The Office market in the Greater Paris Region

Greater Paris Region office market in the 3^rd quarter of 2023: the rental market is gradually catching up on its delayed performance, while the investment market awaits a rebound.

485,000 sq m of office take-up was recorded over Q3, taking the year-to-date volume to 1,352,000 sq m. This -12% year-on-year decrease means that the overall volume was -11% lower than the 10-year average. The rental market in the Greater Paris Region continued to make up for the slow start to the year.

Immediate supply in the Greater Paris Region continued to rise (+3% over the last 3 months, +13% year on year) with levels reaching over 4.6 million sq m by the end of September, 26% of which is new/refurbished space. The vacancy rate currently stands at 8.3%.

The prime rent in the CBD continued to rise to €960 per sq m/year with top values of €1,000. In La Défense, there was a slight reduction in the prime rent to €570 per sq m/year.

With uncertainty currently weighing on real estate values and as the risk premium is slowly being restored, the year-to-date investment volume in the Greater Paris Region only reached €5.5 billion; this is -56% down on last year and the same amount lower than the 10-year average.

In terms of investment volume, the Paris South came in first place with 16 transactions and a volume of over €1.4 billion (26%). This was largely due to the disposals of “Italie 2”, “Apollo”, “Life” and “Vivacity”.

The repricing phase is still underway for all asset types. The prime yield for the best office and retail assets therefore reached 4.00% by the end of Q3. Prime yields for logistics assets stood at 4.50% over the period.

The repricing phase continued for offices resulting in a further prime yield correction. Yields for offices in the CBD therefore rose by +25 basis points quarter on quarter with prime yields from 3.50% to 3.75%.