French business confidence reached a four year high in August, with companies buoyed by improving credit conditions and a more favourable corporate tax environment. The recovery in business investment is slow however, with occupiers wary of the wider economic issues in the eurozone and many expansion plans remain on hold.
Take-up volumes in Q3 were boosted by sustained activity in Paris intra-muros, and especially in the CBD submarket, where new supply is being absorbed rapidly by large finance and professional services firms, while technology firms are also very active. The South West suburbs of Paris are also seeing healthy demand, typified by Accor Hotels taking 43,000 sq.m at Sequana Tower in Issy-les-Moulineaux in Q3. Leasing activity elsewhere in Paris is more subdued however, with many companies still adopting a “wait and see” policy. On the supply side, the poor availability of Grade A space is not expected to improve in the short term, with few speculative projects in the pipeline. There is better supply in the western suburbs of La Défense, WBD and Boucle de Seine and landlords are still offering generous incentives of 1.5 to 3 months’ rent free per year of commitment. Vacancy rates remained relatively unchanged at below 8% in Ile-de-France.
Source : Cushman & Wakefield