Obsolete Paris office stock means good opportunities-du Passage

Large occupiers in the Paris office market are all looking for new buildings and good transportation links, JLL France head Benoit du Passage says. In 2009, Paris's large stock of obsolete buildings means great opportunities for developers and, ultimately, also investors.

"Large occupiers in Paris want brand new buildings and want to make savings," he told a MIPIM audience recently. "They cannot make savings in the CBD so they have to go to the outskirts of Paris, but we have a scarcity of this kind of product. Another point that is very important and not negotiable is public tranportation."

Looking ahead into prospects for 2009 in the French commercial market, he said: "I believe the take-up will fall by 20%. It already decreased by 20% in 2008 compared with 2007... High yields for space upwards of 5,000 sq.m. will remain the same because companies want to make savings. The large-deal market will remain very active. Immediately, supply will increase a little. Consequently the vacancy rate will increase too but not dramatically - maybe on grade E or C buildings but not on Grade A...

"Prime rents will fall but not dramatically, only slightly - probably around 10%. Incentives will go up again and will present between 1.5 and 2 months rent-free per year at least. All in all, my conclusion: Difficulty in raising finance for new developments means the Paris office market, which is by far the largest in Europe .. will present significant obsolescence. This creates a formidable opportunity for professionals, for developers and investors in the future." pie

(Full story published in Property Investor Europe 115. Register now for a free trial)