Review 2019 Outlook 2020 - French Property Markets - Knight Frank
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Review 2019 Outlook 2020 French Property Markets
1 2 3 Investment Office Retail
Investment
2019 REVIEW
AND 2020 OUTLOOK
FRANCE
1 2 3
Investment
2019 HIGHLIGHTS
AN EXCEPTIONAL YEAR
LARGE TRANSACTIONS: INCREASINGLY DECISIVE
GREATER PARIS REGION: EVER HIGHER
THE SUCCESS OF THE REGIONS
OFFICES: CONSOLIDATED DOMINANCE
EXAMPLES OF OFFICE TRANSACTIONS ˃ €400 M IN 2019
LA DÉFENSE: 2ND BEST YEAR IN HISTORY
FORWARD FUNDING SALES: THE INNER SUBURBS ARE THE FRONT-RUNNERS
A GRAND PARIS EFFECT
FUNDS AND SCPI/OPCIS ARE DRIVING THE MARKET
A FAIRLY BALANCED MARKET
THE YEAR OF THE SOUTH KOREANS
RETAIL: GOOD RESULTS
RETAIL: MORE BALANCED ACTIVITY
RETAIL: VERY TARGETED INVESTOR APPETITE
LOGISTICS: RECORD BROKEN!
YIELDS: FURTHER DECREASES
KEY TRENDS IN 2020
1 2 3
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
2019 highlights
• Several records beaten: France, Greater Paris Region, regions / Lyon, offices, logistics…
• A year of mega-deals
• Dynamism of savings collectors and foreign funds
• Renewed vigour of retail
• Continued yield compression
1 2 3
5
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
An exceptional year
The French corporate real estate investment
The 2018 record has been shattered!
market reached new highs in 2019, continuing
Change in investment volumes in France,
the phase of strong growth that began in All asset types (offices, retail, industrial), in billions of euros
2014. 35.4 billion euros was invested in
France in 2019, a 16% increase year-on- 2014 – 2018
year and an all-time record. The sums €26.85 billion / year
€35.4
invested in France have increased by almost
50% in five years!
€28.5
While France has many structural advantages,
2009 – 2013
€30.5
it also benefits from a particularly favourable
economic climate. The low interest rate €13.2 billion / year
€27.9
context has taken hold over the long
term, prompting investors to step up the
pace of asset diversification and place
greater emphasis on real estate.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Investment volumes in France 2009-2013 average 2014-2018 average
Source: Knight Frank
1 2 3
6
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Large transactions : increasingly decisive
84 transactions above 100 million euros
A year of mega-deals
were completed in 2019 compared to 77
770
Breakdown of investment volumes in France by size bracket
in 2018. They account for 65% of all
investment volumes in France,
compared with 61% the previous year. transactions
100%
(879 in 2018)
It was the mega deals that made 20% 21%
the difference: transactions in
excess of 200 million euros in 2019
80% 35 > €200 M
totalled 16.3 billion euros, 19% 14% (33 in 2018)
compared with 12.4 billion in 2018. =
19% €16.3 B
60%
Most of them were carried out in the
Greater Paris Region, such as the sale in 20%
the 4th quarter to SOGECAP of "Sways", 40% (12.4 in 2018)
the future headquarters of Canal + in =
46%
Issy-les-Moulineaux, and the sale to GIC
of "PB6" in La Défense. 20% 41% 46%
of volume
(41 % in 2018)
0%
24%
2018 2019
More than €200 M €100-200 M €50-100 M Less than €50 M =
Share of volumes
invested in portfolios
Source: Knight Frank
(24 % in 2018)
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7
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Greater Paris Region: ever higher
The Greater Paris Region accounted 25 billion euro threshold crossed for the first time
for the majority of large transactions and Breakdown of volumes invested in the Greater Paris Region, all asset types
consolidated its leadership in 2019: In billions of euros
last year, 26.6 billion euros were
invested in all transactions € 30 80%
combined, an unprecedented
amount and 75% of investment 78%
activity in France. This volume was € 25
mainly invested in offices (83%), ahead 75% 76%
of retail and industrial premises.
€ 20 74%
72%
€ 15 72% 73%
70%
€ 10 68%
66%
€26.65
€20.2
€5
€22.1
64%
Source: Knight Frank
€ 62%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Greater Paris Region investment volumes Share of Greater Paris Region in French investment volumes
1 2 3
8
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
The success of the regions
The mega-deal effect also played a role in the Historic performance for the Lyon market
regions, notably due to the numerous portfolio Breakdown of volumes invested in the regions, all asset types
acquisitions. Two very large deals in particular In billions of euros
boosted volumes in Q4 2019: Argan's purchase of
the "Cargo" portfolio and ADIA's sale of 38 mixed- € 10 30%
use assets located in Lyon. This transaction, the
24%
Breakdown of investment volume by asset type
largest ever recorded in Lyon, ended an Rhône-Alpes region, in 2019
exceptional year in 2019. With €2.1 billion invested 25%
in 2019 in the Rhône-Alpes region, €8
France's second largest region shattered its
19% 20%
record thanks to the proliferation of large
€6 24%
transactions and the growing appetite of French
and foreign investors, mainly from North America, 15%
Germany and the UK. This change of scale in
the investment market mirrors that of the
57%
€4
rental market, as 2019 was also a record 10%
year in terms of take-up of office space in 19%
Lyon.
€2
€2.10
€1.57
5%
€ 0%
2014 2015 2016 2017 2018 2019
Source: Knight Frank Offices Retail Industrial
Amounts invested in the regions Rhône-Alpes Share of Rhône-Alpes
1 2 3
9
KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Offices: consolidated dominance
In 2018, offices improved on their Seventh consecutive year of growth
previous 2007 record by 13 per cent. The Change in office investment volumes in France, in billions of euros
increase was also 13% in 2019, with 25
billion euros invested in offices in France, Breakdown of investment volumes in France,
by asset type
making the past year the best in history.
However, their share of the total sums
Regions Greater Paris Region 100%
invested in France fell from one year to € 30
the next due to the sharp increase in the €25 9% 12% 14%
90%
amounts invested in logistics, and the
15%
€ 25
renewed vigour of the retail sector. 80% 23% 15%
70%
Paris is an exception in the office market: € 20
activity slowed there in 2019, with 60%
15 transactions in excess of 100
million euros compared to 28 in € 15 50%
2018. This decline is partly due to the
40%
lack of supply and landlords' desire to 73%
68% 71%
retain their Parisian assets. Indeed, € 10
30%
despite the high level of market values,
the strength of the rental market and the 20%
€5
historically low vacancy rates make it
10%
possible to envisage further increases.
€ 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10-year average 2018 2019
Source: Knight Frank lle-de-France Régions Offices Retail Industrial
1 2 3
10KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Examples of office transactions
˃ €400 M in 2019
Swiss Life | Texas portfolio, Paris Primonial / Samsung | Lumière, Paris 12th Amundi / Mirae | Majunga Tower, La Défense La Française / Samsung | Crystal Park, Neuilly
Sogecap | Sways, Issy-les-Moulineaux GIC | PB6 Tower, La Défense Apicil | To-Lyon Tower, Lyon Amundi / La Française REP / CAVP
West Bridge, Levallois-Perret
1 2 3
11KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
La Défense : 2nd best year in history
3.6 billion euros was invested in offices in La Very close to the 2007 record
Défense in around a dozen transactions. The Change in office investment volumes in La Défense
increase is 45% year-on-year and gave the In billions of euros
business district its second best
performance after 2007. La Défense owes this
€5 25%
increase to Asian investors, who were behind five
of the eight transactions of more than 100 million
euros in 2019, two of which were for more than
500 million euros (sale of the Majunga Tower to €4
€3.6 20%
the South Koreans MIRAE ASSET DAEWOO, in
association with AMUNDI, and the purchase of €2.45
the PB6 Tower by GIC, a Singapore sovereign
fund). €3 15%
16%
Other sectors in the West also did well, such as
Neuilly-Levallois, whose activity benefited in the 13%
fourth quarter from the sale of iconic headquarter €2 10%
buildings (West Bridge and the Semaphore in
Levallois), and the Péri-Défense market.
€1 5%
€ 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Knight Frank
Investment volumes - La Défense Transactions > €200 M La Défense share of Greater Paris Region office investment volumes
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12KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Forward funding sales: the Inner Suburbs are the front-runners
The increase in forward funding sale Change in forward funding sale investment volumes in the Greater Paris Region,
investment volumes continued in 2019, notably Individual transactions ≥ €20 M, in billions of euros
to the benefit of the Inner Suburbs. The towns Geographical breakdown
of Greater Paris Region
closest to Paris and with the best transport
office forward funding sales
links remain very popular, partly because they
26 24
€ 4,000 30 Individual transactions ≥ €20 M
are best placed to take advantage of the Share as a %, out of the total number
relocation decisions of Parisian occupiers.
25
The crucial importance of public
transport is also reflected in the growing
€ 3,000
4% 12%
success of the future Grand Paris hubs. 20
Saint-Denis and Saint-Ouen are particularly
popular as several major deadlines approach, 13%
including the extension of line 14 North and the € 2,000 15
2024 Olympic Games, and major urban
15
46%
projects such as the Docks de Saint-Ouen and
the Pleyel project in Saint-Denis move forward. 10
As such, almost 900 million euros was € 1,000
invested in 2019 in these two towns of Seine-
Saint-Denis, including approximately 400 5
25%
€3.28
€2.63
€3.55
million euros in the 4th quarter for the
acquisition by CDC and ALLIANZ of the "V2"
and "V3" projects in Saint-Ouen. €0 0 Paris CBD Paris outside CBD
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Western Crescent Inner Suburbs
Outer Suburbs
Forward sales investment volumes Of which speculative Number of forward sales
Source: Knight Frank
1 2 3
13KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Le Mesnil
A Grand Paris effect -Amelot
Triangle de Gonesse
Office transactions > €20M 2017-2019 in the
Greater Paris Region (excluding Inner Paris) Le Bourget Aéroport
Grand Paris Express Saint-Denis
Pleyel
rollout schedule
Mairie de Le Bourget RER
Nanterre Clichy -
Saint-Ouen
La Folie Montfermeil
2020-2021
Val de Fontenay
Noisy-Champs
2024-2025
Pont de
Sèvres
2027 By volume category
Villejuif Institut €20 – 50 M
Versailles Gustave Roussy
Chantiers €50 – 100 M
2030 €100 – 200 M
Source: Knight Frank
€200 – 400 M
Aéroport d’Orly > 400 M€
1 2 3KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
A fairly balanced market
Investment volumes in France by investor type
The dynamism of the major French All asset types, in billions of euros
savings collectors is a good indication of
the appeal of the real estate market. € 16
SCPI/OPCI funds enjoyed record 2018 2019
levels of inflows and accounted for
€ 14
24% of total investment volumes in
France in 2019, after 19% in 2018.
They are second only to investment funds € 12
- whose dominance is due in particular to
very large transactions undertaken by € 10
foreign investors - and ahead of insurers,
down slightly from 2018. €8
€6
€4
€2
€
Funds Property companies SCPI/OPCIs Private investors Insurance companies Sovereign funds Others
Source: Knight Frank
1 2 3
15KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
A fairly balanced market
As a result of the dynamism of SCPI/OPCIs, Change in the share of French and foreign investors
and the major transactions carried out by Out of all investment volumes in France, all asset types
Breakdown of investment volume by nationality
other types of domestic players (property Out of total investment volume in France,
companies, insurers, etc.), the share of all asset types
French investors increased slightly in 2019. 100%
They accounted for 55% of investment 2018 2019
volumes in France last year, after 54% in
2018. The exceptional performance of
90%
61% 54% 55%
the French market also owes much to 8%
80%
7%
the increase in the amounts
committed by foreign investors. They
54% 55%
70%
Outside of € zone
have been continually increasing in 18%
volume since 2017 and reached 15.8 60% 13% 12% 9%
10%
billion euros in 2019, a 14% increase 1%
50%
year-on-year. North Americans are in first Europeans (€)
place, accounting for 28% of the volume North Americans French Koreans
40%
invested by foreigners last year. They are
fond of offices, industrial and retail 30%
premises, and are equally keen on secure
7%
assets and higher-risk transactions. 20%
46% 45% 5%
39% Others
10%
0%
10-year average 2018 2019
Source: Knight Frank
Share of foreign investors Share of French investors
1 2 3
16KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
The year of the South Koreans
Having led the London market 29% of foreign investments
in 2018, South Koreans were Investment volumes by foreigners in the Greater Paris Region
behind some of the biggest All asset types, in billions of euros
transactions in the Greater Geographical breakdown of South Korean
Paris Region last year: they investment volumes between 2010 and 2019
accounted for 29% of foreign € 14 35% Share as a %, all asset types
investment volumes in 2019 in the 29%
Greater Paris Region, compared € 12 30%
with barely 3% in 2018, and were
ahead of the Germans and the € 10 25%
British.
Inner
Suburbs
La 5%
€8 20% Défense
Unlike the Americans, the South 28%
Koreans' appetite is almost Paris
€6 15% CBD
exclusively for Core and large office 16%
complexes in Paris and the main Western
€4 10%
office sectors of the western Crescent Rest of
34% Inner Paris
€3.4 9%
Greater Paris Region.
€2 5%
€ 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Outer
Suburbs
Foreign investors 8%
Korean investors
Korean's share of foreign investment
Source: Knight Frank
1 2 3
17KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Retail: good results
Retail did not set a new More than 5 billion euros
record in 2019, however, Change in retail investment volumes in France
with 5.3 billion euros In billions of euros, all retail formats combined
invested in France, the
increase is 12% over one
year and 18% compared
to the ten-year average.
€9 35% + 12%
This result actually makes €8 Year-on-year
30%
2019 the third best year in
€7
history and confirms that
25%
retail is still a must, even if
investors remain cautious.
€6 €5.3
€5 20%
€4 15%
€3
€2
15%
10% + 18%
5% 10-year average
€1
€ 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Knight Frank
French retail investment volumes Share of retail (%)
1 2 3
18KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Retail: more balanced activity
As with office and industrial space, 2019 Shopping centres: Key role of large transactions
was a year of large transactions. a recovery that needs to be confirmed Share of transactions > €100 M
Transactions over 100 million euros Retail investment volumes in France Out of all retail investment volumes in France
accounted for 55% of retail investment in Breakdown by asset type
France last year, compared with an average
of 46% over the past ten years. Several 5% 6%
market segments benefited, such as
shopping centres (sale to AXA of 50% and 18%
16%
2019 2018
75% of the shares in "Passage du Havre" 24%
13%
and "Italie 2" respectively) and large retail
distribution (Casino portfolios). 10% 18%
Nevertheless, it was retail streets that
40%
were the main beneficiaries of the
surge in large transactions, with
volumes that amounted to 2.8 billion euros
in 2019, all transaction sizes included.
55% 51%
60%
53%
37%
10-year average 2018 2019
Source: Knight Frank High street Shopping centres Retail parks Others* Transactions over €100 M
*Factory outlet centres, hypermarkets and supermarkets, non-divisible portfolios
1 2 3
19KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Retail: very targeted investor appetite
Several very large high street retail transactions
High street assets remain the priority target
were recorded in the 4th quarter, including the High street investment volumes in France
sale to NORGES BANK of 79 Champs-Élysées, In billions of euros
the future NIKE flagship store, and the purchase
by AMUNDI / CREDIT AGRICOLE of a portfolio of
mixed assets in Lyon, mainly comprised of retail €4 70%
properties. This transaction slightly rebalanced
the geographical distribution of investment
60%
60%
amounts, even though they remain clearly
53%
concentrated in Paris (70% of the sums €3
invested in high street assets in 2019). 50%
The ranking of the capital's districts did not
40%
change either. The sale of the future NIKE
flagship store reinforced the leading €2
position of avenue des Champs-Élysées, 30%
whilst new acquisitions of luxury boutiques and
the purchase by BNP PARIBAS REIM of 51-53
Haussmann consolidated the position of the 20%
€1
other streets in the Parisian top 5: the Rue Saint-
€2.80
€2.86
Honoré / Place Vendôme sector, Avenue 10%
Montaigne, the Opéra/Haussmann district and
Rue du Faubourg Saint-Honoré.
€ 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Knight Frank
High street investment volumes High street share (%)
1 2 3
20KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Logistics: record broken!
Logistics investment volumes by nationality
Investment volumes in In France, in 2019
industrial property reached an XXL portfolios are driving the market
19%
Change in industrial real estate investment volumes
unprecedented 5.1 billion
In France, in billions of euros
euros in 2019, exceeding the
amounts invested in 2018 by 6% 1% Argan
44%, as well as the previous
€6 76% 80% (Cargo Portfolio)
record set in 2017 by 12%. With
67% 58%
70%
this result, industrial premises €5
accounted for 14% of the total
60%
sums invested in France, still far
behind offices (71%) but very close €4 29% 43%
50%
to retail (15%). This strong
performance is mainly due to the
€3 40%
logistics market's surge, and the
sale of warehouse portfolios.
30%
These increased over the months, €2
with eight transactions of more
than 100 million euros recorded in 20%
€4.57
€3.62
2019, including seven in the
€5.12
11%
€1
second half of the year. 10%
10%
€ 0%
France € zone
Source: Knight Frank 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Europe outside € zone North America
Asia/Middle East Others
Industrial investment volumes Logistics Share of portfolios (%)
1 2 3
21KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Yields: further decreases
Institutional investors' Change in prime yields
2010-2019 change
enthusiasm for logistics
as a diversification tool LOGISTICS
contributed to a further 9.00%
compression of prime yields - - 39%
in this market sector. They
8.00%
have decreased by more
than 300 basis points since
2013 and are now close to 7.00%
4% for the best assets on
the main North-South axis. 6.00%
HIGH STREET
With regard to high street
properties, rates remain
below 3% for the best 5.00% - 39%
assets, while offices have
seen a slight 4.25%
4.00%
compression with rates
also below 3% in Paris. 2.90%
3.00%
OFFICES
2.75%
2.00% - - 42%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: Knight Frank
Offices (Paris CBD) High street (Paris) Logistics (Greater Paris Region)
1 2 3
22KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Key trends in 2020: real estate’s advantage continues
Monetary policies remain accommodating Prime yields / bond yields spread
for the time being, particularly in Europe (as a %)
where the ECB has not changed its
strategy since Christine Lagarde took over Prime yields / bond yields spread Greater Paris Region investment volumes
as head of the institution. In 2020, as in 30 4.00%
recent years, the real estate sector
will therefore benefit from the low Real estate advantage
interest rate context, as it has in 25 2.00%
recent years. Coupled with investors'
caution, this should continue to work in
20 0.00%
favour of assets that have good
fundamentals and provide stable and
In billions of euros
Bond advantage
secure income. The shortage of prime 15 -2.00%
supply and the compression of yields will
also favour diversification assets. Finally,
some investors may take on more risk, 10 -4.00%
although they will remain highly selective,
targeting the types of assets and
geographic sectors least exposed to a 5 -6.00%
change in economic conditions.
0 -8.00%
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: Knight Frank/Banque de France
1 2 3
23KNIGHT F R AN K 2019 REVIEW AND 2020 OUTLOOK I NV E S TM E NT
Key trends Risks are
always present
in 2020 • Economic slowdown
• Social and geopolitical tensions
Activity drivers Questions
• Growing interest in the Grand Paris project sectors and regional cities • Continued decrease in prime yields?
• Interest rates: persistently low • Shortage of office supply: what impact on investment volumes and
• Dynamism of international capital flows investors' acquisition criteria?
• Fund-raising: record after record? • Will investors take more risk?
• Investors' search for diversification • Confirmation of renewed interest in retail?
1 2 3
242019 REVIEW
Offices
AND 2020 OUTLOOK
GREATER PARIS REGION
LETTINGS MARKET
1 2 3
25Offices
2019 HIGHLIGHTS
A GOOD YEAR
LARGE TRANSACTIONS: DOWN ON PREVIOUS YEAR
PARIS: DOWN, BUT RESISTANT
NEW SPACE, ALWAYS POPULAR
IMMEDIATE SUPPLY: STABILISING
RENTS: RECORD(S) BROKEN
REBALANCE IN SIGHT?
AND IN THE FUTURE?
WHAT IMPACT ON THE MOBILITY OF LARGE COMPANIES?
10 YEARS OF LARGE COMPANY MOVEMENTS: TOP 10
10 YEARS OF LARGE COMPANY MOVEMENTS: INNER PARIS
10 YEARS OF LARGE COMPANY MOVEMENTS: SUBURBAN OFFICE MARKETS
WHAT CHANGED IN 10 YEARS: AN OVERVIEW
COWORKING: MORE MODERATE DEVELOPMENT
COWORKING: PARIS, STILL WAY AHEAD
THE YEAR OF NEXT40 COMPANIES: EXAMPLES OF LETTINGS TRANSACTIONS
THE YEAR OF NEXT40 COMPANIES: HIGHLIGHTS
BREXIT: CONCLUSION IN 2020 ?
KEY TRENDS IN 2020
1 2 3K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
2019 highlights
• Respectable results: + 5 % above the ten-year average
• Letting volumes limited by the lack of supply
• Paris, always in demand
• Two growing trends: coworking and new tech
• Suburbs: increasing success of the future Grand Paris hubs
1 2 3
27K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
A good year
After an excellent performance in 3000000 Change in take-up in the Greater Paris Region 100
2018, and six years of consecutive
increase in take-up, activity in the
90
Greater Paris Region office market
contracted in 2019. Just over 2500000
-9%
80
690,000 sq m were let or sold to
occupiers in Q4 2019. This volume 69
brings the total take-up of office 70
space over the past year to
2000000 Year-on-year
2,372,000 sq m, down 9% 60
compared to 2018. This result
is still respectable and is 5% 1500000 50
above the average of the last
ten years. 40
+5%
1000000
30
2 372 000
20
10-year average
500000
10
0 0
Source: Knight Frank 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Take up (sq m) Average office take-up 2009-2018 Number of transactions > 5,000 sq m
1 2 3
28K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Large transactions: down on previous year
Partly due to the lack of available supply in
certain office sectors, the slowdown in 2019 Resistance of intermediate sized areas
affected all area categories. Small areas Take-up by area category in the Greater Paris Region
under 1,000 sq m recorded a decrease of
69
Out of total volume in sq m
8% year-on-year, while medium-sized areas
(1,000 to 5,000 sq m) held up slightly better
(-6%). The decrease is more pronounced 16%
9% 15% transactions
for large areas, both in number and in > 5,000 sq m
volume. Accordingly, there were 69
29% (83 in 2018)
transactions over 5,000 sq m (compared 24% 21%
with 83 in 2018) and take-up of 865,000 sq
m in 2019, compared with almost one million
sq m in 2018. This area category now =
represents only 36% of total take-up in
2019 after 38% in 2018, even though 30% 34% 36% 865,490 SQ M
several large transactions were recorded in (975,871 sq m in 2018)
the last quarter (CANAL + in "Sways" in Issy-
les-Moulineaux, etc.). =
30% 28% 28%
36 %
of volume
Source: Knight Frank (38 % in 2018)
10-year average 2018 2019
< 1,000 sq m 1,000 to 5,000 sq m
5,000 to 20,000 sq m > 20,000 sq m
1 2 3
29K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Paris: down, but resistant
The very severe shortage of A dynamic year in the Inner Suburbs Paris: a decrease
available areas has weighed on Share of each geographical sector in total take-up that needs putting into perspective
the Paris market results: take-up In the Greater Paris Region, out of total volume in sq m Change in take-up, by volume
volume there reached just under Between 2018 and 2019
840,000 sq m in 2019, down 20% Outer Suburbs
-14%
compared to 2018 and down 4%
compared to the ten-year average. 2019 Paris CBD
The Central Business District (CBD) Inner Suburbs
12%
-25%
accounted for nearly half of this total:
driven by coworking operators, who Paris outside CBD
were the source of five of the twelve
18% 14% Paris CBD
+16%
transactions above 5,000 sq m in
2019, the CBD remains the driving 15% 17%
force of the Paris market, despite a 18% La Défense
14% drop compared to 2018.
Two sectors show an increase. In the
Inner Suburbs, activity is up 9%
2018
Western Crescent -1%
25%
+9%
owing to the dynamism of large
23%
transactions (14 transactions over Western Crescent 19% Inner Suburbs
5,000 sq m, including six over 27% 5%
-18%
20,000 sq m). La Défense shows Paris outside CBD
an increase of 16%.
7% Outer Suburbs
Source: Knight Frank
La Défense
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30K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
New space, always popular
In 2019, demand from large occupiers Grade A: 70 % of take-up Pre-lettings: almost 80 %
was overwhelmingly for new, Take-up by building quality, in the Greater Paris Region Change in pre-lettings in the Greater Paris Region
redeveloped office space. These % of volume of transactions > 5,000 sq m % of number of transactions > 5,000 sq m undertaken
accounted for 70% of total take-up on new or redeveloped supply
over 5,000 sq m, reflecting the
Share of transactions let at delivery or after
priority given by companies to Share of pre-let transactions 80
80%
the efficiency and quality of their
Second 78%
workspaces. This taste for 76%
hand 73%
new/redeveloped offices is also 60
60%
reflected in a high level of pre-lettings:
almost 80% of Grade A office 18% 51%
40
40%
space over 5,000 sq m let in 2019
in the Greater Paris Region was
Renovated
let prior to delivery. This 20
20%
phenomenon is particularly
pronounced in certain established 12% New/Redeveloped 0
office sectors, notably in Paris (89%).
70% -20
20%
-40
40%
-60
60%
80%
-80
2016 2017 2018 2019
1 2 3
31K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Immediate supply: stabilising
The volume of immediate supply of 10-year low
office space totalled 2,737,000 sq
Change in immediate supply and vacancy rate
m in the Greater Paris Region at the In the Greater Paris Region, as a %
end of 2019, down 5% year-on-
year. Office stock is therefore
5%
4,500,000 sq m 9
stabilising after several years
of sharp decline
4,000,000 sq m 7.7 % 8
(-28% between the end of 2014
and the end of 2018). The vacancy Vacancy rate in the
rate is now 5% and is at its lowest
3,500,000 sq m 7 Greater Paris
level since 2008, although the Region
5.0 %
End 2019
situation remains highly contrasted 3,000,000 sq m 6
between the various office sectors
in the Paris region. The limited 2,500,000 sq m 5
number of deliveries of
available projects, and very 2,000,000 sq m
5.5 % 4
high occupier demand,
continued to deplete the Inner
Paris market, with a vacancy rate
of just 2.1% at the end of 2019.
1,500,000 sq m 3
2.1%
1,000,000 sq m 2 Vacancy rate in
Inner Paris
2,737,000
End 2019
500,000 sq m 1
Source: Knight Frank
0 sq m 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Immediate supply (sq m) Vacancy rate
1 2 3 32K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Rents: record(s) broken
The capital’s supply shortage Paris: under pressure Prime rents: heading towards €900
situation has been observed for Number of transactions Change in prime and average Greater Paris Region rents
several months and explains the ≥ €800 /sq m/year In €/sq m/year
surge in Market Rents. As such, In Inner Paris,
for areas ≥ 500 sq m
prime rents are breaking records, € 1,000 /sqm
reaching €865 /sq m/year in the CBD
865
(+3% year-on-year). This trend is € 900 /sqm 840
accompanied by a sharp increase in 790 810
transactions of more than 500 sq m
signed at values in excess of €800/sq 21 € 800 /sqm
m/year in Paris, with 21 in 2019 € 700 /sqm
compared to 14 in 2018, and only
three in 2017. Some Parisian areas in 1 € 600 /sqm
the East and on the Left Bank are also 2
€ 500 /sqm
recording strong increases, partly 405 408 410 411
linked to the boom in demand
1 € 400 /sqm
from coworking operators and
new technology companies, as is
the case in the CBD. 3 14 € 300 /sqm
€ 200 /sqm
€ 100 /sqm
Source: Knight Frank € 0 /sqm
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Average rent Prime rent
1 2 3
33K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Rebalance in sight?
More than 130 projects over Growth in deliveries Increased opportunities in La Défense
5,000 sq m are currently under Deliveries of new or redeveloped areas > 5,000 sq m in the Greater Paris Region and the Inner Suburbs
construction in the Greater Paris
Share of pre-lettings by geographical sector
Region, representing a total of Office supply to be delivered by the end of 2022
nearly 2.6 million sq m, 58% 2,000,000 sq m (Building permit submitted/ Building permit
Available deliveries
of which is still available. Two granted/ Under construction)
Pre-let deliveries
sectors are particularly well 1,800,000 sq m
Delivered areas
supplied: La Défense, where
Average new/redeveloped office take-up > 5,000 sq m (2014/2019)
more than 400,000 sq m of 1,600,000 sq m
office space is under construction 58% 52%
or redevelopment, and the Inner 1,400,000 sq m
Suburbs especially, where this
volume amounts to almost 1,200,000 sq m
800,000 sq m, of which only 42% 48%
28% has been pre-let. Short 1,000,000 sq m
and medium-term availability Inner Paris Western
is much lower in Inner Paris, 800,000 sq m Crescent
with a pre-letting rate of 57% in
the CBD and 60% in the other
600,000 sq m 83% 77%
areas of the capital.
400,000 sq m
48%
29%
200,000 sq m 17% 23%
10%
0 sq m
Inner Suburbs La Défense
Source: Knight Frank 2014 2015 2016 2017 2018 2019 2020 2021 2022
Pre-let Available
1 2 3
34K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
And in the future?
Three major development trends can be Finally, the future Grand Paris hubs The main development sectors
identified with regard to the future are attracting growing interest from Mapping of future office projects > 5,000 sq m in the Greater Paris Region between 2020 and 2022
production of offices in the Greater Paris investors and occupiers, resulting in an New/redeveloped building, under construction or not yet begun (with or without building permit)
Region. The first is the renewal of the acceleration of future projects in towns
most established office hubs, which in the East (Fontenay-sous-Bois, etc.),
explains the high number of projects the South (Montrouge, Bagneux, Villejuif,
identified in the CBD and in the main etc.) and particularly in the North (Saint-
sectors in the West. The second shows Ouen, Saint-Denis) of the Greater Paris
the potential of areas located at the Region.
capital’s inner ring road junctions.
MAIN TRENDS
Established hubs
Renewal of the Paris and Western Crescent office stock
(CBD, La Défense, etc.)
Paris / Inner Suburbs
Dynamism of the ring road junctions (accessibility, quality of
supply, available land, etc.)
Rest of the Inner Suburbs
Development of the Grand Paris hubs (Saint-Denis,
Fontenay-sous-Bois, Villejuif, etc.)
1 2 3
Source: Knight Frank 35K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
What impact on the mobility of large companies?
An analysis of the movements of major Occupier mobility
occupiers over the 2017-2019 period % of number of transactions ≥ 5,000 sq m in the Greater Paris Region, between 2017 and 2019
makes it possible to identify the most
captive office markets, and those subject Company coming from… Left the sector to go to… Stayed in the sector
to greater company mobility.
Paris CBD Paris CBD 68%
The Outer Suburbs remain mainly driven
by endogenous movements, while the La
Défense sector has seen a majority of
companies favour neighbouring sectors Paris outside CBD Paris outside CBD 44% Negative balance Paris CBD
(Western Crescent). With its future large Paris outside CBD
deliveries, the business district could
48%
La Défense
recover its appeal. Nevertheless, La Défense La Défense Negative balance
several other sectors in the suburbs will Western Crescent
also be more attractive, multiplying the
alternatives available to companies. Western Crescent Western Crescent 73 % Inner Suburbs
Outer Suburbs
In Paris, sectors outside the CBD are
showing a negative balance. Unlike La Inner Suburbs Inner Suburbs 78 %
Défense, however, future supply will
remain limited, which should
encourage further occupier
Outer Suburbs Outer Suburbs 88 %
relocations, particularly to
neighbouring Inner Suburb hubs
with good transport links. -100 -80 -60 -40 -20 0 20 40 60 80 100
Source: Knight Frank
1 2 3
36K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
10 years of large company movements
The beginning of a new decade is an Orange in the lead Coworking: in the big league
opportunity to take stock of the past Top 10 companies that use the most sq m of office space Share of each business sector in total take-up ˃ 5,000 sq m
decade. During this period, the large areas In the Greater Paris Region, between 2010 and 2019, In the Greater Paris Region, out of total volume in sq m
transactions > 5,000 sq m
market was driven by the recurrent
movements of several large French
Company Total volume in sq m
companies. Orange is the leading 6%
company in the Greater Paris Region in ORANGE 277,000 Others 2% 16%
terms of the consumption of office 8%
space over 5,000 square metres BNP PARIBAS 227,000
Coworking / 11%
between 2010 and 2019. France's largest
Flex 17%
banking groups also continued to streamline
GROUPE ALTICE / SFR 210,000 2%
their operations, fuelling demand. In 2019, 8%
GROUPE BPCE 208,000 Consulting
several of them further stood out through the
17%
signing of large new leases (Crédit Agricole EDF / ERDF 207,000 15%
Administration
in Montrouge, Société Générale in Fontenay-
sous-Bois, etc.). But one of the most CRÉDIT AGRICOLE / LCL 204,000
striking trends in recent years has
New Tech / 20%
undoubtedly been WeWork's SOCIÉTÉ GÉNÉRALE 172,000 Media 24%
breakthrough: the American operator has
taken 8th place in the ranking of the decade's WEWORK 151,000 Banking /
biggest occupiers, even though the company Insurance
didn’t open its first site there until 2017 (rue THALÈS 149,000 30%
Lafayette, in the 9th district). 24%
SNCF 133,000 Manufacturing-
Distribution
Source: Knight Frank
2010-2018 2019
1 2 3
37K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
10 years of large company movements
In Paris, the analysis of take-up volumes over Breakdown in Paris
5,000 sq m during the 2010-2019 period Share of each district in total take-up ˃ 5,000 sq m
shows a fairly clear geographical In Inner Paris, between 2010 and 2019
concentration of the activity of large
occupiers. Two sectors account for the
Paris 15, 13, 17, 19
15-20%
largest share. The heart of the capital
remains a must, driven by the market in the 10-15%
Very dynamic outer districts
8th district and an increasingly marked 5-10%
XVIII
extension of the CBD towards the east Available land / Development projects
2-5% XIX (Clichy-Batignolles, Balard, etc.)
(Paris 9th and 2nd). This area is a prime target XVII
Consolidation of large business sectors
for large "captive" companies (finance, Less than 2 %
(banking, administration, etc.)
consulting, etc.), and also benefits from the IX X
growing demand from more recent
activity sectors such as coworking and VIII II
digital technology. III
XX
I XI
XVI
The outer districts (13th, 15th, 17th, etc.) have
Paris 8, 9, 2
VII IV
also captured a significant share of demand
from large occupiers, in sectors such as
VI
V XII The driving force in the Parisian market
banking/insurance and administration.
XV Renewal of stock
Advantages of these areas include:
Captive occupiers (luxury, consulting, finance)
excellent access, a Parisian address, Rise of coworking and Tech
XIV XIII
the good value for money of their real “Location, location, location”
estate supply and opportunities for
large areas that have been boosted by the
completion of urban projects (Semapa, Source: Knight Frank
Balard, Batignolles, etc.).
1 2 3
38K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
10 years of large company movements
Outside Paris, the results of the past Top 10 towns in the Greater Paris Region The winning trio
decade show a fairly classic On total take-up > 5,000 sq m On total take-up > 5,000 sq m
polarisation of the activity of large Outside Paris between 2010 and 2019 Outside Paris between 2010 and 2019
occupiers in the main office hubs
of the West, such as La Défense,
Levallois-Perret, Boulogne-Billancourt
and Issy-les-Moulineaux. The latter Saint Denis Courbevoie
town is very popular, confirmed in 2019
by several major moves such as 1 664,800 sq m let
between 2010 and 2019*
▼ 15% compared to 2000-2009
CANAL + who took a lease on "Sways" Saint-Ouen
and CNP's acquisition of the "Issy
Courbevoie 50 large transactions
Cœur de Ville" offices. Outside of the Nanterre Levallois-Perret
more established sectors, three towns
Issy-les-Moulineaux
2
accounted for a significant share of Puteaux
524,400 sq m let
demand for areas over 5,000 sq m, between 2010 and 2019*
starting with Montrouge, which is Rueil-Malmaison ▲ 57% compared to 2000-2009
sought-after by large French 27 large transactions
companies such as EDF and Crédit
Agricole. In the North, Saint-Ouen
and Saint-Denis have in just a few
Boulogne - Billancourt Saint-Denis
years become major office hubs.
Issy-les-Moulineaux
3 452,800 sq m let between
2010 and 2019*
▲ 22% compared to 2000-2009
Montrouge 23 large transactions
Source: Knight Frank
*Take-up of areas over 5,000 sq m
1 2 3
39K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
What changed in 10 years: an overview
While the last ten years have not really changed the hierarchy of emergence of new ways of communicating and working. flexibility, and the huge increase in the number of
the various office hubs in the Greater Paris Region, a few major New types of operators such as digital companies, have also coworking spaces is undoubtedly one of the most obvious
structural changes have profoundly transformed the emerged, leasing ever larger office areas and focusing on the examples.
demand and expectations of companies in terms of most central areas of the conurbation in order to be able to
office space design. Among these factors, the digital attract the best people. Finally, the transformation of working
revolution has played a major role in encouraging the methods has also met the demand for an increased need for
DIGITALISATION NEW WAYS UNCERTAIN FORMALISATION OF
TECH BOOM OF WORKING ENVIRONMENT GRAND PARIS
KEY
TRENDS
MORE
ATTRACTING SURROUNDINGS /
IMPACT ON FLEXIBILITY /
BUSINESS DEMAND TALENT ACCESS
PRODUCTIVITY
IMPACT ON THE « FLEX OFFICE » WELL-BEING PRIORITY GIVEN TO
OFFICE PROPERTY
MARKET BOOM AT WORK CENTRAL DISTRICTS
1 2 3
40K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Coworking: more moderate development
Taking all areas together, coworking But take-up at its highest level … … and WeWork is still in the lead
operator leases totalled almost Change in take-up by coworking operators Breakdown of coworking take-up volumes, by operator
200,000 sq m in 2019, a 38% In the Greater Paris region, between 2015 and 2019 In the Greater Paris region, between 2015 and 2019, all areas included
increase over 2018. Activity was
particularly strong in the > 5,000 sq m
area category, with 11% of the Greater 250,000 sq m 80
Paris Region take-up volume in 2019
falling in this market category (compared 70
with 9% in 2018 and 5% in 2017). In 69,000 sq m
200,000 sq m
Inner Paris, their share even reached 60
35%! WEWORK are still the leader in
terms of the number of square metres let, 50
150,000 sq m
despite a marked deceleration in the
second half of the year. Other operators 40
were behind large transactions, such as
KWERK in the 8th district and WOJO in 100,000 sq m
30 177,000 sq m 65,000 sq m
the 13th and 14th districts. On smaller
areas, DESKEO continued its rapid 20
expansion with more than thirty 50,000 sq m
sites leased, most of them located in 10
the capital and in a few towns in the
Hauts-de-Seine department. 0 sq m 0 53,000 sq m
2015 2016 2017 2018 2019
Take-up (sq m) Take-up > 5,000 sq m
Source: Knight Frank Number of transactions 34,000 sq m
22,000 sq m
1 2 3
41K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Coworking: Paris accounts for nearly three-quarters of all volumes
leased by coworking operators since 2015, including a
14th districts), while WeWork set foot outside Paris
by signing their first space in La Défense ("Les
Paris, still way ahead very substantial share in the CBD. However, 2019
confirmed the trend towards the geographic
Collines de l'Arche"). Outside Paris and La Défense,
coworking operators have targeted the largest office
expansion of coworking, with several large areas hubs in the West, such as Neuilly or Boulogne.
…but more projects in the Western sectors leased in Paris outside the CBD (Wojo in the 13th and
Geographic breakdown of take-up by coworking operators
In the Greater Paris region, between 2015 and 2019
Mapping of lettings to coworking operators between 2015 and 2019
Outer Suburbs
Inner Suburbs 1%
Western Crescent 3%
10%
La Défense 12% 40% Paris CBD
Paris North East 9%
17% 8%
Paris South
Paris Centre West
(Outside CBD)
1 2 3
Source : Knight Frank 42K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
The year of Next40 companies
Like coworking, another relatively recent Examples of lettings in 2018-2019
sector is becoming increasingly important: In the Greater Paris Region
digital companies, many of whom are
opting for coworking spaces to support Year Tenant Address Area (sq m)
40%
their growth and increase their flexibility. 2019 DOCTOLIB LE SEMAPHORE, LEVALLOIS-PERRET 11,230
They are also leasing their own offices, and
this for increasingly larger areas, as shown 2019 BELIEVE DIGITAL KONECT, SAINT-OUEN 9,880
by the lettings in 2018 and 2019 to several of Next40 companies have
2019 PAYFIT QUAI 8, PARIS 8 8,000
companies of the Next40, the index leased office space in two
unveiled last year by the government and 2019 IVALUA 100 AVENUE DE PARIS, MASSY 5,180 years in the Greater Paris
intended to encourage the development of region
2019 DEEZER 29 RUE DE CALAIS, PARIS 9 5,100
world-class technological leaders. Next40
companies accounted for 5% of take-up 2018 YOUNITED CREDIT 21 RUE DE CHATEAUDUN, PARIS 9 4,530
> 5,000 sq m in 2019 in the Greater 2019 BLABLACAR 6-8 RUE SEDAINE, PARIS 11 4,300
Paris Region, even though the majority of
these companies were created less than 2018 MEERO LE CENTORIAL, PARIS 2 3,600
ten years ago. This is the case for 2018 LEDGER #CLOUD, PARIS 2 2,400
DOCTOLIB and PAYFIT, the latter of which
leased just under 8,000 sq m on rue de
Saint-Pétersbourg in the 8th district and
2018 WYND TOUR MIRABEAU, PARIS 15 2,200
65 000 M²
2018 ALAN 117 QUAI DE VALMY, PARIS 10 2,200 in total over the period, of
multiplied the size of its offices by more
which 67 % was in 2019
than 120 since 2014! 2018 DEVIALET 35 RUE LA BOETIE, PARIS 8 1,980
2018 SHIFT TECHNOLOGY BERCY CRYSTAL, PARIS 12 1,660
Source: Knight Frank 2018 VESTIAIRE COLLECTIVE LE BARJAC, PARIS 15 1,300
1 2 3
43K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
The year The growth of digital companies is hardly
surprising: whether or not they belong to
and the need to have premises large enough
to house these new employees. Real estate
facilities and their services are essential
factors in the war that these digital
of Next40
the Next40, their commercial successes therefore plays an eminently strategic role in companies are waging to attract or retain
and the successive fundraising they enabling them to continue their growth. The the best talent.
receive imply major recruitment needs
companies
offices, the quality of their address, their
A recent existance An example of rapid growth Paris first and foremost!
95 % Areas
70 %
of Next40 companies have
of Next40 companies
x 123
did not exist before 2000 their head offices in Paris
in 5 years 10%
A share that remains
modest but is already… 20% 45%
5% 10%
of the volume of movements > 5,000 sq m
15%
in 2019 in the Greater Paris Region
8,000 sq m 2019
1,470 sq m 2017
240 sq m 2016 Paris CBD/Centre West
65 sq m 2014 Paris South
Paris North East
Others Greater Paris Region
Regions
Source: La French Tech/Knight Frank Source: Knight Frank Source: Knight Frank
1 2 3
44K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Brexit: conclusion in 2020 ?
In 2020, the possible Down on last year Paris, solid third
Geographical breakdown of Brexit related movements in Europe
conclusion of Brexit could Chronological change in Brexit-related movements in Europe
Announced, actual or potential movements, by city
trigger a revival of company Announced, actual or potential movements
relocations, which were
relatively few in number in 2019.
Paris remains well placed to
benefit from this: with 68 250
472 107
mouvements Dublin
definite or potential
projects out of the 472
identified in Europe since 200 73
the 2016 referendum, it is still Luxembourg
68
far behind Dublin (107) but has
closed the gap with 150
Luxembourg (73). Furthermore,
57
Paris/Greater Paris Region
it is now well ahead of
Amsterdam (57) and Frankfurt
100
(50). Amsterdam
50
50
Frankfurt
19
Source: Knight Frank
0 Brussels
16
2016 2017 2018 2019
Madrid
1 2 3
45K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Brexit: conclusion in 2020 ?
The activity sectors of companies that
The CBD first and foremost
Paris: less diversity Geographical breakdown of movements recorded in the Greater
have so far chosen Paris are less diverse Breakdown of movements by activity sector Paris Region (movements completed or actively sought)
than those of other major European By number of movements
cities. For example, Amsterdam has
succeeded in attracting companies with fairly 72% 53%
diverse profiles (pharmaceutical companies,
large audio-visual companies, Japanese 8%
industrial flagships such as Sony and Finance 5%
Panasonic, etc.). In Paris, three-quarters of
Brexit-related relocation projects that are
certain or potential concern companies in the
financial sector. This share even exceeds 80%
if Fintech's movements are included, illustrating 10% 12% Fintech
the strengthening of Paris as a leading financial
centre. Driven by international finance,
87%
traditionally captive to an address in the CBD,
the demand for Brexit-related offices
Insurance
therefore almost exclusively targets this
market. This is where the most significant 7% 12%
movements have been identified, whether in
terms of projects that have already been Others
completed (Bank of America, Wells Fargo, Media, lawyers,
pharmaceutical sector,
MUFG, etc.) or real estate searches that are recruitment consultancy,
ongoing. 11% etc.
23%
Source: Knight Frank Paris CBD Paris outside CBD La Défense
Paris European average
1 2 3
46K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK OFFICE
LETTINGS
Context:
Key trends still uncertain
in 2020 • Slowdown in global growth
• Resilience of the French economy?
• Risks are still numerous (Brexit, elections in the USA, social tensions in France,
etc.)
The main drivers Main areas
of demand of development
• New ways of working
• Renewal of the office stock of established office hubs (Paris, Western Crescent)
• Increased search for flexibility and services
• Dynamism of the capital's inner ring road junctions (Parisian address, accessibility,
• Attracting and retaining talent (access, well-being, etc.)
quality of supply)
• Continued expansion of digital companies
• Development of the Grand Paris hubs (Saint-Denis, Saint-Ouen, Fontenay-sous-Bois,
• Continued streamlining of more "traditional" occupiers
Villejuif, etc.).
1 2 3
47Retail
2019 REVIEW
AND 2020 OUTLOOK
FRANCE
1 2 3
48Retail
2019 HIGHLIGHTS
MACRO-ECONOMIC CONTEXT
TOURISM CONTINUES TO PLAY A KEY ROLE
FASHION: SOME DIFFICULTIES, BUT...
NEW FOREIGN BRANDS: A VERY APPEALING MARKET
MULTIPLICATION OF FORMATS
DNVBS: A PHENOMENON THAT NEEDS TO BE PUT INTO PERSPECTIVE
LUXURY: A DYNAMIC MARKET
LUXURY MARKET DRIVEN BY: …
LUXURY: WHAT ARE THE GEOGRAPHICAL CHANGES?
CONTRASTING TRENDS
PARIS: THE TRANSFORMATION CONTINUES
RUE DE RIVOLI: THE REVIVAL?
SHOPPING CENTRES: PRIORITY GIVEN TO THE RENOVATION OF EXISTING CENTRES
SHOPPING CENTRES: EXAMPLES OF 2019-2020 OPENINGS
RETAIL PARKS: SUSTAINED GROWTH
RETAIL PARKS: EXAMPLES OF 2019-2020 OPENINGS
KEY TRENDS IN 2020
1 2 3KNIGHT FRANK 2019 REVIEW AND 2020 OUTLOOK R E T AI L
2019 highlights
• A dynamic market, in spite of the yellow vests movement and social protests
• Significant increase in the arrival of new foreign brands
• DNVBs: openings that underline the importance of physical retail
• Luxury: continued expansion of major brands through the opening of new flagships
• Shopping centres: priority given to the renovation and extension of existing properties
1 2 3
50K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK R E T AI L
Macro-economic context
After a difficult start to the year, Confidence: year-end stall Recovery in consumption
signs of a more favourable Household opinion Household consumption and gross disposable income
economic climate for businesses Synthetic indicator - CVS-CJO data
grew in 2019, from the increase in 3%
purchasing power to dynamic job 130
creation. While forecasters
agree that consumption will
pick up, social movements 120
2%
nevertheless ended 2019 on a
negative note and undermined
household confidence, after 2%
110 102
retailers had already suffered from
the effects of the yellow vests
movement in 2018.
100 1%
90 1%
87
80 1.60% 1.60% 0.90% 1.20% 1.50% 1.40%
déc-00
déc-03
déc-06
déc-09
déc-12
déc-15
déc-18
juin-02
juin-05
juin-08
juin-11
juin-14
juin-17
sept-01
sept-04
sept-07
sept-10
sept-13
sept-16
sept-19
mars-00
mars-03
mars-06
mars-09
mars-12
mars-15
mars-18
0%
2016 2017 2018 2019 2020 2021
Consumption Purchasing power
Source: INSEE Source: Banque de France
1 2 3
51K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK R E T AI L
Tourism continues to play a key role
After a record year in 2018, tourist numbers remained at International tourism ...but has significantly increased
high levels in Paris, despite a slight decrease in foreign
slowed down in 2019... in the last ten years
tourist arrivals. Nevertheless, the number of foreign tourists
Number of hotel arrivals
has increased by more than 20% over the last ten Change in the number of hotel arrivals in Paris
In millions in Paris, 2018/2019 change
years, boosted in particular by an increase in the number of from January to October
Between 2010 and 2019, January-October period each year
American (+54%) and Chinese (+219%) tourists.
8.4 French and International
8.6
+ 13.3 %
5.5 5.9
International
2018
+ 21.7 %
2019
French
Foreigners
+ 3.1 %
French
Total
Source: Office de Tourisme et des Congrès de Paris Source: Office de Tourisme et des Congrès de Paris
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52
52K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK R E T AI L
Fashion: some difficulties, but...…
The clothing sector continues to be A more moderate slowdown An ongoing important role in the French retail market
penalised by consumer decisions, Textile-clothing sales in France, annual change
as illustrated by the difficulties of
several historic brands. However, New foreign
retailers in France
the decrease in sales is expected +0.7% in 2019
to be more moderate in 2020.
Fashion remains an essential 36%
component of the French retail
2019e
2020p
2007-2015
2016
2017
2018
landscape, accounting for example
for a significant proportion of
new foreign retailers or DNVB -1%
-1% -0.8%
projects in France.
-2.9% 44%
DNVB* stores
in France in
2019
42%
Opening of luxury
-15% boutiques in Paris
2019 openings and future
projects
Source: IFM
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*DNVB = Digitally Native Vertical Brands 53K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK R E T AI L
New foreign brands: a very appealing market
In 2019, 57 foreign brands An excellent vintage Paris and high streets: always a priority
opened their first store in Annual change in the number of new foreign brands in France Preferred locations and types of locations in 2019
France, while "only" 43 such First point of sale for new brands arriving in France
openings were recorded in
2018. This increase is
remarkable and reflects the 57
strong appeal of the French
market, which has seen its
65%
supply regenerated by these
new store openings and brands.
Paris
Because of its international
High streets
influence, Paris remains by far
the first choice of foreign 41 43
brands for their first opening
(65% of the 2019 arrivals in 38
France, compared to 61% on
average over the previous five
years).
Regions
26% 16%
Shopping centres
12%
9%
Others
Greater Paris
Region
Annual 2017 2018 2019
average
2014-2018
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54K N I G H T F R AN K 2019 REVIEW AND 2020 OUTLOOK R E T AI L
New foreign brands: a very appealing market
Arriving in France in 2012 The most significant arrivals of the decade
and with more than 500
260
In total number of stores in France at the end of 2019
stores, Action is the foreign
brand with the fastest
expansion in the last ten
years. Basic-Fit comes second new foreign brand arrivals ˃ 300
with the opening of more than in France since 2014 Action
330 fitness clubs in France Basic fit
since 2014. No clothing retailer
10
has experienced such a
development. Nevertheless, ˃ 100
fashion continues to account for Calzedonia
Kiko
the largest share of foreign
retailers' arrivals, accounting for brands account for Pandora
Superdry
36% of all new entrants in 2019
58%
(Icicle, Falconeri, Suitsupply,
etc.), compared with an average
of 43% in the previous five ˃ 50
years. of all openings by these new entrants Desigual
since their arrival in France. Flying Tiger
Hema
JD Sports
Parfois
Rituals
Source: Knight Frank
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