La Defense boasts exceptional Q1 for office take up

Following a lacklustre 2015, international real estate advisor Savills has observed that the Paris office market has shown signs of normalisation in Q1 this year, with a total take-up of 492,000m recorded. This represented a yoy increase of 19%, however take-up levels for Q1 2016 do still remain slightly below the five-year average (502,109 sq m).

Notably La Defense, Paris’s major business district, has dominated the Ile de France market with an exceptional start to the year. Savills recorded a take-up in excess of 74,000 sqm, which is a 430% rise on Q1 2015. Its success can be attributed to the signing of four lease agreements exceeding 5,000 sq m, including Deloitte’s 31,000sqm, the quarter’s largest letting, and IMS Health’s 11,000 sq m in Tour D2. In the Western Crescent, take-up reached 102,968 sq m (up 47.5% yoy) which equates to almost 21% of the total take-up in Ile de France.

Marie-Josée Lopes, Head of Research, Savills France, comments: “In general terms, the overall market in Paris is improving and large transactions have been more prolific in this quarter than in Q1 2015. There have been 16 this quarter as opposed to last year’s 12.”

Vacancy rates in the central arrondissements have dropped to below the 5% mark, and immediate supply in the CBD has dropped by 21% as Paris records a 15.5% decrease in immediate supply.

The most dynamic markets in the Greater Paris region also registered slight increases in their prime rents at the end of Q1 2016, while prime rents in the CBD climbed 1.4%, registering at €736 per sqm/year. The prime rent in La Defense rose 2.4% to €548 per sqm/year, while in the Western Crescent a 9% spike saw rents top  €524 per sqm/year. Savills reports that the Boucle Nord subsector has had the best performance in terns of rental growth in Ile de France  in Q1 2016, with an increase of 32% (€345 per sq m/year).

Bertrand Renaudeau d’Arc, Director of Office Agency, Savills France, comments:  “This is a promising start to the year, particularly for La Defense. Within the CBD and central arrondissements , the prime office supply has really became scarce and prime rental levels will continue to rise. We expect that increasing numbers of corporate occupiers, expanding in line with France’s economic recovery, will seek to decentralise their businesses outside of Paris where there is high quality, more affordable office space.”

Click here to downlaod take up figures from Q1 2016.