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Research

Report

The office market in the Greater Paris Region - Q4 2016


​2016 - Summary of key points

Rental market:
• There was consolidation in the Greater Paris Region office market throughout 2016 and the overall performance for the year was over 2.4 million sq m (+7% year on year).
• 65 transactions for spaces over 5,000 sq m were recorded in 2016 for a total of over 890,000 sq m.
• Over 1.1 million sq m of office was transacted in Paris, more than was seen across the whole of the Inner Suburbs.
• Immediate supply continued to fall across the Greater Paris Region and stood at 3.5 million sq m by the end of December giving a regional vacancy rate of 6.7%.
• Following an active Q3 in terms of rental values in the CBD, the prime headline rent stabilised at €760 per sq m/year over Q4. At the end of the year, the prime rent in La Défense stood at €515 per sq m/year.

Investment market:
• The €19.6 billion invested in the Greater Paris Region made 2016 one of the best years on record, after 2007 and 2015.
• 323 transactions were recorded in the Greater Paris Region investment market over 2016. This is a record number and is far higher than levels seen in recent years (average of 245 over the last 10 years).
• Over 2016, the distribution of investments remained fairly balanced across the various submarkets of the Greater Paris Region and demonstrates the opportunistic stance being taken by investors.
• The Greater Paris Region investment market remained dominated by French investors (69% of investment volume). However, their share fell towards the end of the year due to several major transactions carried out by international investors.
• Office yields remained stable over Q4, at 3.00% in the CBD and 4.25 - 4.75% in La Défense. Despite an increase in the risk-free rate (OAT) to 0.68% at the end of the year, the risk premium offered by real estate (232 basis points) remains attractive to investors.

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