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OFFICE REAL ESTATE MARKET TRENDSIN PARIS LA DÉFENSE
NEWSLETTER FEBRUARY 2016
REAL ESTATE MARKET SNAPSHOT
For the second straight year, Paris La Défense has achieved excellent results on the office property investment market. This trend confirms the business district’s role as an international real estate market. It also points to the «liquidity» of assets in La Défense, an essential aspect of appeal for current investors. 2016 will mark the launch of new development opportunities by EPADESA, which will further the diversification of Paris La Défense, a major focus of EPADESA’s strategic plan.
LEASE TRANSACTIONS
Paris La Défense wins companies’ confidence and loyalty
With lease renewals (Engie, Allianz, EDF…) on more than 100,000 m² (1,075,000 sq. ft.), substantial internal movements (EDF, CSC, Sogeprom, Sogecap, etc.) and rising demand for complementary office space (Solucom, KPMG, Sopra, etc.), Paris La Défense has once again demonstrated its ability to meet the expectations of its clients and other stakeholders. This success is primarily due to a proactive policy of renewing the office real estate supply and continuously strengthening the public transportation offering, as well as enhancing the services and facilities provided.
Demand from users outside the business district, which stands out as a pillar of rental activity, increased signifi-cantly in 2015. Over the past year, incoming tenants accounted for more than 65% of business, whereas internal movements have historically constituted 60% of the real estate market in La Défense.
This structural trend was combined with a rise in demand for intermediate surface areas (1,000 to 5,000 m² or 10,000 to 55,000 sq. ft.). In 2015, this segment accounted for nearly half of the 150,000 m² (1.6 million sq. ft.) taken up. Finally, the district also witnessed a considerable increase in take-up for smaller surface areas (less than 1,000 m² or 10,750 sq. ft.)
As such, even with the absence of major transactions making it possible to equal the record business volumes seen in 2104, Paris La Défense has maintained the momentum generated in recent years. The business district has reaffirmed its ability to diversify its client portfolio and attract new tenants, particularly from Paris and the capital’s inner suburbs (CSC; B2V; AstraZeneca; Celgene; Ubaf; Demos; etc.).
33%
70%
53%
62%
82%
100%
9 transactionsLa Défense
10 transactionsinner suburbs
19 transactionsParis outside CBD
11 transactionsParis CBD
12 transactionsouter suburbs
26 transactionsWestern Crescent
Source : BNP RE Q3 2015
Internal transactionstransactions > 3,000 m² (32,250 sq. ft.)
New tenants - H2 2015
k in Carpe Diem 8,168 m² or 88,000 sq ft²
k in Eqho Tower 3,117 m² or 33,500 ft²
k in La Grande Arche 5,040 m² or 54,200 ft²
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OFFICE REAL ESTATE MARKET TRENDSIN PARIS LA DÉFENSE
Vacancy rate dropped to under
11 % at end 2015
40 % of immediately available office space is Grade A
NEWSLETTER FEBRUARY 2016
Paris la Défense : a unique “Prime” offering in the Paris Region
A new chapter for La Défense began in 2015 as the steady increase in immediately available office space seen since 2013 came to an end and the vacancy rate dropped to under 11% (Q4 2015) from 12.5% (Q4 2014). This trend will continue in coming years, as no delivery of additional space is expected before 2018.
With yearly average take-up of 180,000 m² (1,950,000 sq. ft.) over the past decade, the next few months should see a substantial reduction in the vacancy rate in Paris La Défense, which is expected to drop to under 9% by the end of 2017.
Despite the fact that this rate remains relatively high:
• Some 40% of immediately available office space is Grade A (new or refurbished), which is the segment most in line with companies’ expectations, as 80% of transactions involve surface areas of 5,000 m² (54,000 sq. ft.) or more.
• Coupled with strong competition, the vacancy rate has a positive effect on property renewal in the business district by encouraging prompt action among owners of previous-generation or non-refurbished buildings threatened by a drop in value or an exit from the rental market.
14%
12%
10%
8%
6%
4%
2%
0%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
RENOVATION NEW CONSTRUCTION
10,914 m2
117,477 sq. ft.
5,10 %
76,360 m2
821,932 sq.ft.
6,30%
114,041 m2
1 227,527 sq.ft.
6,80%
6,80%
191,799 m2
2 064,507 sq. ft.
90,360 m2
972,626 sq.ft.
282,159 m2
3 037 134 sq. ft.
12,70%
83,000 m2
117,477sq.ft.
124,047 m2
117,477 sq. ft.
207,047 m2
2 228,635 sq. ft.
12,50%
38,127 m2
410,395 sq.ft.
10,60%
9,40%
12,000 m2
129,166 sq.ft.
8,70%
53,915 m2
580,336 sq.ft.
188,181m2
2,025,563 sq.ft.
8,00%8,20%
Source : EPADESA
Completion and vacancy rate
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OFFICE REAL ESTATE MARKET TRENDSIN PARIS LA DÉFENSE
NEWSLETTER FEBRUARY 2016
INVESTMENTS
Paris La Défense: A major market for office property investment in Europe
Paris La Défense achieved excellent results on the investment market, accounting for more than 15% of investment transactions in the Paris Region for an overall volume of €1.89 billion.
This performance follows from the transactions carried out in 2014 (the best year since 2008), which saw the acquisition of the Cœur Défense Building by Lone Star, the year’s most significant deal. An overall view of investments is also instructive for the diversity they exhibited, in terms of products, strategies and investor profiles. The year thus reaffirmed the business district’s liquidity and appeal for major investors.
Le Lineak 16,000 m2 (570,000 sq. ft.)k JP Morgan Société de la Tour Eiffelk € 104 millionk Multi-tenant building taken
up at 97%
Esplanade Towerk 53,600 m2 (570,000 sq. ft.)k Tishman Speyer properties �French Ministry Ecology,
Sustainable Develop-ment and Energy
k € 478 millionk Investor/user
Pascal Towersk 63,500 m2 (683,500 sq. ft.)k Morgan Stanley �Goldman Sachs and
Altafundk € 185 millionk Opportunistic investment /
value added with a substantial refurbishment project to be carried out
E+ Buildingk 14,900 m2 (160,500 sq. ft.)k Qatar Islamic Bank Primonialk € 103 millionk Currently being refurbished
by property developer Sogeprom; sold during construction
Engie’s Towers (T1&T2)k 87,000 m2 (936,500 sq. ft.)k Ivanhoé Cambridge Gecinak € 900 millionk Core + ultra large-size
buildings under long-term leases with Engie
More than 15 % of investment transactions in the Paris Region
Paris La Défense investment transactions in 2015
€1,89 billion
Major transactions in 2015
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OFFICE REAL ESTATE MARKET TRENDSIN PARIS LA DÉFENSE
NEWSLETTER FEBRUARY 2016
PERSPECTIVES
Paris La Défense: 2016: a promising year
Strong fundamentals and a positive outlookWhile rents have played a role in attracting new users over the past two years, particularly from Paris, and have contributed the diversification of the business district in terms of sectors of activity, Paris la Défense boasts structural and intangible strengths that offer companies directly measurable economic advantages.
Centrality, accessibility, a skilled workforce, building productivity, a pleasant living environment for employees as well as international brand value are all comparative advantages that contribute daily to strengthening its appeal.
Major announcements to come...After excellent performance in 2015, the investment market will once again be making news with major disposal/acquisition transactions, the appoint-ment of operators for new development projects and the creation of new opportunities in the context of upcoming consultations, in particular EPADESA’s launch of the Les Groues development program.
Right from the start of 2016, First Tower has just been acquired by AXA REIM for more than 800 M€.
Important deals have occured in the first weeks of 2016: 20,000 m² or 215,000 sq. ft. in Egée Tower for Elior and 31, 000 m2 or 333, 500 sq. ft. in Majunga for Deloitte, it will complete the marketing of iconic assets recently delivered in the business district.
First Towerk 86,000 m2 or 925,360 sq. ft. k Beacon Capital PartenersAXA REIMk More than € 800 million
New lease in Majunga Towerk Deloitte k 31,000 m2 or 333,500 sq. ft.k Building completed - end 2014
2016: launch of Les Groues new development program
First important transaction in 2016
31, 000 m2 or
333, 500 sq. ft. in Majunga for Deloitte
First transactions of 2016
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