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Office Market in the Greater Paris Region Q2 2013

- Depressed economic context continues to weigh on the leasing market which is down 19% at mid-year.
- Immediately available supply increased slightly this quarter and now represents almost 3.7 million sq m.
- Headline prime rents stand their ground in the most established office sectors.
- Almost 4.3 billion euros were invested in the first half of 2013, i.e. a 13% decrease in one year.
- Ten transactions of over 100 million euros were recorded in the first half of 2013.
- Central Business District prime yield remains stable within a range between 4.50 and 5.00%.

The leasing market continues its trend in the second quarter and remains very affected by the poor economic situation and the degraded business climate. At the end of the first half of the year, only 832,900 sq m of offices had been leased in the Greater Paris Region, i.e. a 19% market downturn. This is the lowest quarterly figure recorded since 2009.

At mid-year, major turnkey contracts shine by their absence, inexorably impacting the leasing market, in particular the large transactions segment
The large transactions market suffered the most from this slowdown. It is true that it had been particularly active in 2011 and 2012 due to the signing of many turnkey contracts. At present this market segment is standing still.
At the end of the first half of the year, although the number of large transactions had only decreased by 10% (25 transactions as against 28 the previous year), the decrease was all the more substantial in terms of floor area with a decrease of 30% representing over 110,000 sq m.
Moreover, upon closer examination of the figures, one notes that the turnkey component of the large transactions segment (>5,000 sq m) dropped substantially. It shifted from 52% in the first half of 2012 to 19% in the first half of 2013.

In this context, the results of the first half should be nuanced. If one excludes the turnkeys from the market, the total volume brought to market at mid-year was virtually the same as that of the previous year: approximately 780,000 sq m in the first half of 2013 as against approx. 825,000 sq m in the first half of 2012. The activity shortfall in the leasing market is therefore in part explained by the slowdown for this type of operation.

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