2015-12-31-莱坊-The_letting_market_-_La_Défense_Q3_2016_11页_330kb

Summary of the Letting Market in La Défense (Q3 2016)

Core Content

The letting market in La Défense during Q3 2016 showed a notable recovery and increased transactional activity, driven primarily by large-scale leases. The market's performance was marked by a significant rise in take-up, a decrease in vacancy rates, and a shift in the supply and demand dynamics.

Key Performance Indicators

• Take-up: 205,200 sq m in Q3 2016, representing a +106% increase compared to Q3 2015.
• Vacancy Rate: 8.4% in Q3 2016, down from 11.5% in Q3 2015, and the lowest level since mid-2013.
• Available Supply: Continued to fall since late 2014, with a -27% decrease in immediate supply compared to Q3 2015.
• Grade A Supply: Decreased significantly from 36% to 12% over the past year, now below the regional average.
• Average Rent: Increased by +5% to 410 €/sq m/year, with a slight decrease in prime rent to 530 €/sq m/year.
• Prime Rent: 530 €/sq m/year, with Deloitte's lease at 550 €/sq m as an exception.

Main Views

• The recovery since 2014 was largely due to discounts on headline rents, which made La Défense more attractive to cost-conscious tenants.
• Large transactions have been the main driver of the market, with 10 leases over 5000 sq m accounting for 76% of take-up in Q3 2016.
• The segment of small spaces (<1000 sq m) saw a decline, returning to 4% of activity, after a significant rise in the first quarter.
• The vacancy rate is now 8.4%, which is lower than the 2015 level but still slightly higher than the regional average of 6.8%.
• The scissors effect is at play, with transactional activity rising while construction activity falls, leading to a gradual absorption of available space.
• The reduction in Grade A supply has become a challenge for La Défense, as it was previously an advantage due to the regional scarcity of quality space.

Key Information

• Large occupiers (>5000 sq m) are the main actors in the market, with 76% of large transactions in 2015 corresponding to Grade A space.
• Rents have stabilized after a period of decline, with a gradual increase in values expected.
• The market's future completions are expected to be limited in 2015–2017, with pre-lets now representing 35% of the expected supply by the end of 2019.
• Window, the only speculative program, is not expected to be delivered before the end of 2017, and its 44,000 sq m have already been leased by RTE.
• The management body of La Défense aims to regulate and stagger future construction deliveries to avoid market peaks and troughs.

Supply and Demand Trends

• Stock: 3,536,818 sq m (unchanged from Q3 2015).
• Take-up: 205,200 sq m in Q3 2016, showing strong demand.
• Immediate Supply: 296,000 sq m in Q3 2016, down from 405,000 sq m in Q3 2015.
• Available Deliveries: Expected to decrease further as pre-lets increase and new developments are absorbed.

Market Outlook

• The drop in available supply is expected to lead to improved financial conditions for building owners.
• The gradual rise in rent values and fall in incentives is anticipated, but the increase will be modest.
• The focus on cost reduction remains a key factor for tenants, influencing their choice of location and rental terms.

Conclusion

La Défense's letting market in Q3 2016 demonstrated a remarkable recovery and increased transactional activity, especially among large occupiers. The decline in available supply and Grade A space is a significant trend, affecting the market's attractiveness and competitiveness. The stabilization of rents and ongoing construction delays indicate a maturing market that is becoming more selective and price-sensitive.