2019-09-16-TransactionalServicesProposalDechertParisFINAL

Annexe 1 : Market Overview and Trend PARIS CBD Office Market – Take-up and average rents

Take-up: a helping hand from co-working The Paris CBD market continues to perform well, even though immediate supply is at record low levels (108,000 sq m with a vacancy rate of 1.7%). Given this context, take-up in Q2 2019 stood at over 111,000 sq m with more than 200 transactions taking the year-to-date transaction volume to 207,300 sq m. Even though this represents a 4% year-on-year decrease, this is still the 3 rd best performance recorded in the Paris CBD over the last 10 years. In detail, there are 2 opposing trends depending on the space segment: a slowdown in transactions in the small space segment (-23% year on year) with decreases of 20% in Etoile and 27% in Centre as well as an increase in transactions for office spaces over 1,000 sq m (82,000 sq m of take-up). Etoile is currently the main beneficiary of this trend; since the beginning of the year there have already been 25 transactions representing an overall volume of 53,200 sq m (+38% year on year ), 24,000 sq m of which was carried out by co-working operators. These operators are also leading the way in the major transactions segment accounting for 4 out of 5 of the transactions recorded since the beginning of the year with a particular fondness for buildings in Etoile (KWERK on Boulevard Malesherbes and WEWORK on Boulevard Haussmann). More traditional transactions included VALEO with “Cortis” in Paris 17.

Office space take-up in Paris CBD, 000 sq. m

Take-up in Paris CBD by office space range - H1 2019

Range of office space

Sq. m Share Change Y/Y-1

Below 1,000 sq. m

86,800

42%

-23%

From 1,000 to 5,000 sq. m

82,000

40%

+23%

Above 5,000 sq. m

38,500

18%

+5% -4%

TOTAL

207,300 100%

Rental values: ever higher Rental values for office transaction in the Paris CBD remained stable over Q2 2019: the prime rent stands at €825 per sq m per year, an average of €720 per sq m per year for refurbished office space and €620 per sq m per year for second-hand space. The steady rise in rents seen in the Paris CBD since 2014 has driven up prices by 22% over 5 years for second-hand office space and 14% for new space. The increases seen in transaction rents in the Paris CBD are currently higher in the Centre (+12% year on year) than in Etoile (+3%). This has brought about an unprecedented position with virtually identical average rental values in both micro- markets that stand at around €660 per sq m per year across all space segments and types.

Office space rental values, €/sq. m/year

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