The French office market has 'returned to rude health', according to JLL, after a difficult 2013 which is 'best forgotten'.

The French office market has 'returned to rude health', according to JLL, after a difficult 2013 which is 'best forgotten'.

More than €1.1 million m2 of take-up was recorded from January to end-June 2014, thanks to a particularly strong second quarter. The rental market has therefore grown by an additional 200,000 m2 or 24% in a year.

JLL said that the growth was driven by large transactions, as rental demand from large companies was particularly dynamic. This market segment recorded around 30 transactions totalling 500,000 m2, representing 45% of take-up in the first half of the year.

Although the number of transactions increased only slightly, the floor areas leased were much larger. In the second quarter alone, no fewer than five leases were recorded for more than 30,000 m2, including KPMG (La Défense), L'Oreal (Levallois) and Solocal (Boulogne).

LA DEFENSE BACK ON THE OFFENSIVE
La Défense has finally returned to growth – takeup in the first six months of the year has already reached the same level as the whole of 2013 (about 100,000 m2). The Central Business District also recorded strong performances in the first half-year (up 33%).

New offices still fetch a premium. One in two transactions relates to latest generation buildings, the vast majority of which are still under development. The quality of the location and the external and internal environment are essential for attracting and retaining the best staff. The attractive rental conditions being offered in some areas with a plentiful supply of new large properties are also winning over companies looking to consolidate their staff on a single site. Prime rents are still at the lower end of their values.

In the Central Business District, the prime rent stands at €735 per m2, with the most expensive transactions failing to break through the €750 mark in the last year. The situation is different in La Défense. There, prime rents have plummeted to €505. 'As we mentioned last quarter, we believe that La Défense has now reached its lowest point in terms of rental values. The first large tenants for new, recently delivered building will probably give a new impetus to the market, although for the time being La Défense is still tring to find its correct rental level,' said Jacques Bagge, head of the French leasing team of JLL.

Supply, meanwhile, is completely flat. Immediate supply remains at around 3.9 million m2, representing 7.5% of commercial real-estate in the Greater Paris Region.