France’s Commercial Property Market sees Weaker Performance in Second Quarter
After a first quarter that saw a 27% jump in demand year-on-year, France’s commercial property market has had the wind taken out of its sails in the second.
Immostat‘s figures for the French commercial property market in Q2 have disappointed onlookers. In April, May and June, 16% less office, warehouse and retail space was bought or sold than in the same period last year, a figure some commentators have called ‘catastrophic‘.
The strength of the first quarter still means that 2017 has seen a higher demand for commercial property than by this point in 2016. A total of 1,164,600 m2 of commercial property has been leased or sold this year, 4% higher than 2016’s figure.
But investment into the Ile-de-France region has fallen in both quarters: 5 billion euros in Q1 2017, 27% less than Q1 2017; and 2.5 billion euros in Q2 2017, 48% less than Q2 2016.
Warehouses have fared particularly badly. The amount leased or sold in the capital has grown this year, by 2% compared with 2016. But the nationwide figure is 26% lower than 2016, significantly worse than the overall change of +4% when offices and retail space are taken into account. This could be seen as a microcosm of a wider long-term switch from industry to services.
One explanation for the poor performance in the second quarter is an increase in office rents. For new-build offices, this has remained stable at €367 per m2 per year. But for existing office space, this has increased by 3% in the last 12 months, now at €358/m2/year.
But in some separate good news – and somewhat paradoxically considering these figures – the number of company insolvencies fell year-on-year in the first quarter of 2017 at a rate never seen before. A study found there were 12,925 in the first quarter, 7.8% fewer than last year. What’s more, that fall was even stronger in the construction sector, with 16.8% fewer insolvencies year-on-year: 2017 breaking construction records for new-build homes has certainly helped with this.
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