Paris Office Take-up Falls

PARIS-Office take-up in the French capital during the first half of 2001 was down by 20% on the same period in 2000 according to new research from CB Richard Ellis. However a continuing tight supply, especially in the prime office districts, is underpinning rents.

CBRE’s latest Paris Market Index says many occupiers are taking a “wait and watch” approach, and the brokers are not forecasting a massive surge in take-up during the second half. Therefore CBRE is forecasting between 1.8 million and 2.0 million sq m (19.373 million to 21.5 million sf)of take-up for the whole of 2001, down from 2.3 million sq m (24.75 million sf) in 2000.

The report shows that immediate availability in the Paris region is still low at around 1 million sq m (10.8 million sf) or 2.5% of total stock. And the development pipeline only includes some 3.3 million sq m (35 million sf). Reflecting this restricted supply, prime rents have remained static at around €840 per sq m per annum ($70 per sf per annum) in the Central Business District, although rents in the inner suburbs to the north, east and south are still rising.

Another indicator of a cooling property market is the slowdown in investment activity. According to CBRE the record levels of activity seen in early 2000 have not been repeated. In the first half of 2001 about €3.0 billion ($3.33 billion) was invested in Paris, down from €8 billion ($8.88 billion) a year previously. Accordingly, prime office yields have softened to around 6%.