Paris office property: activity rebounds by 39% in third quarter of 2015
The office market in Paris and Île-de-France recorded 39% more sales and rental transactions between July and September 2015 than the same period the previous year, according to a new study.
Demand for Parisian office real estate grew significantly during the third quarter of 2015, a net improvement on the mediocre performance of the commercial real estate sector in the second quarter. 565,000 m2 of office space were sold or rented during Q3 2015, according to a survey released by the Immostat group, which includes real estate consultancy firms BNP Paribas Real Estate, CBRE, DTZ and Jones Lang LaSalle.
The total amount of commercial real estate investments for the third quarter of 2015 is 5.5 billion euros, or a 96% increase on the amount invested in the third quarter of 2014.
Experts expect the total amount of office surface changing hands by the end of 2015 to reach 2 million m2. Since 1st January 2015, office sales and rentals in Île-de-France totaled 1.5 million m2. This equates to a 6% decrease compared to the first nine months of 2014, but a definite improvement on the drop recorded during 2015 first quarter (-21% compared to Q1 2014).
While sales volumes for small and medium-sized offices — up to 5000 m2 — grew by 11%, larger office spaces recorded a 30% drop in transactions. Nonetheless, three major transactions occurred during this third quarter: the Sequana tower (43,000 m2) leased by hotel group Accor in Issy-les-Moulineaux, the acquisition of the Passio and Opalia buildings (23,000 m2) by the City of Paris in the 13th arrondissement and the Publicis Group’s renting out of PariSquare (20,000 m2) in the 11th.
“In this context, the demand for Île-de-France office should cross the 2 million m2 mark for the whole of 2015 by the end of the year,” predicts Richard Malle, Director of Research for France at BNP Paribas Real Estate.
A 2% decrease has been recorded in the amount of office space available in Paris, which is a positive trend according to BNP Paribas Real Estate, given the high volume of new offices completed this year — almost 1.7 million m2. Nonetheless, vacancy is still high in the west of Paris (reaching 13%) and in La Défense (11%). In Paris, vacancy is a lot lower, at only 4.6%.
For the whole of France, investment amounts in commercial property between January and September 2015 totaled 16.2 billion euros, an 11% decrease on last year. Nonetheless, this remains a low drop in light of last year’s results including four large transactions nearing 4 billion euros.
A BNP Paribas release explains that while the economy has suffered of late due to the Greek crisis as well as the downturn in the Chinese stock market, certain elements supporting growth remain, such as the low cost of building materials, the weakness of the euro and the accommodating policies of the European Central Bank. While the economy grew by only 0.2% in 2014, it is expected to increase by 1.1% in 2015 and by 1.4% in 2016.
Photo credit: Flickr / David Stanley