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.

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. 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.
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