New start in 2021? Following a year like no other, early 2021 offered a glimpse of recovery although with some questions regarding the scale and the durability of the upturn in the office real estate market. As the only hope for a way out of the crisis, vaccinations may be gaining pace across many European countries including France but a 3rd lockdown has shuffled the deck, obliterating any certainty and undermining forecasts. Q1 reflected this indeterminate state with an office take-up of 327,430 sq m; this represents a -30% decrease compared with Q1 2020. One positive sign was that there was good activity in the large space segment over Q1. Some businesses have moved beyond the paralysing inertia seen in 2020 and started to take projects forward as we move out of the initial waves of the epidemic.
The reduction in transactional activity has had a direct impact on immediate supply which rose to 3.79 million sq m by the end of Q1 2021. This reflects new, unleased building completions as well as releases of space which have taken the vacancy rate for the Greater Paris Region to 6.9% compared with 5.3% 12 months earlier. This position is a sign of the market transformation that is underway and is indicative of a post-crisis renewal for office real estate: more flexible, more hybrid, more efficient and less carbon-intensive. Given this climate, the task of preparing forecasts is challenging but projects are now taking changing occupier demand and expectations into account.
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