Paris office market remains “robust”

The Paris office market remains “robust” this year, despite any uncertainty surrounding the impact of the UK’s Brexit vote.

According to Knight Frank’s latest report, Île-de-France office take-up amounted to 1.2 million sq m in the first half of the year, surpassing the volumes achieved for the same period last year (27 per cent). Leasing activity stayed strong in the small and medium sized category (59 per cent of transactions), while activity surged among larger corporates.

Occupiers remain focused mostly on inner-city Paris and La Défense. Notably, the La éfense market posted a record H1 with take-up of 126,500 sq m, as corporates, including Deloitte & Associés and Bureau Veritas, contributed to the significant leasing transaction volume.

New deliveries in 2016 are forecast to be well below the average volumes of the preceding three years, and that undersupply is being exacerbated by strong pre-letting activity, with over half of the development pipeline for the next three years already let out.

With demand up and supply limited, the vacancy rate for the central France region has rocketed down to 6.9 per cent, its lowest level in three years.

“Disparities are evident across the Paris Region. Strong occupier activity in La Défense has brought a notable reduction in vacancy levels, with rates falling from 12 per cent in 2015 to the current mark of 9 per cent,” says Knight Frank. “In contrast, higher vacancy levels in the Western Crescent (11.5 per cent) reflect lower occupier activity. Supported by low availability levels, prime CBD rents increased to €760 per sq m per annum, with significant deals concluded for rents over €750 per sq m.”

Full-year take-up is expected to reach 2.4 million sq m in 2016, exceeding the long-term average.

“The occupational market fundamentals in Paris are sound and the outlook remains positive,” concludes the report.