Commercial real estate in Île-de-France remained generally stable in 2015

The commercial real estate market in Paris and its region experienced a contrasted evolution over the past year, nonetheless remaining fairly stable year on year, according to real estate agency Knight Frank France.

Real estate agency Knight Frank France has released an overview of commercial real estate in Île-de-France in 2015, taking stock of both the sales and rental market of office space across the region.

According to the agency, activity in this sector in 2015 was in very slight decline (-1%) compared to the previous year. Nonetheless, the 2.008 million square meters sold and rented over the year was a reassuring result after a slow start to the year.

While overall volumes remained generally stable, the market underwent some notable changes, detailed by Knight Frank in a release. On the one hand, the market was slightly impaired by lessened activity on the part of buyers and renters of very large surfaces — over 20,000 square meters. These had been one of the main driving forces of 2014, and in 2015 their share of total transactions fell from 20% to 12%.

On the other hand, small and medium surfaces (less than 5,000 square meters) grew in popularity, with transactions on surfaces smaller than 1,000 m2 increasing by 9% in 2015 and those on spaces between 1,000 and 5,000 m2 jumping by 12%.

The “classic” segment of office surfaces comprised between 5,000 and 20,000 m2 ended 2015 on a stable note, experiencing a 1% increase in activity.

Knight Frank explains these contrasting results thus: the quality of the supply of very large surfaces was unsatisfactory and therefore not conducive to sales or rental contracts while users of small and medium surfaces probably felt compelled to act after years of staying away from the rental market.

From a geographical point of view, the year 2015 was the year of “central” markets, with the Central Business District experiencing 12% growth and the whole of central Paris seeing a 16% increase in activity. Overall, 43% of regional activity was concentrated in Paris in 2015, significantly more than the 35% observed on average over the last 10 years.

However, the Defense area exhibited a decline of 38%, but Knight Frank puts this in perspective by noting that the results for the year 2014 were exceptionally good and nearly impossible to match the following year. The main “losers”, are the inner suburbs, an area that struggled to maintain its attractiveness last year and was fully impacted by the decline in transactions of large and very large commercial spaces.

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