French GDP growth over Q2 was perfectly aligned with Q1 forecasts and results (+0.3%). Economists are forecasting the same for Q3 and Q4 with full-year growth estimated at 1.3% with levels mainly driven by domestic demand.
According to our latest estimates, deliveries of new or refurbished office spaces in the Greater Paris Region should reach 844,000 sq m in 2019 and bring an end to the downward trend seen in the market since 2015. Levels could rise even further in 2020 when over 1.1 million sq m is due for completion. Beyond the volume of this new production, the geographic distribution has also changed considerably: a strong focus on Paris is set to give way to a concentration of new office space in both La Défense (251,000 sq m) and the Western Crescent (322,000 sq m).
Occupier and investor demand for core retail stock is forecast to remain steady. However, demand for second tier and secondary markets is becoming much more selective, which may generate significant adjustments in terms of rental values and yields for the most vulnerable assets.
The macro-economic framework is still resilient in France. Omnichannel strategies, e-commerce, and large-scale distribution supply-chain transformation continue to reshape real estate logistics landscape. Large deals are expected through to the end of the year both on the occupier and investor sides.
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