France - Retail Snapshot Q3 2013

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Retail MarketBeat is a brief summary of the Retail sector in key cities, providing comment on recent trends as well as market data and analysis of the impact on commercial real estate.

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France - Retail Snapshot Q3 2013

  1. 1. MARKETBEAT RETAIL SNAPSHOT FRANCE Q3 2013 A Cushman & Wakefield Research Publication ECONOMY The latest economic report from INSEE confirmed that the French economy is improving. After some initial positive indicators in the spring, the French institute for statistics and economic data recorded continued growth in Q4 (+0.4 %). There has been an improvement in both investments and external demand. Despite fiscal pressure and a continually high unemployment rate, household consumption is also moving in a positive direction, mainly thanks to social benefits and an inflation rate that remains moderate. RENTAL MARKET These slight movements within the economy have not been accompanied by an improvement in the retail property market as a whole. Retailers therefore continue to seek out the best locations in order to kick start or carry on with their development. Foreign players‟ expansion continues to spur on development in the main shopping streets in Paris (Michael Kors rue des Francs-Bourgeois) and in large regional conurbations (UGG Australia in Lyon) and has contributed to a renewal of supply in the largest shopping centres (Pandora in Carré Sénart). Prime locations are also benefitting from the arrival of new names, such as Primark and Agent Provocateur, and from the confirmed interest from high-end retailers, which has accentuated the trend of certain high streets becoming more up-market (Omega rue de Sèvres). These last few months have therefore, unsurprisingly, demonstrated retailers‟ desire to capitalize on the high consumer traffic and good image of the best quality sites. This trend, illustrated by the high number of extension projects in retail parks (Clos du Chêne 2, Green 7) as well as in dominant shopping centres (Carré Jaude 2 in ClermontFerrand), also applies to high streets. It highlights the scarcity of available quality supply, with stores occasionally becoming available when independent retailers or national brands close down, at which time other retailers are quick to cease the opportunity to continue their expansion (JD Sports rue Saint-Ferréol in Marseille, Desigual on Place du Capitole in Toulouse) and to roll out their new store formats (La Halle in the former Virgin on boulevard Montmartre). The remainder of the retail market has been more active, as demonstrated by numerous new retail park developments and the excitement surrounding the upcoming launches of large centres (Aéroville near Roissy). Traditional retail locations are also changing in the capital, although changes are limited to the ongoing extension of major shopping areas (such as rue Cambon or Upper Marais) and to the success of certain gentrified high streets in eastern Paris (such as rue de Charonne). ECONOMIC INDICATORS – CHANGE IN % FRANCE 2011 2012 2013F GDP Growth 2.0 0.0 0.2 Consumer Price Index 2.1 2.0 1.1 Unemployment rate¹ 9.3 10.2 10.6 Purchasing power² 0.7 -0.9 0.5 Household confidence³ 83 84 85 Household consumption 0.5 -0.4 0.4 Sources : INSEE/Crédit Agricole / P : forecast ¹Mainland France/²Purchasing power from gross available revenue. /³General indicators at the end of September of each year PRIME RENTAL VALUES – €/SQ M/YEAR HIGH STREETS (ZONE A) Q3 2012 Q3 2013 TREND Paris/Avenue des Champs-Élysées 13,000 18,000 ►/▲ Paris/Avenue Montaigne 8,000 10,000 ►/▲ Paris/Bd Haussmann-Grands magasins 5,000 6,000 ► Paris/Rue de Rivoli 4,000 4,500 ► Bordeaux/Rue Sainte-Catherine 2,200 2,200 ► Cannes/Croisette 6,500 6,500 ►/▲ Lille/Rue Neuve 2,200 2,200 ► Lyon/Rue de la République 2,200 2,200 ► Nice/Avenue Jean Médecin 2,200 2,200 ► Strasbourg/Rue des Grandes Arcades 2,000 2,000 ► Toulouse/Avenue Alsace-Lorraine 2,200 2,200 ► Marseille/Rue Saint-Ferréol 2,000 2,000 ► Ile-de-France 2,000 2,000 ► Provinces 1,400 1,400 ► Ile-de-France 180 180 ► Provinces 170 170 ► REGIONAL SHOPPING CENTRES RETAIL PARKS Source : Cushman & Wakefield EXAMPLES OF KEY RETAIL LETTING TRANSACTIONS RETAILER ADDRESS AREA SQ M Primark O’Parinor SC / Aulnay-sous-Bois (93) 5,500 18-20 rue de la Paix / Paris (75002) 1,690 115 boulevard Saint-Germain / Paris (75006) 262 Carré Jaude 2 SC / Clermont-Ferrand (63) 254 29 rue Saint-Ferréol / Marseille (13) 239 Massimo Dutti The North Face Lego JD Sports
  2. 2. TRENDS IN ILC AND ICC (ANNUAL GROWTH %) THE INVESTMENT MARKET With 2.1 billion euros invested in the first nine months of the year, volumes invested in retail property have fallen by 7% compared to the same period in 2012 and now represent „only‟ 20% out of the total invested amount in France (this figure stood at 25% at the end of the 2nd quarter). After a buoyant first half, there have been few large transactions in the 3rd quarter, with three deals above 50 million compared to ten in the first half. The role of large transactions could be more decisive in the next few months due to the expected sale of some large portfolios and the arrival on the market of several large shopping centres. Street-level shops on the most well-reputed high-streets, both in Paris and elsewhere in France, will also continue to be sought-after, as was illustrated by Vastned‟s recent acquisition of several boutiques on Cours de l‟Intendance and Rue de la Porte Dijeaux in Bordeaux. 8,00% 6,00% 4,00% 2,00% 0,00% -2,00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 -4,00% 2010 -6,00% 2011 ILC 2012 2013 ICC -8,00% Source : INSEE / Construction cost (ICC) and retail rent (ILC) index. RETAIL INVESTMENT VOLUMES IN FRANCE This has also been demonstrated by the upcoming launch of the One Nation Paris outlet centre, a trend that will be reaffirmed in 2014 with the much-awaited completion of Terrasses du Port in Marseille. 10% 2,1 1 3,6 20% 3,3 2 3,6 30% 1,9 3 1,2 40% 4,8 4 2,3 50% 1,9 The end of 2013 will see the emphasis put on shopping centres. After Rives d‟Arcins, other shopping centre extensions will be opened (Carré Jaude 2 in Clermont-Ferrand, La Toison d‟Or in Dijon). The next few months will also see the launch of three of the largest projects of 2013 for a total surface area of 166,000 sq m. One of these is an example of how a shopping centre can rejuvenate neglected urban areas (L‟Ilo in Epinay-sur-Seine). The other two are examples of how retail developments are moving more and more up-market (Beaugrenelle in Paris, Aéroville near Roissy) 5 1,2 Retail parks dominated the summer agenda, with the opening of several schemes mostly located near large towns (Chasse-sur-Rhône Retail Park) or on the outskirts of medium-sized regional towns (Be Green near Troyes, Grand Parc in Charleville-Mézières). Although several projects will be launched by the end of December, the total surface area of new openings in 2013 should nevertheless be lower than that of the previous year, due to the fact that there are fewer large-scale and very large-scale developments (there were 7 projects above 25,000 sq m in 2012 including the 91,000 sq m Atoll development near Angers). 0,8 FRENCH RETAIL STOCK 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3 2013 0 0% Retail Investments (€bn) Source : Cushman & Wakefield EXAMPLES OF KEY RETAIL ACQUISITIONS ADDRESS/BUILDING VENDOR / PURCHASER Portfolio/Bordeaux (33)¹ PRICE €MN Corio / Union Investment Trois Moulins SC/Issy-les-M. (92) 57,6 Privé / Vastned 40ter av. de Suffren/Paris (75015)² 47 Unibail-R. / Generali 46,8 ¹6 boutiques located on Cours de l’Intendance and rue de la Porte Dijeaux/²Volkswagen showroom. KEY OPENINGS IN 2013 CURRENT LEGISLATION AND REGULATION PROJECT Several retailers are currently embroiled in legal battles for having disregarded laws on opening hours including Castorama, Leroy-Merlin, Sephora and Monoprix, which has intensified debate over late-evening and Sunday shopping. A popular topic of discussion in Paris during the electoral period, the issue will certainly not be resolved in the short term. The situation could change, however, as suggested by the prime minister‟s decision to commission a report on the exceptions to Sunday closing and due to the pressure from consumers and retailers, which would justify a relaxation of legislation in order to protect jobs and respond to competition from e-commerce. Aéroville (SC) The e-commerce boom also led the government, with the first passing of the projet de loi (white paper) ALUR, to make planning permission obligatory for the creation of new drive-through grocery pickups (“click and collect”, or drive). % of sums invested in retail in France TOWN AREA (SQ M) OPEN. Tremblay-en-France (93) 84,600 Q4 Beaugrenelle (SC) Paris (75015) 45,000 Q4 Mondevillage (RP) Mondeville (14) 42,000 Q4 Épinay-sur-Seine (93) 36,700 Q4 Saint-Parre-aux-Tertres (10) 35,000 Q3 Caen (14) 28,700 Q2 Les Clayes-sous-Bois (78) 22,500 Q4 Cherbourg (50) 15,450 Q2 Dijon (21) 14,100 Q4 Bègles (33) 12,900 Q2 Rennes (35) 9,400 Q4 L’Ilo (SC) Be Green (RP) Rives de l’Orne (SC) One Nation Paris (FO) Les Eléis (SC) La Toison d’Or (SC)¹ Rives d’Arcins (SC)¹ Alma (SC)¹ ¹Extension/In dark blue projects already opened. Follow us on: Cushman & Wakefield 11-13 avenue de Friedland 75008 Paris – France Tel: +33 1 53 76 92 92 www.cushmanwakefield.fr This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2013 Cushman & Wakefield, Inc. All rights reserved.

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