750 million.
Even disregarding this deal, hotel investment has
increased by 26%. With the exception of a portfolio of
four Club Med resorts sold by Gecina to Les Assurances
du Crédit Mutuel for €280 million, and a few small
independent hotels bought through SCPIs, the vast
majority of hotel acquisitions were conducted by U.S.
investment funds. The most noteworthy of these was
the acquisition by Blackstone of the Concorde Opéra
Hotel, next to the Gare Saint Lazare train station, for
€250 million.
With volumes reaching nearly €1 billion, investment activity in warehouses has seen a decline of nearly 7%. This
can be explained by a drop in transactions valued at over
€100 million, and by the lower amount of portfolios valued
at more than €200 million on the market. However, there
has been increased activity in the €20-to-€100 million range.
Retail properties and
shopping centres more
attractive
Several logistics platforms were acquired by a wide variety of
investor types in 2013, including insurance companies, investment funds, (most often SCPIs), or by French, American or
other European funds, (most frequently Belgian, Norwegian
or British) at values ranging between €30 and €60 million.
Light-industry premises have seen an increase in investment activity after four years of uninterrupted decline.
However, the amounts invested in this sector have been
marginal compared to other asset types. At €381 million,
light –industry premises have accounted for only 2% of
total investment.
In 2013, the portfolio sale by AXA of ten business parks has
been solely responsible for the rise in investment volumes
in this sector. This was to to an American fund, Northwood
Investors, for €120 million.
Hotels see rise in investments
Less interest in logistics
Two transactions valued at between €50 and €100 million
occurred in 2013, marking a break with the sector’s
2012 performance. These were the acquisition by AXA
Assurance of Energy Park in Courbevoie for €62 million
and Archon’s purchase of a mixed-activity (light industry/
logistics/offices) portfolio for €70 million.
Apart from these transactions, the remainder of investments
involving light-industry premises concerned assets worth
under €20 million, (or sometimes even less than €10
million). Such assets were mainly purchased by SCPIs and
private investors.
Higher, but still minor interest
in light-industry premises
SPECULATIVE INVESTMENTS
AT THEiR LOWEST LEVEL
Speculative investment has seen a further drop in 2013,
to only €415 million. This represents a further decrease
of 52% from 2012, down to 2009 levels. The lack of
sufficiently clear direction regarding the economy, as well
as widespread uncertainty about the evolution of rental
values, are partly responsible for this steep drop-off in
speculative investment volumes.
Moreover, the easing of certain financing conditions
has not yet benefited the speculative market, which has
remained the preserve of equity investors. However,
estimations regarding the decline in speculative investment
are probably overstated.
Indeed, some investors, especially insurance companies,
have not hesitated to position themselves in speculative
operations in booming areas such as ZAC Clichy
Batignolles or Paris Rive Gauche, but are employing
different methods from those prevailing before the
financial crisis. Some investors, such as AG2R La Mondiale,
Ivanhoé Cambridge or Cardif have speculatively invested
in office buildings in the ZAC Clichy Batignolles or in Paris
Rive Gauche, by winning the public tenders teaming up
with a developer. In this case, the transaction is recognized
as “development” rather than “speculative” especially as
no payment is made by the investor at the time of the
tender being awarded.
Speculative investments: 2005 ‑ 2013
Spec
€ million
Partially let
Let
30 000
25 000
20 000
15 000
10 000
5 000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
The few projects acquired speculatively accounted for
39% of sales involving assets valued at between €20
and €50 million. Only two projects were purchased
at value of more than €50 million. These were the
definitive acquisition by Ivanhoé Cambridge of the
Ardeko Building in Boulogne for nearly €140 million,
and the joint purchase by Eurosic, Crédit Agricole
Assurances and ACM of a building at 27 rue Laffitte
in the 9th arrondissement of Paris for an estimated
€50 million.
A MAJOR INCREASE IN INVESTMENTS
MADE THROUGH OPCis
The increased volume of investments made via OPCIs
is the most striking phenomenon of 2013 with regard
to changes in investor type. €1.7 billion in assets were
transacted through OPCIs in 2013, up 52% over 2012.
Primonial of the Ilot Panhard in the 13th arrondissement
of Paris), the vast majority of office transactions ranged
between €45 and €100 million, representing nearly 68%
of total investments in offices conducted through OPCIs.
The proportion of OPCIs within total investment volumes
increased from 4% to 10% between 2012 and 2013,
with 91% of their usage for the acquisition of office and
retail properties.
Concerning investments in retail properties, however,
70% of transactions in 2013 were valued at over €100
million. The most noteworthy was the sale by Metro
Cash and Carry of a portfolio of 43 wholesaler outlets,
valued at more than €200 million, which accounts for the
269% increase in retail-centered investment conducted
via OPCIs.
With the exception of a single transaction valued at
more than €100 million (the €165 million acquisition by
OPCIs see growing success
investment volumes for non‑residential property in France by investor type
€ million
2012
2013
6 500
4 875
3 250
1 625
0
SIIC
Listed companies
International
Long term funds
Pension funds
As in 2012, investment funds have remained the most
active players in the non-residential investment market
in France in 2013, accounting for 34% of total investment volume. Investment amounts have increased
slightly, by 4% compared to 2012, reaching €6.1 billion.
But unlike in 2012, when the increased volumes were
led by sovereign wealth funds mainly originating from
the Middle-East, American-based funds have been the
main contributor to higher volumes in 2013.
SCPI
OPCI
Life insurance
Private
ment of Paris, by Tishman Speyer Properties of the
Tour Pacific in La Défense, and by Blackstone of the
Colisée III and IV buildings in Saint-Ouen.
There were also a few new American entrants on
the French market, such as KKR, who acquired the
River Plaza Building in Asnières for €85 million, and
Northwood Investors, the buyer of a portfolio of ten
business parks from AXA for €120 million.
U.S. funds have invested €2.1 billion in the French
non-residential real estate market: an increase of 81%
over 2012.
These volumes have been invested by opportunistic
funds, attracted by the arrival on the market of noncore or value added assets, as well as by long-term
funds, driven by the sale of Trophy assets.
Middle-Eastern and Asian sovereign wealth funds have
been less active in 2013, with investment volumes
down 13% compared to 2012. However, they have
still represented 29% of the amounts invested through
funds. Among the major acquisitions of the year was
the portfolio sale of Docks Lyonnais, acquired by Adia
for around €690 million, and the purchase of 8 Place
Vendôme in Paris by SOFAZ, an Azerbaijani oil fund,
for €135 million.
U.S. funds were mainly involved in the acquisition of
offices (51% of their total activity) and hotels (28%),
as well as warehouses (9%) and light-industry business
parks (9%). 78% of their 2013 acquisitions concerned
assets valued over €100 million, primarily located in
Paris (45%) and the West CBD (17%).
German funds have reduced their market activity for
the fifth consecutive year. With €740 million invested
in 2013, this year has marked their lowest performance
by volume in the French market since 1999.
Among the most significant transactions have been
the acquisition by Thor Equities of a property at
65-67 Ave. des Champs-Elysées in the 8th arrondisse-
Although amounts invested were lower than in 2012,
insurance and pension funds have remained major
players in the market in 2013, accounting for 26% of
the overall investment volumes.
Investment funds
among most active players
American funds return
Sovereign wealth funds
still present on market,
though less active
Insurance companies still
major players
Totaling €4.7 billion in 2013, their investment volumes
have been down 7% compared to 2012. This slight
decrease should not last, however, and is due mainly
to the fact that insurance companies have been more
focused on purchasing high-value assets, for which
negotiations are longer and more complicated.
However, this does not alter the underlying trend,
which started in 2012 with a clear return of insurance
companies to the investment market. This was a necessity driven by low bond yields as well as the volatility
being seen in stock markets, and has been further
encouraged by favorable prudential rules relating to
real estate investment.
Slight increase in
SCPIs activity
As in 2012, investment volumes in 2013 on the part of
insurance companies have been their highest since 1995.
While activity on the part of insurance companies has
remained focussed on the office market (60% of the
total volume invested in this sector), the insurance
industry’s range of interests has become more diverse.
Investment in retail properties and shopping centres has
grown significantly, from 4% of their investment activity
in 2012 to 19% in 2013. The most notable deals have
been the acquisition by Allianz of the Altarea portfolio
for €395 million and by Generali of the Passy Plaza mall
for €140 million.
More investments by
domestically-listed
property companies
We also note their return to the logistics market, with
several acquisitions of logistics platforms undertaken by
AG Real Estate and AXA for a combined investment
amount of €157 million.
Moreover, insurance companies have recently tended to
focus their activities on large-scale operations, thereby
significantly increasing their involvement in the over€200-million market. These deals have represented
42.5% of their total investments in 2013, totaling over
€2 billion. The most noteworthy transactions include
the acquisition by Allianz of the Altarea portfolio; Crédit
Agricole Assurances’ purchase of the Eco Campus
Orange in Châtillon, and SMABTP’s acquisition of the
Technopole of Bouygues Telecom in Meudon.
Private investment
has fallen sharply
More generally, 85% of insurance companies’ investments have involved deals valued at over €50 million, and
their investments were more geographically diversified
and balanced in 2013: 27% in Paris (down from 52%
in 2012), 14% in the regions (vs. 8% in 2012), 19% in
the West CBD (vs. 14%), 11% in the inner suburbs (vs.
8%) and 19% in outer suburbs (vs. 13%).
After a quieter year in 2012, SCPIs have again increased
their involvement in non-residential property investment
in 2013. The drop in the collection recorded in the
first half of 2013 was offset by the deferral of a portion
of the uninvested collection from 2012
With nearly €2.4 billion invested in 2013, SCPIs activity
increased by 3% over 2012. Acquisitions have essentially
focused on offices (69%) and retail properties (20%),
as well as on clinics and hotels (6%).
SCPIs have refocused their acquisitions in 2013 within
their more traditional target range: namely, the €20to-€50 million market sector. This accounted for 47%
of their acquisitions, with a further 20% occuring in
the €50-to-€100 million range.
While SCPIs have reduced their investments in regional
markets (down to 31% of overall investment activity
from 36% in 2012), they have increased their commitments sharply in the inner suburbs (22% of investments
in 2013, compared to 7% in 2012) and in Paris, which
have accounted for 14% of SCPIs investments in 2013:
double the level seen in 2012.
As we had anticipated last year, domestically-listed
property companies have increased their participation
in the non-residential real estate market in 2013. The
€1.36 billion invested by domestically-listed property
companies in 2013 represents a rise of nearly 17%
over 2012.
While their performance of the investment market is
still very far from the records seen in 2006 and 2007,
the consolidation of their debt ratio, completed in
2012 has allowed the return of the domestically-listed
property industry to the market as net purchasers.
In 2013, the largest refocus by the industry was in the
€50-to-€100 million range, which rose to 30% of their
investment activity from 13% in 2012. However, their
commitments in the €100-to-€200 million range have
fallen from 35% in 2012 to 32% in 2013.
In terms of asset allocation, domestically-listed property
companies in 2013 adopted investment strategies similar
to those seen in other players, in contrast to their more
atypical behaviour in 2012.
Their investment interests amounted to 65% in the
office market and 19% for retail-related assets. Among
the most significant transactions have been the acquisition by Terreis of a building at 50-52 Bd. Haussmann
in the 9th arrondissement of Paris for €138 million,
and by Klépierre of 50% of the Odysseum shopping
center in Montpellier from Icade for what is believed
to be close to €135 million.
The involvement of private investors and private property firms in the French investment market has fallen
sharply over the past two years, especially due to their
concerns about potential new tax burdens. In 2013,
their investment volumes have been down 20% on the
year to €1.6 billion, with €920 million of this coming
from unlisted property companies, and €630 million
from private investors.
FAR GREATER GEOGRAPHiCAL DiSTRiBUTiON
The geographical distribution of volumes invested in
non-residential property in France has been much
more balanced than in 2012. Less availability and more
intense competition for “core” products have led many
investors to seek to diversify their acquisitions in the
pursuit of higher yields.
2013. At slightly over €5 billion, volumes invested in the
capital fell by nearly 27% compared to 2012, thereby
consisting of only 28% of the national total.
This greater diversification in 2013 most benefited the
regions (particularly in and around Lyon); the West
CBD (notably La Défense), the inner suburbs, (particularly the Emerging North) and, to a lesser extent,
the outer suburbs.
As a consequence, investments in Paris, which accounted
for 40% of the volume invested in 2012, fell sharply in
investment volumes in Île‑de‑France by submarket
2012
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4 000
2013
3 828
3 280
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2 776
2 646
2 141
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All the various markets within the city limits of Paris
have suffered from a decline in investment in 2013. The
Paris CBD, the pre-eminent market for core properties,
recorded an investment volume of €3.28 billion in 2013,
down 8% from 2012. Its share of the total national
volume has dropped from 21% in 2012 to 18% in 2013.
Despite this decline, the Paris CBD proved the most
resilient of the capital’s submarkets in 2013.
€200 million have been up 15% in the Paris CBD, further
illustrating the attractiveness of the area to investors.
Seven transactions valued at between €100 and €200
million have been concluded, worth a total of €974
million: up 35% compared to 2012. The largest of
these is the acquisition by Generali of a building at 4
avenue de l’Opéra in the 1st arrondissement of Paris
for €177 million.
It is the absence of available portfolios and very highvalue assets that best explains the decline in investment
volumes in 2013, despite investor demand and competition in this sector remaining intense.
Transactions valued at over €200 million have been
down 36% in 2013. No deals whatsoever valued at over
€300 million were transacted in 2013, compared to two
in 2012: the sale of a building at 50-52 Ave. ChampsElysées for €512 million and Kan Am’s portfolio sale of
the Néo and Cité du Retiro buildings for €633 million.
While the Paris CBD is clearly highly appealing, the same
cannot be said for the Secondary Business Districts or
the Other Paris areas of the capital, which have seen
investment volumes drop by 55% and 37%, respectively.
In 2013, the most important transactions have been
the Docks Lyonnais portfolio acquired by Adia; the
sale of a building at 6-8 Blvd. Haussmann and another
at 33 rue La Fayette, both in the 9th arrondissement.
The latter was acquired by the German fund Deka
for €280 million.
In contrast, investment transactions valued at less than
Within the secondary Parisian business districts, very
few assets were brought to market in 2013, in marked
contrast to 2012. Five assets valued at more than €100
million and two valued at more than €200 million were
sold in 2012. In 2013, only two assets valued at between
€100 and €200 million were sold. Moreover, sales of
assets priced at over €100 million volumes fell by 73%
in 2013 doing much to explain the overall decline.
Paris CBD sees less activity
for high-value assets
Far fewer assets brought
to market in Paris
outside the CBD
In the Other Paris submarkets, much the same pattern
was evident.Only two deals value at more than €100
million were transacted in 2013 (Îlot Panhard, Passy
Plaza), compared to six in 2012.
The West CBD rebounds,
especially La Défense
The West CBD has recorded a growth of 17% in investment volume in 2013. At €2.15 billion, this accounts for
12% of total investment volume in France.
La Défense has benefited most from the regained attractiveness of this area, accounting for nearly half of the
volume invested in the West CBD.
La Défense, despite rising short-term risk for rentals, a
high vacancy rate and low levels of take-up, is reaping
the rewards of a gradual adjustment by owners in sales
values and yields for buildings experiencing non-secure
rental conditions. This is providing some stimulus for a
stagnating market.
Record volume growth
in the inner suburbs
Less robust growth
in the outer suburbs
In the West CBD, transactions of more than €200 million
have showed the strongest growth in any price range.
Three transactions were finalized in this category,
compared to only one in 2012, representing 46% of
total investment in the West CBD. These deals were the
acquisition of the Tour Sequana in Issy-Les-Moulineaux
for €320 million; the purchase of the Tour Adria in La
Défense via an OPCI managed by Primonial for €450
million, and Tishman Speyer Properties’ purchase of the
Tour Pacific for €215 million.
The inner suburbs have experienced the highest volume
growth this year with €1.63 billion in investments: an
increase of 212% over 2012.
This result is all the more remarkable because it was
achieved in the absence of deals valued at more than
€200 million, in contrast to 2012 when one transaction
of more than €200 million was finalized.
This growth was made possible by the very high level of
transactions of between €50 and €100 million (which,
in totaling nearly €840 million, amounted to 51% of
investments in the area), and an equally strong growth
in the €100-to-€200 million range, which amounted to
almost 30% of total transaction volume.
The regions prove very
appealing, especially Lyon
This record growth has mainly benefited the Emerging
North submarket, where volumes have multiplied by
a factor of 5.5 compared to 2012. Among the most
significant transactions was the acquisition by Cardif and
Sogecap of the Nuovo Building in Clichy for in excess
of €190 million.
The outer suburbs have also seen investment volumes
grow, but less dramatically. With €2.65 billion invested,
volumes increased by 15% compared to 2012. The area
accounted for 15% of investment in France, up from
13% in 2012.
Volumes increased by 83% in the over-€200-million range,
including the signing of one of the largest transactions of
the year, the acquisition by Crédit Agricole Assurance of
the Eco Campus Orange in Châtillon for €380 million.
However, deals valued at between €50 and €200 million
have dropped by 22%
After a decline in 2012, investment volumes in the regions
have rebounded in 2013. At €3.83 billion, investments
increased by 25%. The market share of regions within
total national investment rose from 18% in 2012 to
21% in 2013.
This share would be even stronger if we take into account
the proportion invested in the regions within global
portfolios. This result was achieved by an 83% growth
in deals valued at between €50 and €200 million, and
in particular through a 178% increase in transactions
valued at between €100 and €200 million. The regional
investment market breakdown in 2013 has been: 37%
offices, 32% retail properties, 17% hotels and clinics and
13% logistics centres.
Regional investment is still highly concentrated in the Lyon
area, with nearly 24% of the regional total, followed by
sales of regional portfolios which represent 22% of the
total. Other regional cities lag far behind in market activity.
Among other regional cities, Montpellier ranks in the
third position, because of the sale of its Odysseum shopping center, while Lille was host to 6% of total regional
investment. In 2013, investments were up in Lyon (+6%),
in Marseille (+15%) and in Toulouse (+5%). However,
volumes were still low in the two latter cities, and have
fallen by 18% in Lille.
The concentration has been even stronger in regional
office markets. The Lyon region accounted for 52% of
investment in the sector, followed by Lille with only 8%.
Investment volumes in this sector have been up 28% in
Lyon, but have plummeted in Lille (-30%) in Toulouse
(-29%) and were virtually non-existent in Marseille.
The most important transactions in the Lyon area have
included the acquisition by ANF / Caisses d’Epargne
Rhône-Alpes and DCB of the Le Silky Building in the
Carré de Soie in Villeurbanne for €100 million, and
BPCE’s purchase of the Incity Tower, in the Part Dieu
area, for €136 million for the area not rented by BPCE.
Prime yields stabilize
Prime yields have stabilized in almost all locations, with the
exception of the regions, where they have fallen slightly
and in La Défense, where they have grown.
The regions, however, have experienced a decrease
of 10 basis points in the prime yield from 2012 levels,
which stood at 5.7%. This change has had the greatest
effect on Lyon. In other cities, prime yields have been
stable since 2012, ranging between 5.9% and 6.2%.
In the Paris CBD, prime yields have stabilized in 2013 to
4.25% for office-only buildings. Lower yield levels, however, were seen for those with mixed office-retail usage.
Apart from prime yields, there was a widening gap
between prime assets and those rented under longterm leases on the one hand, and secondary assets
and those rented under less secure agreements on the
other. Yields for the latter reached between 8% and
10%. La Défense has been notable in this regard, with
large assets, sold with unsecured rental agreements,
having yields ranging between 9.5% and 10%.
This stability is due to the rising rates for government
bond yields, which have caused a decrease in risk premiums, thereby limiting the margins of maneuverability
for actors. Meanwhile, premium yields have clearly bottomed out. La Défense has seen a rise in yields from
5.2% to 6%: an increase due mainly to mounting rental
risks in the area.
Yields on office properties by market
2007
4.25 - 4.75 %
4.9 - 5.5 %
5 - 6 %
4.65 - 6 %
5.3 - 6.5 %
5.1 - 6.5 %
Paris CBD
Paris Secondary BD
La Défense-Neuilly
Other west CBD
Other suburbs
Provinces
2008
5 - 5.8 %
5.5 - 6 %
5.75 - 6.5 %
6.25 - 6.75 %
6.75 -7.5 %
6.25 - 8 %
2009
5.5 - 5.75 %
5.5 - 5.75 %
6.5 - 8 %
6.75 - 9 %
6.75 - 9 %
6.5 - 9 %
2010
4.75 - 5.5 %
6..0 - 6.5 %
5.70 - 7 %
6 - 7 %
6 - 8 %
6.2 - 8.25 %
2011
4.5 - 5 %
5.7 - 6.0 %
5.7 - 6.2 %
5.6 - 6.8 %
5.85 - 7 %
6 - 8 %
2012
4.25 – 5 %
5.35 - 5.75 %
5.2 - 6.2 %
5.5 - 6.2 %
6.25 - 7 %
5.8 - 8 %
2013
4.25 - 5.5 %
5.2 - 5.75 %
6.6 - 7.5 %
5.5 - 6.5 %
6.25 - 8 %
5.7 - 8 %
Risk premiums have continued to trend lower, from 451
basis points at the end of 2012 to 246 basis points in
the fourth quarter of 2013. This drop has mainly been
due to higher government bond yields and the decline
in inflation, allowing for a long-term stabilization in prime
yields. Any increase in prime yields is presently unlikely,
however, given the strong current competition between
players to acquire prime properties in the Paris CBD.
Long-term evolution of prime yields vs. government bond rates: 1990-2013
10
Paris CBD
%
Indexed 10 years gov. bond yields
10 years gov. bond yields
8
6
4
2
0
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
19
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
CONCLUSION
CONCLUSiON
The French economy has performed better than
expected in 2013. This has been particularly true in
the fourth quarter, with unexpected growth following
a stagnating third quarter. This has resulted in annual
growth of 0.3%, compared to a widely expected 0.1%
to 0.2%. This slight improvement is due both to higher
domestic and external demand. Domestically, consumer
spending and business investment both improved toward
the end of 2013, limiting the impact of the slowdown
seen earlier in the year on overall annual performance. In
terms of external demand, exports have also increased
more strongly in the fourth quarter (+1.2%) after a
third-quarter net decline of 1.6%, while import growth
was more moderate.
These trends are generally expected to continue
throughout 2014, but will not be enough in themselves
to provide the stimulus needed to generate any rebound.
The French economy is still being constrained by many
obstacles, including low competitiveness levels and
counter-productive tax burdens. Growth in France will
probably remain moderate at 0.8%, but will continue its
slow recovery in 2015 and might rise to 1.2%.
Employment could also improve slightly, mainly due
to the anticipated CICE tax credit program and more
widespread subsidized employment schemes. For Îlede-France, which in 2013 showed much more stable
employment figures than the national average, this
should result in a more substantial, if slight, growth in
employment of 0.5%.
In this economic climate, the rental market could
recover. Take-up activity for small and mediumsized surfaces should benefit directly in an improved
economic environment and resume moderate growth,
with volumes possibly returning to their 2012 levels.
However, as in 2012, the extent of recovery will be
very much dictated by the number of large-surface
transactions. In this respect, the amount of data readily
available regarding take-up requirements on the part
of major companies does not allow for much optimism
regarding their near-future intentions. Most information
available at the end of 2013 points to a downward trend
compared to late 2012. However, too many current
economic uncertainties, and the ponderous tax burdens
being placed on companies are hindering medium-tolong visibility, leading to a virtual standstill regarding
major decisions. Only 12 large-surface transactions
are being finalized or are currently in advanced stages
of negotiation as of February 2014, compared to 17
in February 2013, confirming the negative trend for
large-space take-up. Among such transactions are Veolia’s
45,000 sq. m development in the Parc du Millénaire,
that has been postponed from 2013 to 2014 due to the
need to resolve construction permit issues, the Région
Île-de-France’s 60,000 sq. m turnkey project, that could
be registered in 2014, and the Ministry of the Interior’s
transaction in the 19,000 sq. m Garance Building in the
19th arrondissement of Paris. Some positive surprises
could also come from the partial leasing of the new
or redeveloped office towers that have been, or will
soon be delivered in La Défense. These should allow
the large-surface take-up rate to grow more strongly
than previously forecasted.
Overall take-up could see a recovery, but looks unlikely
to exceed 2 to 2.1 million sq. m.
As in 2012, the evolution of vacancy rates will depend
primarily on the share of take-up in both new and
second-hand properties. If the proportion of prelettings remains at the level of 2013, any effect on the
vacancy rates is unlikely. In any event, the lower supply
available or releasable within a year lessens the risk
of any significant increases in overall vacancy rates.
Geographically, only La Défense is presently at danger
of seeing its vacancy rate rise if take-up remains low.
Elsewhere, particularly in the rest of the West CBD
as well as in Paris and its suburbs, vacancy rates are
expected to stabilize or begin to decrease slightly in
the short term.
Headline rents in the current economic climate should
continue to remain stable, except in La Défense and
the rest of the West CBD where they could fall if the
current oversupply persists. However, the gap between
economic and headline rents should remain substantial,
as no significant improvement in corporate margins is
expected.
The investment market will continue to be healthy, with
the prevailing dynamics close to those detailed in the
previous “Property Market Trends”. Ready liquidity for
property market investment is still a major advantage in
an ongoing environment of low bond yields and stock
market volatility.
• T he net collection of life insurance companies
has turned positive in 2013, although this has yet
to return to the volumes seen in 2009 and 2010.
The collection reached €11 billion in 2013: a major
change from its negative €6 billion in 2012. Their
asset allocation strategy remains increasingly oriented
towards property acquisition in their portfolios. -
Moreover, even if the implementation of Solvency 2
has been postponed to 2015, its influence is already
determining much of their asset allocation strategies.
This has already resulted in a slight increase in the
proportion of real estate within insurance company
portfolios, from 2% in 2012 to 3% in 2013: a trend
that is expected to continue in 2014.
• A s we had predicted, sovereign wealth funds,
particularly funds from Asia such as China, South
Korea, Malaysia,… have been increasingly active in
France. We forecast their interest for french real
estate to strengthen in 2014.
• 2013 has also seen a notable return by opportunistic
funds to the French market. They should also increase
their acquisition activities, with a higher amount of
value-added assets coming to market. Many new
opportunistic funds have been entrants on the
French market (eg. KKR, Mount Kellett, Northwood
Investors): another trend that should continue in 2014.
• The collection of SCPIs is also expected to remain
high, despite the respite seen in 2013 that was most
likely due to a general decline in personal savings.
• The success of OPCI’s should allow them to remain
major players on the investment market in 2014.
• Domestically-listed property companies, whose return
to acquisition activities was small but significant in
2013, should also be consolidating their presence
in 2014.
Meanwhile, the generally better financing climate
seen in 2013 will continue, through banks as well as
through the alternative funding sources introduced in
2012. However, debt financing for riskier investments
will remain a challenge, especially for speculative
developments.
In terms of investment opportunities, certain concerns
we had at the end of 2013 have eased at the beginning
of the new year. Supply is currently both plentiful and
quite diverse, however, still insufficient relative to the
amount of liquidity available.
Rising interest rates, along with higher transfer taxes
in most cities, could lead to upward pressure on prime
yields. However, this could be tempered by increased
competition for already highly sought-after core
assets. Secondary or value-added assets have already
experienced repricing, and should continue to offer
high returns. Finally, the relative scarcity of investment
opportunities involving core assets may help to shift
liquidity towards less “perfect” properties, in terms of
the quality of the buildings, the tenancy schedules or the
locations, assuming that sellers would agree to repricing.
The volumes invested in non-residential real estate
should remain high, reaching at least €18 billion,
especially as a number of high-volume transactions
are currently under offer.
CONCLUSION
THE RENTAL MARKET:
THE SITUATION
IS NOT ALL BAD
THE iNVESTMENT MARKET
IS EXPECTED TO REMAIN
VERY DYNAMIC
Stéphane Guyot-Sionnest - CEO Catella Property
Emmanuel Schreder - CEO Catella Property
« The office rental market in Îlede-France has undergone a crisis
due to a ver y difficult economic
environment. While this observation
is indisputable, the situation has
reflected an economic crisis rather
than a property market crisis.
As clearly illustrated in this report,
take-up for large surfaces has experienced a sharp decline
in 2013. Large companies are being confronted with
too many adverse economic conditions and a lack of
market visibility, making relocation decisions too difficult
to make in the short term. Searches for large surfaces
have been postponed to 2014 or 2015, especially those
originating from companies in the manufacturing sector.
But at present, these requirements remain active. On the
other side, public-sector take-up in this category has not
been dynamic, as had been seen in previous property
market cycles.
Despite this, some areas have performed well in 2013.
This is particularly the case in Boulogne-Billancourt, which
has seen take-up rise by 51%, including for large as well
as small and medium surfaces. This illustrates the good
market fit of available buildings in the city in terms of
size, location and rental values.
The drop in take-up notwithstanding, supply levels are
well under control. There is no real oversupply problem
at present, with the exception of La Défense, where the
situation is expected to improve in 2014. A recovery in
commercialization activity is expected to allow many
areas to move closer to market equilibrium.
The evolution of headline rents has essentially been
determined by a lack of transactions being concluded at
top values. Aside from this, recent developments involving
headline rents present few interesting lessons. They have
not reflected the current economic environment, in which
corporate margins have never been so low, prohibiting
companies from accepting higher rents. Nor have they
reflected the true evolution of rental values, which in 2013
has been most characterized by an excessive gap between
economic and headline rents.This is clearly a problem that
must begin to be resolved. This discrepancy blurs market
visibility, mainly due to a total lack of transparency regarding
the actual level of incentives currently being offered. It is
also damaging to the confidence levels of tenants who
are often preferring simply to renegotiate leases in the
buildings they occupy, rather than considering trying to
engage in more complicated arrangements.
« All indications point to the
investment market remaining buoyant
in 2014. In France, the collection
among life insurance companies in
2013 was €11 billion. In the countries
of northern Europe, personal savings
have stayed very high. Real estate
markets have been very competitive
compared to bond and stock markets, and should benefit
once again from an influx of liquidity. Insurance companies,
investment funds and property companies will continue to
drive the market in 2014. The presence of foreign funds,
(particularly the arrival of many new players), stands as
the most significant event of 2013. This trend is expected
to continue and intensify in 2014, illustrating the growing
appetite of foreign investors for the French non-residential
property market, especially in Île-de-France.
Although the number of investment opportunities is still
inadequate to meet the levels of liquidity available for
property transactions, these are still quite abundant at
the beginning of 2014. Driven in particular by a reduction
of the holding period for assets, their sales allow capital
gains to be generated, thereby offsetting low bond yields.
Only the current state of the rental market could create
obstacles in the system. Over the past few months, we
have noticed a limited number of investors starting to
take economic rents into account in their assessments of
buildings. Even if this does not generate any real rise in
yields, this new development could delay some transactions
in the short term. Only a significant rise in interest rates
could have an upward impact on property yields which
remain, at least for now, very well protected by greater
demand than supply for assets.
But the market has entered a consolidation phase, and is
more diverse, more balanced and has been reorganized,
especially after the «repricing» of unsecured and non-ecocertified assets that has resulted in significant discounts.
This is expected in 2014 to generate volumes at least
equivalent to those seen in 2013, of around €18 billion.
Offices, especially core assets, remain the most desired
product type, particularly in the €30-to100-million price
range in which no adjustment in yields has yet occurred.
The market for retail properties has overheated slightly,
but continues to be popular with investors seeking
diversification.
The property market has not been structurally affected
by this crisis. In fact, it will be one of the first sectors to
benefit from a recovery once economic indicators become
more positive. This recovery should be gradual, and should
result in an increase in take-up in 2014, with more than
two million square meters being commercialized ».
Overall, lower- and medium-size assets, rented with shortterm leases with a need of active asset management,
present very good investment opportunities. Furthermore,
the speculative office market looks set for reinvestment,
including for projects which could be delivered in 2017
and 2018. Risk- taking now offers the promise of rich
rewards, especially with future supply beginning to shrink,
as can be clearly seen in this study, which minimizes the
likelihood of potential vacancies ».
Catella is a European finance group active in Corporate Finance and Asset Management.
450 employees work in 25 cities and 11 European countries including France, Germany,
Sweden, Norway, Denmark, Finland, Spain and the UK.
Catella Property combines the structured approach of an investment bank with local
market knowledge and “Dealability”: in 2013, we acted as advisor in property transactions throughout Europe for a total value of approximately EUR 5,5 billion.
Emmanuel Schreder, Managing Director
Stéphane Guyot-Sionnest, Managing Director
Monique Benisty, MBE Conseil
Catella Property
15/25, boulevard de l’Amiral Bruix
75116 Paris
France
Tél. : +33 (0)1 56 79 79 79
Fax : +33 (0)1 56 79 79 80
[email protected]
www.catella.fr

the PMT document

Transcription

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