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French Commercial Property Markets 2012

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A review of the French commercial Property Market in 2012 and a look ahead to the 2013 market outlook.

A review of the French commercial Property Market in 2012 and a look ahead to the 2013 market outlook.


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  • 1. FRENCHPROPERTY MARKETS2012 SUMMARY & 2013 OUTLOOK 9th JANUARY 2013
  • 2. INTRODUCTION INVESTMENTINTRODUCTION CUSHMAN & WAKEFIELD 1
  • 3. ECONOMIC CONTEXT AND FORECASTS INTRODUCTION INVESTMENT GLOBAL ECONOMY / GDP GROWTH (%) TRENDS IN FRENCH UNEMPLOYMENT RATE * 2011 2012 2013* 2014* 11,0% Euro Zone 1.4 - 0.4 0.0 1.3 10,5% Germany 3.1 1.0 0.6 1.7 10,0% France 1.7 0.1 0.4 1.3 9,5% United Kingdom 0.8 - 0.2 0.4 1.1 9,0% USA 1.7 2.2 1.9 2.8 8,5% China 9.3 7.7 8.5 7.8 8,0% q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 Global 3.8 2.9 3.2 3.6 2011 2012 2013** Sources: Crédit Agricole and OCDE / *Forecast. Source: INSEE / * Metropolitan France / **Forecast• After relative improvements during 2011, the global economic climate for both developed and emerging countries deteriorated in 2012.• French growth remained sluggish in 2012, a year which was also marked by the general elections. Industry in particular, was hit the hardest and saw the multiplication of restructuring plans.• Whilst household consumption remained resilient somehow, it is no longer the driver of growth and is expected to decline further due to the deterioration of the job market. CUSHMAN & WAKEFIELD 2
  • 4. EFFECTS OF THE CRISIS ON THE FRENCH PROPERTY MARKET INTRODUCTION INVESTMENT• A longer economic crisis than expected.• The real estate market has felt the impact of the crisis since 2008. Savings• 2009 was the year of the recession and the accentuation of the public deficit, marking the lowest point in the rental and investment property markets. Visibility• After a slight recovery in 2010, the real estate market saw the most growth in 2011: the regaining of confidence was helped by government measures taken both in the Security Eurozone and USA to stabilize the global economy.• Further decline in 2012: the debt crisis remained unresolved and the French elections resulted in a decrease in investor and company confidence. CUSHMAN & WAKEFIELD 3
  • 5. OVERVIEW OF THE 2012 FRENCH INVESTMENT MARKET INTRODUCTION INVESTMENT• A total of €14.9bn was invested in France in 2012 representing a decrease of 10% when compared to the previous year and a volume close to the 10 year average (-2 %). Large transactions, which mostly occurred in Paris, limited the decline in activity.• With take-up of 2.1 million sq.m of office space in Ile-de France, demand has fallen by 10% compared with 2011. There was lower appetite for small and medium sized areas although the Parisian market was offset by the completion of several large-scale operations.• With1.8 million sq.m of warehouse space let or sold to occupiers in France in 2012, take-up was down by 25% on the previous year. The logistics market has suffered due to the wait and see attitude of occupiers as well as the poor performance of the majority of the large logistics hubs in France• The arrival of a number of major foreign brands to France, the rapid expansion of large retailers and the dynamism of the luxury sector have been of benefit to zone A locations and to prime markets. CUSHMAN & WAKEFIELD 4
  • 6. INVESTMENTPROPERTY INVESTMENT ACTIVITY IN FRANCE CUSHMAN & WAKEFIELD 5
  • 7. 2012 KEY FACTS INVESTMENT --- +++  Moderate FALL in investment volume.  LARGE TRANSACTIONS played a key role.  Less active OFFICE LETTINGS  Increasing presence of MARKET. INTERNATIONAL INVESTORS.  Contrasting performances in the  Domination of PARIS INTRA- different business districts of ILE-DE- MUROS. FRANCE.  RETAIL: targeted sectors performed well.  Rebound of the LOGISTICS market. CUSHMAN & WAKEFIELD 6
  • 8. INVESTMENT VOLUMES IN FRANCE (€ BN) INVESTMENT• A total of €14.9bn was invested in France in 2012 (418 transactions), €11bn of which was invested in Ile-de-France. €14.9BN• A 10% fall in investment volumes over the course of the year, or a 2 % fall when compared with invested in France the yearly average of the last 10 years (€15.2bn). in 2012• Investment volume still greatly exceeded its low point of 2009 (€7.8bn). 30 -10% 25 yoy 20 15 10 5 11,1 17,5 24,4 28,5 13,0 11,1 16,5 14,9 12,2 9,8 7,8 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 10-year average (€15.2bn) CUSHMAN & WAKEFIELD 7
  • 9. OFFICE INVESTMENT VOLUMES IN FRANCE INVESTMENT• A 19% fall yoy, or an 11% fall in comparison with the yearly average of the last 10 years (€11.2bn).• Accounting for 67% of all investments, the share of office investments was down slightly on last year, due to the fall in transactions in the region of €50-100m. 25 100% 20 80% 84% 15 67% 60% 61% 10 40% 5 20% 14,0 18,2 19,5 10,3 10,0 10,2 12,3 7,7 5,3 8,0 6,7 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Office investments (€bn) Share in total investments (%) 10-year average (€11.2bn) CUSHMAN & WAKEFIELD 8
  • 10. OFFICE INVESTMENT VOLUMES IN PARIS/ILE DE FRANCE INVESTMENT• Investment volumes were down by 32% in the “Western Crescent” (Western Business District, La Défense and the South-Western Suburbs) in 2012.• Certain well-located markets in the suburbs performed well. Boasting quality office buildings at competitive rents and with excellent transport links, these sectors provide a good alternative for office lettings. INVESTMENT BREAKDOWN (€ VOLUME) 7% 2012 1% 2011 8% 9% 7% 7% Start – Guyancourt Urbagreen – Joinville-le-Pont 2% 2% 4% 47% 10% 60% 11% 4% 7% 11% 2% Inner Paris Liberté II – Charenton-Le-Pont City Zen – Bois-Colombes Inner Paris La Defense La Defense Western business districts Western business districts Boucle de Seine Boucle de Seine Southwestern suburbs Southwestern suburbs Southern suburbs Southern suburbs Eastern suburbs Eastern suburbs Northern suburbs Northern suburbs Terra Nova IV – Montreuil Rest of Paris region Rest of Paris region CUSHMAN & WAKEFIELD 9
  • 11. INVESTMENT DEAL ANALYSIS INVESTMENT• Out of a total of 418 transactions, 39 were over €100m, representing 53% of investments (9% of the total number).• Medium-sized deals were fewer, penalised by the tightening of financing conditions and a reduced number of investors. 100% 27% 28% 80% >€100mn Neo-Retiro, Paris Faubourg One, Paris = 53% 60% 23% 25% 40% 21% 17% Avant Seine-52 Hoche, Paris Haussmann-Courcelles, Paris 20% 52-60 CE, Paris 22% 21% 7% 9% Portefeuille ANF, Lyon 0% Carré Saint-Germain, Paris 2011 2012 €1-15mn €15-50mn €50-100mn €100-200mn >€200mn Portefeuille Mercure, France*All types of products CUSHMAN & WAKEFIELD 10
  • 12. PURCHASER NATIONALITY IN FRANCE INVESTMENT• French, mainly institutional investors, are still in the majority (57%).• Foreign investors mainly positioned themselves on large transactions and made up for 43% of all acquisitions (compared with 38% in 2011)• Sovereign Funds made a name for themselves in 2012 with 7 major acquisitions over €200m (representing €2.7bn). INVESTMENT BREAKDOWN BY NATIONALITY OF PURCHASERS* Asia North America 4% 7% Middle East 14% Europe - other 3% France UK 57% 3% Norway 3% Germany 9% *All types of products CUSHMAN & WAKEFIELD 11
  • 13. CROSS-BORDER ACTIVITY INVESTMENT• While the French are still in the lead, the foreign investor share went up from 38% in 2011 to 43% in 2012, accounting for €6.4bn. EUROPE NORTH AMERICA 40% ASIA 16% 10% MIDDLE EAST 34% CUSHMAN & WAKEFIELD 12
  • 14. FRANCE INVESTMENT BREAKDOWN INVESTMENT• Predominance of inner Paris: 20 transactions > €100m out of a total of 39 recorded in France.• Volumes were boosted by large transactions carried out by foreign investors who targeted the most liquid and prestigious assets of the capital.• Investor aversion to risk increased further, favouring the most secure assets.FRANCE INVESTMENT BREAKDOWN* Paris CBD Provinces 25% 26% Cité du Retiro, Paris 8 PARIS = 41% 23 Université, Paris 7 52-60 Champs-Élysées, Paris 8 Siège d’Amundi, Paris 15 Rest of Paris 16% Rest of Paris region 33% *All type of products 116bis Champs-Élysées, Paris 8 Faubourg One, Paris 8 CUSHMAN & WAKEFIELD 13
  • 15. RETAIL INVESTMENT VOLUMES IN FRANCE INVESTMENT• A 9% increase yoy and a 64% increase when compared with the yearly average of the last 10 years (€2.2bn).• This performance was boosted by 12 acquisitions of retail or mixed assets over €100m, accounting for 52% of retail investments.• High street retail accounted for 51% of all investments in retail. RETAIL INVESTMENT ACTIVITY IN FRANCE (€ BN) INVESTMENT ACTIVITY BY ASSET TYPE 5 100% 100% 14% 22% 4 80% 80% 35% 3 60% 60% 45% 2 40% 40% 51% 20% 1 20% 33% 0,9 0,8 1,2 1,9 2,3 4,8 1,2 1,9 3,6 3,3 3,6 0% 0 0% 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Retail investments (€bn) Share in total investments (%) High street retail Shopping centres Retail warehousing 10-year average (€2.2bn) CUSHMAN & WAKEFIELD 14
  • 16. INDUSTRIAL INVESTMENT VOLUMES IN FRANCE INVESTMENT• Investment volumes were just below the 10 year average (€1.4bn), but up by 44% on 2011.• The strong performance was aided by the sale of 3 large logistics portfolios (accounting for 45% of all industrial investments). 4 100% €1.3BN invested in industrial 80% in 2012 3 60% 2 +44% 40% yoy 1 20% 0,8 2,6 2,1 1,5 0,6 0,7 1,1 0,9 3,2 0,9 1,3 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Industrial investments (€bn) Share in total investments (%) 10-year average (€1.4bn) CUSHMAN & WAKEFIELD 15
  • 17. THE INVESTMENT MARKET IN THE PROVINCES INVESTMENT• Volumes invested in the provinces remained stable compared with last year (€3.9bn)• The Lyons market accounted for 22% of sums invested outside Ile-de-France.• Activity in other large towns in the provinces was animated by some significant transactions.EXAMPLES OF TRANSACTIONS MADE IN THE PROVINCES IN 2012Type Property Location Vendor Purchaser Area sqm Price €mnRetail ANF portfolio Lyons ANF Grosvenor - >300Retail 65 Croisette Cannes KanAm Thor Equities 1,800 90Office Oxygène tower Lyons Unibail-Rodamco AEW Europe 30,000 130Office Lugdunum building Lyons Sogelym Dixence Unofi Assurances 21,200 76.4Logistics Arrow portfolio Prologis Blackstone 480,000 208 CUSHMAN & WAKEFIELD 16
  • 18. INTEREST RATES INVESTMENT• Competition between investors for the best assets weighed on yields, the fall in which followed on from the fall in interest rates• The spread between the OAT 10 year bonds and prime yields in Paris still remains attractive (227 bp as at 31/12).• Growing distinction between prime and secondary markets PROPERTY YIELDS AND INTEREST RATES, AS AT 31/12 7% 6% 5% 4.25% 4% 3% 227 bp 2% 1.98% 1% 0.19% 0% -1 % -2 % q4 05 q4 06 q4 07 q4 08 q4 09 q4 10 q4 11 q4 12 Prime office yield 3-month Euribor 10-year bonds Spread CUSHMAN & WAKEFIELD 17
  • 19. 2013 FORECAST INVESTMENT ? Predominance of EQUITY INVESTORS. LACK OF PRIME investment opportunities. DEBT MARKET potentially more favourable. LETTINGS MARKETS under pressure. Likely 10% FALL in INVESTMENT VOLUMES in 2013. CUSHMAN & WAKEFIELD 18
  • 20. INVESTMENT OFFICESTHE OFFICE LETTINGS MARKETS IN PARIS/ILE-DE-FRANCE CUSHMAN & WAKEFIELD 19
  • 21. 2012 KEY FACTS INVESTMENT OFFICES TAKE-UP: An “average” year. Key role played by LARGE TRANSACTIONS. NEW AND REDEVELOPED properties make up for a significant share of take-up. Strong performance in the NORTHERN & SOUTHERN INNER SUBURBS. A less active PARIS INTRA-MUROS market. Decrease in activity in the FINANCE & ADMINISTRATION SECTORS. INCREASE IN SUPPLY available within 6 months. PRIME RENTS remain high. CUSHMAN & WAKEFIELD 20
  • 22. TAKE-UP: AN “AVERAGE” YEAR INVESTMENT OFFICES• A 10% fall compared with 2011 and a 1% fall compared with the average of the last 10 years.• Still, much higher take-up than in 2009 (+20%). TRENDS IN TAKE-UP IN PARIS/ILE-DE-FRANCE (SQM) 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 1 581 102 1 742 328 1 937 638 2 049 452 2 791 622 2 656 443 2 357 403 1 752 665 2 091 864 2 321 082 2 098 351 500 000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002-2011 average (2.13 million sqm) CUSHMAN & WAKEFIELD 21
  • 23. LARGE TRANSACTIONS PLAY KEY ROLE INVESTMENT OFFICES• 91 transactions > 4,000 sqm accounted for 1,044,379 sqm, i.e. 50% of total take-up.• 10 transactions > 20,000 sqm accounted for 33% of total take-up > 4,000 sqmTRANSACTION BREAKDOWN BY SURFACE AREA (IN SIZE) 100% EXAMPLES OF SIGNIFICANT TRANSACTIONS 80% 43% 42% CNET/ORANGE 44% 46% 44% 45% 45% 51% 49% 51% 50% • ECO-CAMPUS • Châtillon (92) 60% • 70,000 sqm MINISTÈRE DE L’ÉCOLOGIE 40% • TOUR ESPLANADE • PUTEAUX (92) 56% 54% 56% 57% 58% 55% 55% 49% 51% 49% 50% • 53,600 sqm 20% THALÈS 0% • NEW VELIZY • VELIZY-VILLACOUBLAY (78) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 • 49,000 sqm Transactions <4,000 sqm Transactions >4,000 sqm CUSHMAN & WAKEFIELD 22
  • 24. NEW PROPERTIES MAKE UP FOR A SIGNIFICANT SHARE INVESTMENT OFFICESTake-up > 4,000 sqm• New/redeveloped properties accounted for 67% of all take-up >4,000 sqm.• This figure includes a large number of turn key schemes (CNET, Thalès, Unilever, etc.).• These projects show that occupiers are acting early to profit from the best possible leasing conditionsQUALITY OF TAKE-UP > 4,000 SQM TAKE-UP > 4,000 SQM ACCORDING TO REASON FOR MOVING (IN SIZE) 1 600 000 90% 80% 1% 1 400 000 10% 70% 1 200 000 60% 1 000 000 42% 50% 800 000 40% 47% 600 000 30% 400 000 20% 1 419 972 1 116 329 1 157 054 1 073 748 1 050 667 1 044 379 Consolidation 698 123 800 297 860 380 881 965 794 811 200 000 10% Cost cuttings Relocalisation 0 0% Extension 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Take-up Share of new/refurbished office space leased CUSHMAN & WAKEFIELD 23
  • 25. STRONG PERFORMANCE IN THE NORTHERN AND INVESTMENT OFFICES SOUTHERN INNER SUBURBS • The high increase in take-up in the southern suburbs (+141% on 2011) can be in part explained by CNET moving all staff to one roof in Châtillon, as this lettings transaction alone accounted for 48% of take-up in the sector in 2012. • The northern suburbs also performed well, with a 55% increase in take-up compared with the 10-year average and much more balanced activity than in 2011. TAKE-UP BY SUBMARKETS SIGNIFICANT TRANSACTIONS IN THE 2011/2012 (SQM) NORTHERN SUBURBS SNCF500 000 • CITY ONE • SAINT-DENIS (93) / 22,000 sqm400 000 SNCF • INNOVATIS 2 • SAINT-DENIS (93) / 20,000 sqm300 000 SIEMENS • LE SISLEY200 000 • SAINT-DENIS (93) / 18,710 sqm BETC EURO RSCG100 000 • EX-BÂTIMENT DES DOUANES • PANTIN (93) / 16,000 sqm 482 552 424 836 389 438 337 740 248 295 231 586 163 183 145 159 278 655 289 044 188 236 108 634 158 804 215 159 138 800 235 646 60 184 46 674 56 320 99 167 67 609 53 712 0 CONSEIL GENERAL 93 • LE PAPILLON • BOBIGNY (93) / 15,000 sqm SAMSUNG 2011 2012 • OVALIE • SAINT-OUEN (93) / 13,355 sqm CUSHMAN & WAKEFIELD 24
  • 26. A LESS ACTIVE PARIS INTRA-MUROS MARKET INVESTMENT OFFICES• Take-up in central Paris fell by 24% over the course of a year.• The Parisian market suffered from the fall in small and medium sized lettings transactions, as well as those over 4,000 sqm (24 compared with 30 in 2011).• The fall in take-up in central Paris can also be explained by the lack of quality availabilities. SIGNIFICANT TRANSACTIONS IN PARISTAKE-UP IN INNER PARIS NEXITY • SOLSTYS 100% • PARIS 8 / 24,500 sqm 18 % 17 % 23 % 22 % 22 % 22 % 21 % 24 % 33 % 29 % BANQUE POPULAIRE 80% • PUSHED SLAB 15 % • PARIS 13 / 19,000 sqm 15 % 14 % 17 % 25 % 14 % 23 % 26 % 60% 13 % 18 % RFF • EQUINOXE • PARIS 13 / 18,200 sqm 40% PPR 64 % 67 % • LAENNEC 62 % 61 % 62 % 54 % 58 % 55 % • PARIS 7 / 16,460 sqm 53 % 53 % 20% CRITEO • 32 BLANCHE • PARIS 9 / 10,000 sqm 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 HOGAN LOVELLS • 17 AVENUE MATIGNON Paris CBD Paris Centre East Paris Left Bank • PARIS 8 / 7,000 sqm CUSHMAN & WAKEFIELD 25
  • 27. DECREASE IN ACTIVITY IN THE FINANCE &ADMINISTRATION SECTORS INVESTMENT OFFICES• The economic and financial crisis weighed on the take-up of office space by the banking and insurance sector (157,489 sqm of take-up in 2012 compared with an average of 246,900 sqm over the last 10 years).• Due to the general elections in 2012, the number of transactions over 4,000 sqm in the administration sector fell to 11 transactions in 2012 compared with an average of 18 per year between 2002 and 2011).• The letting of the Esplanade tower by the Ministry of Ecology suggests that the French government’s cost cutting strategy is likely to mean further large-scale moves in the next few months.TAKE-UP > 4,000 SQM ACCORDING TO ACTIVITY (IN SIZE) 2012 2011 MOYENNE 2002-2011 2002-2011 AVERAGE 7% 10% 6% 16% 18% 19% Administration Administration 11% Administration 12% Banque-Assurance Banque-Assurance Banque-Assurance 16% Communication Communication Communication 15% Conseil Conseil Conseil 21% Industrie-Distribution Industrie-Distribution 28% Industrie-Distribution 25% 5% IT-Telecom 23% IT-Telecom IT-Telecom 43% Services Services Services 2% 8% 4% 6% 5% Public sector Banking-Insurance - Communication Advisory Manufacturing-Distribution - IT Services CUSHMAN & WAKEFIELD 26
  • 28. INCREASE IN SUPPLY AVAILABLE WITHIN 6 MONTHS INVESTMENT OFFICES • The amount of available supply went up in 2012 (+4%) due to the vacating of premises and several new lettings schemes being put on the market. • New and redeveloped stock went down by 3% over the course of a year and only represents 23% of the total supply on the market within a 6 month period.SUPPLY AVAILABLE IN LE-DE-FRANCE (SQ.M) ACCORDING TO BUSINESS DISTRICT 4 500 000 9% Southern New/redeveloped 36% 8,0% suburbs 7,9% Renovated 4 000 000 7,4% 8% Paris Centre 7,1% 7,1% 7,1% 19% East Secondary/to be renovated 6,7% 6,6% 3 500 000 6,5% 7% 6,1% Eastern suburbs 36% 5,7% 3 000 000 6% Paris Left Bank 14% 2 500 000 5% Boucle de Seine 52% 2 000 000 4% Southwestern 23% suburbs 1 500 000 3% La Défense 26% 1 000 000 2% 2 772 090 3 117 655 3 383 320 3 413 681 3 133 113 2 794 676 3 290 764 4 103 109 4 066 053 3 720 902 3 869 380 Northern 26% 500 000 1% suburbs 0 0% WBD 17% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Paris CBD 18% Supply (sqm) Vacancy rate (%) 0 100 000 200 000 300 000 400 000 500 000 600 000 700 000 CUSHMAN & WAKEFIELD 27
  • 29. PRIME RENTS REMAIN HIGH INVESTMENT OFFICES• The lack of quality supply was accentuated in 2012, encouraging tenants with a high profit margin to pay the highest prices for the last availabilities in the best districts of the capital.• There are still big differences in rental values, whilst incentive measures have been a key point of negotiation between occupiers and landlords.RENTAL VALUES IN ILE-DE-FRANCE EXAMPLES OF TRANSACTIONS 820 823 +/- €800/sqm/yr 800 €/m² 760 ROLAND BERGER • LE MAGISTERE 700 • PARIS 8 / 7,390 sqm 662 595 HOGAN LOVELLS 581 • 17 AVENUE MATIGNON 550 • PARIS 8 / 7,000 sqm 540 507 495 539 500 €/m² 512 440 SJ BERWIN • OZONE • PARIS 8 / 3,500 sqm 354 357 319 327 295 AT KEARNEY • 23-25 RUE DE L’UNIVERSITÉ • PARIS 7 / 2,000 sqm 200 €/m² 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Paris CBD: prime rent (€/sqm/yr) Paris CBD: average rent (€/sqm/yr) Hauts de Seine: prime rent (€/sqm/yr) Hauts de Seine: average rent (€/sqm/yr) (1) Prime rent: average of the 5 highest transactions in terms of headline rent >1,000 sq. m. in a year (2) Average rent: average rental values (headline rents mentioned in transactions) all areas included, refurbished or second-hand premises CUSHMAN & WAKEFIELD 28
  • 30. INCREASE IN FUTURE SUPPLY INVESTMENT OFFICES• The market will be in over-supply in 2013 and is likely to remain so in 2014. This is due to not all availability having been taken-up in 2012.• The amount of future supply depends greatly on the geographical sector and the specific business district, with 70% of supply concentrated in the Western Crescent (Western Business District, La Défense, South Western Suburbs, Boucle de Seine).FUTURE SUPPLY IN ILE-DE-FRANCE (SQ.M) GREOGRAPHICAL BREAKDOWN 1 525 731 m² 6% 7% 20% 8% 9% 20% 946 445 m² 799 482 m² 13% 701 013 m² 17% 6% Northern suburbs 11% 11% La Defense 18% 474 652 17% Western business districts 12% Boucle de Seine 2013 2014 12% 13% South Western suburbs Volume of secure future supply > 10,000 sq.m Volume of likely future supply > 10,000 sq.m Eastern suburbs Paris non CBD Average > 10,000 sq.m take -up over the last 5 years Average > 5,000 sq.m take -up over the last 5 years Paris CBD CUSHMAN & WAKEFIELD 29
  • 31. SUMMARY INVESTMENT OFFICES OFFICE LETTINGS KEY INDICATORS 2011 2012 TREND Take-up (sqm) 2,321,082 2,098,351 ▼ Take-up > 4,000 sqm (sq.m) 1,050,667 1,044,379 ► Take-up > 4,000 sqm (sq.m) 66% 67% ► – share of new office space Number of transactions > 4,000 sqm 92 91 ► Supply available within 6 months (sqm) 3,720,902 3,869,380 ▲ Vacancy rate (%) 7.1% 7.4% ▲ Prime rent (1) (€/excl. taxes & charges/yr) 838 838 ► Average rent (2) (€/excl. taxes & charges/yr) 364 356 ▼(1) Prime rent: average of the 5 highest transactions in terms of headline rent >1,000 sq. m. in a year(2) Average rent: average rental values (headline rents mentioned in transactions) all areas included, refurbished or second-hand premises CUSHMAN & WAKEFIELD 30
  • 32. 2013 FORECAST INVESTMENT OFFICES ? Poor ECONOMIC OUTLOOK. Further SOCIAL TENSIONS are likely to weigh on take-up. Companies will still seek EFFICIENCY and REDUCTION OF COSTS. Success of WELL-LOCATED districts in the suburbs offering NEW AND ECONOMICAL PREMISES More significant INCENTIVE MEASURES in secondary markets. Stable rental values in ESTABLISHED SECTORS with a limited office supply. CUSHMAN & WAKEFIELD 31
  • 33. LARGE GRANDS WAREHOUSES INVESTMENT ENTREPÔTSJean-Paul DeheegerHead of the Industrial DepartmentLARGE WAREHOUSE MARKET IN FRANCE CUSHMAN & WAKEFIELD 32
  • 34. TAKE-UP > 5 000 sq.m LARGE WAREHOUSES INVESTMENTIn France 3 000 000 2 600 000 2 600 000 2 500 000 2 400 000 2 200 000 2 000 000 2 000 000 1 800 000 1 800 000 1 760 000 1 600 000 1 500 000 1 500 000 1 000 000 1 000 000 500 000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 France Ile-de-FranceSource: Cushman & Wakefield/Entrepôts > 5 000 m², incluant opérations en compte-propre et ventes utilisateurs. CUSHMAN & WAKEFIELD 33
  • 35. TAKE-UP > 5 000 sq.m LARGE WAREHOUSES INVESTMENTIn Ile-de-France 1 200 000 1 000 000 1 000 000 850 000 790 000 800 000 740 000 690 000 700 000 640 000 630 000 600 000 560 000 450 000 400 000 250 000 200 000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Source: Cushman & Wakefield/Entrepôts > 5 000 m², incluant opérations en compte-propre et ventes utilisateurs. CUSHMAN & WAKEFIELD 34
  • 36. CHARACTERISTICS OF TAKE-UP GRANDS LARGE INVESTMENT ENTREPÔTS WAREHOUSESIn France (transaction size)Geographical Breakdown – 2012 Geographical Breakdown – 2011 Ile-de-France Ile-de-France 3% Rhône-Alpes Rhône-Alpes 9% 2% 13% Nord-Pas-de-Calais Nord-Pas-de-Calais 5% 3% 3% 31% PACA 33% PACA 6% Pays de la Loire 0% Pays de la Loire 3% 4% 1% Burgandy Burgundy 8% 11% Normandy Normandy 20% Alsace-Lorraine 14% Alsace-Lorraine 14% 17% Centre Centre Other Other CUSHMAN & WAKEFIELD 35
  • 37. CHARACTERISTICS OF TAKE-UP LARGE WAREHOUSES INVESTMENTIn France (transaction size)Size Bracket – 2012 Size Bracket – 2011 5 000 - 10 000 m² 5 000 - 10 000 m² 18% 14% 37% 10 000 - 20 000 m² 10 000 - 20 000 m² 42% 28% 25% 20 000 - 30 000 m² 20 000 - 30 000 m² 20% 16% > 30 000 m² > 30 000 m² CUSHMAN & WAKEFIELD 36
  • 38. LARGE GRANDSCHARACTERISTICS OF TAKE-UP WAREHOUSES INVESTMENT ENTREPÔTSIn France (transaction size)Type of Activity – 2012 Type of Activity – 2011 3PL 3PL 8% 14% 34% In-House Logisticians 47% In-House Logisticians (Distribution sector) (Distribution sector) 45% 52% In-House Logisticians In-House Logisticians (Manufacturing sector) (Manufacturing sector) CUSHMAN & WAKEFIELD 37
  • 39. LARGEEXAMPLES OF SIGNIFICANT TRANSACTIONS GRANDS WAREHOUSES INVESTMENT ENTREPÔTSTransactions > 10 000 sq.m carried out in France in 2012MARKET NEW TENANT ADDRESS SURFACE AREA Sq.mIle-de-France INTERMARCHÉ Parc d’activités Jean Monnet/Vert-Saint-Denis (77) 94 300Nord-Pas-de-Calais AMAZON.FR Lauwin-Planque (59) 90 000Nord-Pas-de-Calais OXYLANE (DÉCATHLON) Lieu-dit Terres d’Epinoy/Rouvignies (59) 57 000Rhône-Alpes FIDUCIAL OFFICE SOLUTIONS Satolas-et-Bonce (38) 45 000Normandy SCHNEIDER ELECTRIC ZAC du Long Buisson/Guichainville (27) 43 000Burgundy AMAZON.FR Distripôle/Sevrey (71) 40 000Ile-de-France INDESIT ZAC Parisud/Combs-la-Ville (77) 40 000Alsace SCAPALSACE ZA de Niederhergheim (68) 30 000Pays de la Loire SYSTÈME U Vendéopôle/Fontenay-le-Comte (85) 27 400Rhône-Alpes CONFORAMA ZA Lafayette/Saint-Georges-d’Espéranche (38) 25 200Champagne EURODIF Parc logistique de l’Aube/Troyes (10) 24 000Nord-Pas-de-Calais IM LOGISTIQUE Distripôle/Houplines (59) 22 500Ile-de-France OTELO Avenue du Fief/Saint-Ouen-l’Aumône (95) 18 300PACA PROLOG Distriport/Fos-sur-Mer (13) 14 500 CUSHMAN & WAKEFIELD 38
  • 40. LARGERENTS GRANDS WAREHOUSES INVESTMENT ENTREPÔTSPrime rents as at end 2012 PRIME RENTS OF LARGE WAREHOUSES (€/sq.m/yr) CUSHMAN & WAKEFIELD 39
  • 41. OVERVIEW OF 2012 GRANDS LARGE INVESTMENT ENTREPÔTS WAREHOUSESLarge Warehouse Market in France• 1.8 million sq.m of take-up France, representing a 25 % fall compared with 2011.• The four hubs of the north-south axis concentrated 73% of total take-up, a figure similar to that recorded in 2011.• 560,000 sq.m of take-up in Ile-de-France: a sharp 34 % decrease compared with 2011, representing the lowest level of take-up since 2004.• 360,000 sq.m of take-up in the Lyons region, the only market on the north-south axis to have performed well in 2012.• Stability of prime rents: slightly over 50 €/sq.m/yr in Ile-de-France.• Slight fall in available supply which can be explained by the take-up of new and well-located secondary assets, as well as by the slowdown in forward sale developments. CUSHMAN & WAKEFIELD 40
  • 42. OUTLOOK FOR 2013 LARGE GRANDS WAREHOUSES INVESTMENT ENTREPÔTSLarge Warehouse Market in France CUSHMAN & WAKEFIELD 41
  • 43. RETAIL INVESTMENT COMMERCESTHE RETAIL LETTINGS MARKET IN FRANCE CUSHMAN & WAKEFIELD 42
  • 44. 2012 KEY FACTS INVESTMENT RETAIL A large INCREASE in RETAIL STOCK Higher QUALITY retail developments  Shopping centres: development of new, innovative and exciting concepts to stand out from the competition and to create a BUZZ in the market place The LUXURY SECTOR has strengthened the attractiveness of the high street A LARGE GULF between prime and secondary Competition has been accentuated by the boom of E-COMMERCE  ILLADAPTED REGLEMENTATION surrounding retail A CHANGING retail property market CUSHMAN & WAKEFIELD 43
  • 45. FRENCH RETAIL PROPERTY STOCK INVESTMENT RETAILAn increase in supply Retail property stock in France GROWTH IN TOTAL LOCATION NUMBER OF SITES NUMBER OF SHOPS TOTAL AREA(SQM) AREA - 2011/2012 (%) HIGH STREET₁ Provinces 209 112,306 13,572,138 0 (0.1) Ile-de-France 83 26,154 4,007,729 0 (0) Total 292 138,460 17,579,867 0 (0) SHOPPING CENTRES² Provinces 746 25,673 14,634,982 1.3 (1.1) Ile-de-France 187 9,799 4,988,392 1.2 (2.2) Total 933 35,472 19,623,374 1.3 (1.4) RETAIL PARKS³ Provinces 923 34,943 29,006,821 1.5 (0.8) Ile-de-France 132 4,919 4,189,721 3.0 (1.8) Total 1,055 39,862 33,196,542 1.7 (0.9)*Source: Cushman & Wakefield as at 1st January 2013 (X): Annual growth 2011/2012 in %(1) Comprising at least 50 sites(2) Shopping centre comprising at least 10 sites(3) Out of town retail zone comprising at least 10 sites CUSHMAN & WAKEFIELD 44
  • 46. A LARGE INCREASE IN RETAIL STOCK INVESTMENT RETAIL Recent and forthcoming openings 2011 – OPENINGS IN SQM 2012 – OPENINGS IN SQM 2013 – ESTIMATED OPENINGS IN SQM* 892 745 798 333 493 990 430 341 884,140 488,289 354,191 316,360 260,163 547,646 Shopping centres Retail parks Shopping centres Retail parks Shopping centres Retail parks *As at 1st January 2013 Opening announced on the 1st January Effective openingsSource: Cushman & Wakefield CUSHMAN & WAKEFIELD 45
  • 47. A LARGE INCREASE IN RETAIL STOCK INVESTMENT RETAIL2012: A significant year for postponed retail projects 1600000 1400000 72 130 Remainder Moved back to 2015 214 944 Moved back to 2014 1200000 Moved back to 2013 Developments completed in 2012 1000000 267 160 800000 1 449 443 Shopping centres + Retail parks 600000 1,323,086 sq. m. Shopping centres + 893 209 Retail parks 400000 (62 %) 807,809 sq. m. 200000 0 2012 Forecast Breakdown of 2012 forecastSource: Cushman & Wakefield CUSHMAN & WAKEFIELD 46
  • 48. HIGHER QUALITY RETAIL DEVELOPMENTS INVESTMENT RETAILNew emblematic projects and openingsSo Ouest, Levallois-Perret (92) Beaugrenelle, Paris (75015)L’Atoll, Beaucouzé (49) L’Aire des Moissons, Saint-Parres-aux-Tertres (10) CUSHMAN & WAKEFIELD 47
  • 49. MAJOR OPENINGS AND FORTHCOMING PROJECTS INVESTMENT RETAILExamples of new shopping centres 2012 OPENINGS TOWN DEVELOPMENT TYPE AREA SQM 260,163 SQM Lyon (69) Confluence Creation 52,000 of openings in France in 2012 Levallois-Perret (92) So Ouest Extension-redevelopment 46,770 La-Chapelle-Saint-Luc (10) L’Escapade Transfer-Extension 16,700 Montreuil (93) Grand Angle Creation 15,000 - 27% Claye-Souilly (77) Les Sentiers de Claye Extension 13,000 Saint-Herblain (44) Atlantis Extension 9,800 YOY2013 PROJECTS TOWN DEVELOPMENT TYPE AREA SQM Tremblay-en-France (93) Aéroville Creation 65,000 Villeneuve-la-Garenne (92) Bongarde Creation 63,000 Paris (75015) Beaugrenelle Extension-redevelopment 45,000 Epinay-sur-Seine (93) L’Ilo Redevelopment 36,700 Caen (14) Les Rives de l’Orne Creation 28,700 Cherbourg (50) Les Eleis Creation 15,400Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 48
  • 50. NEW AND INNOVATIVE SHOPPING CENTRES WHICH STANDOUT FROM THE COMPETITION INVESTMENT RETAILSignificant lettings transactions in shopping centresPARIS PROVINCESMARKS & SPENCER SUITE BLANCOSo Ouest – Levallois-Perret (92) Confluence – Lyons (69)6,970 sqm 900 sqmFOREVER 21 HOLLISTERRosny 2 – Rosny-sous-Bois (93) Atlantis – Saint-Herblain (44)1,800 sqm 800 sqmHOLLISTER DESIGUALCarré Sénart - Lieusaint (77) Cap 3000 – Nice (06)800 sqm 700 sqmJD SPORTS JD SPORTSCarré Sénart – Lieusaint (77) Saint-Sever – Rouen (76) 700 sqm 400 sqmPRÊT-À-MANGER LEGOSo Ouest – Levallois-Perret (92) Euralille – Lille (59)200 sqm 300 sqmCLAUDIE PIERLOT FOSSILSo Ouest – Levallois-Perret (92) La Part-Dieu – Lyons (69) 150 sqm 220 sqmMUJI TO GO ALDOCœur Saint-Lazare – Paris (75) Confluence – Lyons (69)80 sqm 150 sqmSource: Cushman & Wakefield: Those in dark blue indicate openings in new shopping centers sqm (creations or extensions and redevelopments) CUSHMAN & WAKEFIELD 49
  • 51. HIGHER QUALITY RETAIL DEVELOPMENTS INVESTMENT RETAILExamples of new and forthcoming retail parks 2012 OPENINGS TOWN DEVELOPMENT TYPE AREA SQM 547,646 SQM of openings in France Beaucouzé (49) L’Atoll Creation 91,000 in 2012 Pontault-Combault (77) Les Quatre Chênes Creation 47,000 Chambourcy (78) Les Vergers de la Plaine Creation 29,500 + 73 % Les-Clayes-sous-Bois (78) Alpha Park Extension 25,400 Salaise-sur-Sanne (38) Green 7 Creation 21,000 YOY Lieusaint (77) Shopping Parc Extension 13,5002013 PROJECTS TOWN DEVELOPMENT TYPE AREA SQM Mondeville (14) Mondeville 1 Creation 42,000 Saint-Parres-aux-Tertres (10) L’Aire des Moissons Creation 35,000 Nîmes (30) Costières Park Creation 27,000 Boé (47) Agen-Boé Creation 23,000 Montévrain (77) Clos du Chêne Extension 21,000 Soyaux (16) Parc de la Jaufertie Creation 16,000Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 50
  • 52. THE LUXURY SECTOR HAS STRENGTHENED THEATTRACTIVENESS OF THE HIGH STREET INVESTMENT RETAILSignificant lettings transactions in 2012PARIS PROVINCESC&A ZARA23-25 bd de la Madeleine – 75001 28 rue Alsace-Lorraine – Toulouse6,870 sqm 2,350 sqmFOREVER 21 TOMMY HILFIGER144 rue de Rivoli – 75001 25 rue Grignan – Marseilles4,000 sqm 300 sqmBERLUTI HERMES14 rue de Sèvres – 75006 20 rue Grignan – Marseilles800 sqm 300 sqmBERLUTI ARMANI9 rue du Faubourg St-Honoré – 75008 42 boulevard de la Croisette– Cannes790 sqm 260 sqmTIFFANY & CO VANS62 avenue des Champs-Élysées – 75008 97 rue Sainte-Catherine – Bordeaux690 sqm 240 sqm JD SPORTS (SIZE) TIFFANY & CO 18 rue Berger – 75001 6 avenue de Verdun – Nice 300 sqm 150 sqm HERMES/SHANG XIA 8 rue de Sèvres – 75006 160 sqmAIGLE29-33 av. des Champs-Elysées – 75008150 sqmSource: Cushman & Wakefield: note the dark blue transactions indicate the openings of luxury brands. CUSHMAN & WAKEFIELD 51
  • 53. A LARGE GULF BETWEEN PRIME AND SECONDARY INVESTMENT RETAILPrime high street rental valuesPRIME RENTS IN PARIS (€/sqm/yr – zone A)LOCATION Q4 2011 Q4 2012 TREND 2013 €15,000 Avenue des Champs-Élysées 10,000 15,000 ▲ /SQM/YR Rue du Faubourg Saint-Honoré 6,500 8,000 ▲ ZA Rental Value for the Champs-Elysées Avenue Montaigne 6,500 8,000 ▲ Boulevard Haussmann 4,600 5,000 ▲ Boulevard Saint-Germain 4,500 5,500 ▲ Rue de Rivoli 3,500 4,000 ▲ - 7%PRIME RENTS IN THE PROVINCES (€/sqm/yr – zone A)LOCATION Q4 2011 Q4 2012 TREND 2013 Annual decline of Bordeaux – Rue Sainte-Catherine 2,000 2,000 ► national values Cannes – Croisette 6,000 6,500 ▲ Source/ L’Argus de l’Enseigne Lille – Rue Neuve/Béthune 2,000 2,000 ► Lyons – Rue de la République 2,000 2,200 ▲ Marseilles – Rue Saint-Ferréol 1,800 1,800 ► Nice – Avenue Jean Médecin 2,000 2,000 ► Strasbourg – Place Kléber 2,000 2,000 ▲ Toulouse – Avenue Alsace-Lorraine 2,000 2,000 ►Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 52
  • 54. A LARGE GULF BETWEEN PRIME AND SECONDARY INVESTMENT RETAILPrime rental values for shopping centres PRIME RENTS IN PARIS/ILE DE FRANCE (€/sqm/yr) TYPE Q4 2011 Q4 2012 TRENDS 2013 Regional shopping centres 2,000 2,000 ► Large shopping centres 950 950 ▼ PRIME RENTS IN THE PROVINCES (€/sqm/yr) TYPE Q4 2011 Q4 2012 TRENDS 2013 Regional shopping centres 1,400 1,400 ► Large shopping centres 800 700 ▼ For well-located surface areas of 150 sqm let to fashion or service retailers• The rental values for the best located units in regional shopping centres have remained stable, whilst units located in secondary locations have shown a slight decrease.• Negotiations between retailers and landlords have intensified, with more and more brands determined to renegotiate and decrease their occupational costs to regain competiveness in a difficult environment• Shopping centres have particularly suffered from brands having successfully negotiated substantial rental incentives. CUSHMAN & WAKEFIELD 53
  • 55. A LARGE GULF BETWEEN PRIME AND SECONDARY INVESTMENT RETAILPrime rental values for retail parks PRIME RENTS IN PARIS/ILE DE FRANCE (€/sqm/yr) LOCATION Q4 2011 Q4 2012 TRENDS 2013 Herblay, Plaisir, etc. 180 180 ► PRIME RENTS IN THE PROVINCES (€/sqm/yr) LCOATION Q4 2011 Q4 2012 TRENDS 2013 Lyons (St-Priest), Marseilles (Plan de Campagne), 170 170 ► etc. For well-located surface areas of 1,000 sq.m located in prime locations in large catchment areas.• Retailers are continuing to target priority strategic sites where they consider it necessary to be present, which explains the stability of prime rental values​​.• Retail parks offer both a lower level of rent and setting up costs than shopping centres, providing an advantage at a time when the fall in consumer spending makes it hard for retailers to remain competitive.• Despite their advantages, retail parks still remain affected by retailers negotiating their lease terms (reduced firm periods, capped charges etc.). CUSHMAN & WAKEFIELD 54
  • 56. COMPETITION HAS BEEN ACCENTUATED BY THE BOOMOF E-COMMERCE INVESTMENT RETAILGrowth in online sales in France 50 40% 45 35% 40 30% 50 50% 35 25% 30 40 40% 34% 25 33% 20% 30 28% 30% 20 25% 15% 24% 22% 15 20 18% 20% 10% 10 5% 5 10 10% 31,0 25,0 11,6 15,6 20,0 31,0 37,7 45,2 8,4 11,6 20,0 25,0 37,7 15,6 45,5 0 0% 2005 2006 2007 2008 2009 2010 2011 2012e 0 0% 2006 2007 2008 2009 2010 2011 2012 e. Turnover (€ billion) Chiffres daffaires (Mds €) YOY growth (%) Croissance annuelle (%)Source: FEVAD CUSHMAN & WAKEFIELD 55
  • 57. ILLADAPTED REGLEMENTATION SURROUNDING RETAIL RETAIL INVESTMENT COMMERCES The general elections have halted progress on retail lawThe incertitude observed in 2011 … continued into 2012UNFAIRNESS between laws governing Proposal of the LAW ON TAXATION ONE-commerce and those governing INTERNET SITES but rapid proliferation of drive-general retail through grocery pickupUnclear implementation of the DAC The proposed LAW ON URBAN RETAIL has not been followed upSALES occurring outside the fixedsales periods criticized by SALES occurring outside the fixed sales periods haveprofessionals not been dealt withSUNDAY REST remained a key issue Majority opposition to SUNDAY OPENINGS condemned by retailersNegative impact of APPEALS on retaildevelopment projects New proposal for a law on CONTROLLING EXCESSIVE APPEALS to dissuade appealing parties CUSHMAN & WAKEFIELD 56
  • 58. A CHANGING RETAIL PROPERTY MARKET INVESTMENT RETAILSignificant examples Newcomers New concepts New formats Pandora Lego Atoll Cœur Prêt à Babycare by Saint- Manger Orchestra Lazare FNAC One JD Sports Bercy Nation Village Paris CUSHMAN & WAKEFIELD 57
  • 59. INVESTMENT OUTLOOKOUTLOOK CUSHMAN & WAKEFIELD 58
  • 60. REAL ESTATE MARKET OUTLOOK FOR 2013 INVESTMENT OUTLOOK• Rise in unemployment coupled with fiscal tightening: a poor economic outlook• Lack of confidence amongst investors and businesses• Investors and occupiers continue to disfavour secondary markets• New transactions for prime and emblematic properties: France and the Parisian region are the destination of choice for large wealthy investors and international fund managers who see Paris as the place to invest in.• A strongly contrasted market with developments reflecting the following:- the appetite of new players (sovereign funds, foreign brands);- transformation of work patterns;- disruption of consumption patterns. CUSHMAN & WAKEFIELD 59
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