Office take-up plunges by 46% in Ile-de-France so far this year, says BNPPRE

The market for large units (over 5,000 m2) is still significantly slow (-56% over one year), totalling 252,000 m2 with just 15 transactions. The decline for small and medium-sized units, particularly the <1 000 m2 segment, is less pronounced (-37% over one year). All the districts of Île-de-France have been affected by the fall in take-up with an average vacancy rate across the region of 6.1%.

Two-speed market
BNPPRE expects districts such as La Défense or the Northern Inner Rim to see greater increases in their vacancy rates due to the high number of buildings under construction. Conversely, despite an increase in Paris CBD as well, the vacancy rate is still very low (now at 2.7% compared to a 10-year average of 3.7%).

As construction has slowed, the availability of office space within a year has stabilised over the past three months, and it currently stands at 4.6 million m2 for the Paris region as a whole.
 
‘The level of investment in commercial real estate in France is decent given the current context, with €17.7 bn invested over the first nine months of 2020 (-21% over one year),’ said Olivier Ambrosiali, deputy general manager in charge of the sales and investment division of BNP Paribas Real Estate Transaction France. Interestingly, French investors have made a comeback this year, accounting for 67% of investment.

With investors still very averse to risk, prime yields for logistics and offices have not changed over the last three months, still standing at respectively 4.00% and 2.80%. Only retail premises have seen prime yields rise to 3.00%.
 
‘Exceptionally low bond yields and high volatility on equity markets will continue to make the risk/return of real estate attractive. Under these circumstances, investment in commercial real estate in France should exceed €26 bn in 2020,’ commented Olivier Ambrosiali.