retail property market france 2016
TRANSCRIPT
Retail Property Market France | 2
THE ECONOMY
The French economy is expected to have ended the year 2015 with
GDP growth of 0.2% in the fourth quarter. Household consumption
declined by 1.1% in November (−0.3 % in the fourth quarter) and
remains fragile. This weakness is due mainly to unseasonably mild
weather, which reduced consumer spending for heating and winter
clothes.
The job market does not bode well for a rapid, strong recovery in
consumer spending. Unemployment reached 10.2% in the third
quarter of 2015, compared with 10% in the third quarter, belying
INSEE’s forecast for stabilization by the end of the year. Above all,
it was the terrorist attacks of November 13 that undermined
consumer spending. The effects of the attacks are indisputable and
significant, as seen in the 4.9% fall in specialized retail in
November¹ and the 2.8% decline in clothing sales in December.²
Department stores in Paris also experienced a sharp slowdown in
sales. Unsurprisingly, the tourism sector has been especially hard
hit. Although 2015 was on its way to being a good year in Paris,
occupancy rates of Paris hotels (all categories) collapsed by 25%
during the end-of-year holidays,³ traditionally a busy period for the
sector.
It remains to be seen whether winter sales will make up for
business lost after the attacks of November 13. Figures from the
first few days indicate that the sales period is off to a good start,
no doubt aided by the substantial discounts offered by retailers.
Consumers are doing their share by going into shops and buying.
The encouraging start to the new year reinforces our optimistic
view for retail in 2016. In addition to GDP growth of 1.2%−1.5%
forecast for 2016 (compared with 1.2% in 2015), low inflation, and a
timid improvement in purchasing power, the latest polls show that
consumer confidence is withstanding the terrorist threat and
sluggish economic recovery. Despite hesitant consumer spending,
the consumer confidence indicator held steady at 96 in December,
down from 97 in September and the long-term average of 100, but
higher than the average (94) for 2015.
¹ Source: Procos. ² Source: IMF. ³ Source: MKG/OTCP.
RETAIL PROPERTY MARKETFRANCE | 2016
ECONOMIC INDICATORS (IN %)
2015E 2016F
GDP growth 1.2 1.5
Consumer prices 0.1 1.1
Unemployment rate¹ 10.2 10.2
Household consumption 1.5 1.4
Source: Oxford Economics / E: estimate / F: forecast / ¹Metropolitan France.
THE LETTINGS MARKET
High streets
Prime retail locations in France continue to be vigorously sought
after by a variety of occupiers. This demand is underpinned by the
expansion of relatively recent retailers (Pandora, Tiger, Hema), the
arrival of newcomers (Nyx) as well as by the repositioning of long-
standing players. The proliferation of single-brand stores reaffirms
the attractiveness of this retail model in numerous sectors (Maille,
Lipault, Le Creuset, Asics). In addition to market momentum,
overall demand is driven by the rapid growth of pop-up stores,
pure-player stores (AM/PM, Spartoo, Sensee, Smallable), and
original concepts for restaurants and food shops (Vapiano,
Chipotle, Kusmi Tea, etc.).
Paris
Although the terrorist attacks have badly hurt tourism in Paris,
supply still drives a retail-property market that is characterized by
robust demand. The scarcity of suitable properties and often high
rental values tend to slow retail development projects in vibrant
sectors such as food and restaurants, where operators are severely
limited by industry constraints. Even large international groups
have limited room for development in certain neighborhoods. In an
effort to maintain profitability at sales points, or to boost growth or
begin development, many retailers choose locations in more
distant parts of key high streets or on nearby side streets. This
spillover effect has been especially visible near rue du Faubourg
Saint-Honoré and rue Saint-Honoré. However, geographical
expansion and the upmarket trend in Paris retail are not limited to
the luxury sector. Some streets in Le Marais (rue des Archives, rue
Sainte-Croix-de-la-Bretonnerie) have seen numerous development
projects and openings. This trend is also visible on the Left Bank,
especially in the form of significant redevelopment projects
(Banimmo / Marché Saint-Germain and Emerige / boulevard
Raspail).
Although large retail spaces remain hard to find, sales and
transactions carried out recently on the investment market provide
exceptional opportunities on the busiest thoroughfares. Although
calm in recent months, the Champs-Élysées is expected to return
to center stage thanks to a few high-profile transactions. In
addition, department stores continue their projects on the
boulevard Haussmann, such as the lease by Galeries Lafayette of
the former La Halle store.
PRIME RENTAL VALUES (€/M²/YEAR ZA)
High Streets Q4 2014 Q4 2015
Paris | Champs-Élysées 18,000 18,000
Paris | Faubourg St-Honoré 11,000 13,000
Paris | Boulevard St-Germain 6,500 6,500
Paris | Boulevard Haussmann 8,000 8,000
Paris | Rue des Francs-Bourgeois 4,500 4,500
Paris | Rue de Rivoli 3,500 3,500
Bordeaux | Rue Ste-Catherine 2,200 2,200
Cannes | La Croisette 8,000 8,000
Lille | Rue de Béthune 2,000 1,800
Lyon | Rue de la République 2,400 2,400
Marseille | Rue St-Ferréol 1,800 1,600
Strasbourg | Grandes Arcades 2,000 1,800
Nice | Avenue Jean Médecin 2,200 2,200
Toulouse | Rue d’Alsace-Lorraine 2,200 2,200
Source: Cushman & Wakefield.
Harmont & Blaine | 35 Boulevard des Capucines, Paris (75002)
Retail Property Market France | 3
RETAIL PROPERTY MARKETFRANCE | 2016
Provinces
In recent months, the best-known shopping districts have
dominated markets in large regional cities. More than ever, retailers
favor prime retail locations in terms of profitability, risks related to
openings, and heightened visibility. These locations are targeted by
international retailers recently arrived in France, by retail
newcomers, and by single-brand stores beginning their
development outside Paris. Momentum continues unabated in
cities such as Lyon, Toulouse, and Bordeaux. After a busy 2014, the
past few months have seen significant activity in new leases and
openings, with Michael Kors in Lyon, and Maille and Burger King in
Bordeaux. Bershka, Sabon, and Pandora have been active in
Toulouse, where Nyx opened its first store in France.
Major transactions were carried out in other large cities in 2015.
Several such operations reflect the ongoing demand for large
stores, which remain scarce in city centers because of structural
limitations. However, such operations do little to conceal the
challenges facing high streets in regional cities, such as rue Saint-
Ferréol and rue Paradis in Marseille. In Lille, rue de Béthune has
been penalized by the announced departures of major anchors
from Le 31 shopping center. Instead, other streets such as rue
Faidherbe—more affordable, still central, and offering quality
supply—are enjoying increasing success, as Lille’s retail market
restructures. In general, vacancy rates in midsized cities continue
to rise. However, a few cities such as Annecy, Biarritz, and La
Rochelle continue to see steady demand, thanks to tourists and
local consumers with high purchasing power.
Maille boutique | 40 cours de l’Intendance, Bordeaux (33)
SIGNIFICANT OPENINGS AND DEALS IN 2015
CITY ADDRESS RETAILER AREA M²
PARIS 9th 21-23 boulevard Haussmann GALERIES LAFAYETTE 3,200
PARIS 2nd 5 boulevard Montmartre MAISONS DU MONDE 2,580
PARIS 8th 36 rue Marbeuf VAPIANO 1,260
PARIS 8th 71 avenue des Champs-Élysées DUBAIL 490
PARIS 8th 17 rue François 1er BRUNELLO CUCINELLI 450
PARIS 4th 20 rue Sainte-Croix-de-la-Bretonnerie NATURE & DÉCOUVERTES 450
PARIS 2nd 35 boulevard des Capucines HARMONT & BLAINE 360
PARIS 6th 6 rue de Montfaucon CHIPOTLE 300
PARIS 1st 12 rue Cambon PACO RABANNE 60
MARSEILLE 75 rue Saint-Ferréol H&M 4,400
TOULOUSE 10 rue d’Alsace-Lorraine BERSHKA 680
LILLE 50 rue Faidherbe COSTA COFFEE 240
NICE 2 avenue de Verdun FURLA 210
CANNES 17 boulevard de la Croisette VAN CLEEF & ARPELS 160
LYON 74 rue du Président E. Herriot MICHAEL KORS 120
BORDEAUX 40 cours de l’Intendance MAILLE 120
Source: Cushman & Wakefield.
Retail Property Market France | 4
RETAIL PROPERTY MARKETFRANCE | 2016
Rue Saint-Honoré14%
Faubourg Saint-Honoré
13%
Avenue Montaigne9%
Saint-Germain-des-Prés8%
Vendôme/Paix6%
La Croisette6%
George V/François 1er
5%
Le Marais5%
François Sibilli4%
Champs-Elysées3%
Others27%
GEOGRAPHIC DISTRIBUTION OF OPENINGS | FRANCE 2011−2015
FOCUS ON THE LUXURY MARKET
Grand openings in the fourth quarter—Dubail on the Champs-
Elysées, Baccarat on rue du Faubourg Saint-Honoré, and Glashütte
on rue de la Paix—brought to 63 the number of luxury stores
opened in France in 2015, a significant increase over the 34
openings in 2014. While creations accounted for half of the
openings of luxury stores in France in 2015 (compared with 65% in
2014), relocations, refurbishments, and extensions also contributed
more than one-third of total openings. There were nine relocations
in 2015, and 2016 is slated at least to equal this solid performance.
In 2015, rue Saint-Honoré was the most desirable street in Paris for
luxury retailers. Eight stores opened on rue Saint-Honoré in 2015,
bringing to nearly 30 the number of stores opened there since
2011, when the Mandarin Oriental was launched. Other streets
outside the traditional Paris luxury district also stood out in 2015.
With four openings, rue des Archives came in fourth place, after
rue Saint-Honoré (eight openings), rue du Faubourg Saint-Honoré
(five openings), and rue de la Paix (five openings). Seven luxury
stores opened in Le Marais in 2015, confirming the demand there
for cosmetics, accessories, and men’s fashion. The French luxury
market is less lively in other parts of France. In 2015 there were 11
openings in French cities other than Paris, including five in Cannes
(e.g., Hermès and Van Cleef & Arpels) and three in Saint-Tropez
(e.g., Lanvin and Giorgio Armani).
Twenty-three openings are planned in France for 2016, a
satisfactory figure that suggests the year could be a good one for
the French luxury market. However, several factors could
compromise this outlook, the foremost being the heightened
terrorist threat. Although 2015 was on the way to being a very
good year for tourism, the attacks of November 13 put an end to
that trend, especially in Paris. Reservations fell dramatically for the
year-end holiday period, and occupancy rates declined in
ultraluxury hotels. This challenging environment—scarce supply of
retail properties and rising rental values—could limit the number of
store openings in France. With the aim of propping up their
margins, retailers may be tempted to sit on the sidelines. Retailers
may also decide to pay more attention to optimizing their sales
network by means of refurbishments, store relocations, and new
creations in locations just off the most prestigious high streets.
With regard to less established districts, any expansion by retailers
will be cautious and opportunistic, most likely in less exclusive
market segments such as accessories and beauty products.
Source: Cushman & Wakefield.
The various types of openings include: creations of new boutiques, reopenings after refurbishment, store relocations and extensions, pop-up stores, and retailer name changes.
Boulevard de la Croisette | Cannes (06)
Retail Property Market France | 5
RETAIL PROPERTY MARKETFRANCE | 2016
Shopping centers
The latest footfall index from the CNCC (Conseil National des
Centres Commerciaux, or French Council of Shopping Centers)
confirms the delicate position of shopping centers in France. The
November terrorist attacks have added to long-standing problems
such as the growth of online sales and the weakness of household
consumption. The large number of refurbishments and extensions
of existing sites, as well as the steady clip at which retail parks are
innovating, could also delay the development of shopping centers
and explain why they are often slow to get up to speed.
However, this global view does not necessarily apply to every
shopping center. Some shopping centers opened in 2015 have
been very successful (Promenade Sainte-Catherine in Bordeaux).
The expansion of new retailers (Pandora, Kiko, Hema, Tiger) and
the arrival of unorthodox concepts that meet consumer
expectations also contribute significantly to market growth. The
upmarket trend of shopping centers goes hand in hand with the
success of upmarket formats in the restaurant and beauty sectors
(Big Fernand in Val d’Europe and Les Docks Marseille, Rituals in
Italie 2), the growth of single-brand stores (Maille in Le Carrousel
du Louvre, Lego in Forum des Halles, Lipault in 4 Temps), and
openings of fashion retailers usually located only in high streets
(The Kooples in 4 temps, Cos and & Other Stories in Polygone
Riviera, near Nice).
These new sales points heighten the contrasts of the French
market and give further advantage to prime retail locations at
existing regional shopping centers. Creation and extension projects
tend to go to established and well-known sites, which are able to
supply retailers with significant footfall. Established shopping
centers also add value by providing a product-enhancing context
for retailers. However, the largest and newest shopping centers are
not alone in driving the market. Medium-sized shopping centers
and local malls can also do well, provided that landlords make the
necessary investments and offer leases that attract new retailers
and retain existing occupiers. On the other hand, shopping centers
that are badly located or poorly designed suffer declining visitor
numbers. They are also more exposed to arbitrages made by
retailers in search of cost savings, and by long-standing retail
powerhouses weakened by internet competition and innovative
newcomers.
FOOTFALL INDEX FOR SHOPPING CENTERS IN 2015
-6,00%
-5,00%
-4,00%
-3,00%
-2,00%
-1,00%
0,00%
1,00%
2,00%
3,00%
Janu
ary
Feb
ruar
y
Mar
ch
Ap
ril
May
June
July
Aug
ust
Sep
tem
ber
Oct
ob
er
No
vem
ber
Dec
emb
erSource: CNCC / Data from a panel of 145 shopping centers.
PRIME RENTAL VALUES (€/M²/YEAR)
Shopping centers* Q4 2014 Q4 2015
Regional centers | Ile-de-France 2,000 2,000
Regional centers | Provinces 1,400 1,400
Source: Cushman & Wakefield.
*For 150 m² of well-located retail space (clothing retailers or services) in existing shopping centers that are leaders in their catchment areas.
Retail Property Market France | 6
RETAIL PROPERTY MARKETFRANCE | 2016
Retail parks
The French retail-park market receives steady demand from retailers
of children’s clothing (Orchestra), sporting goods (Intersport, Sport
2000), footwear and clothing (Chausséa, Gémo, Besson), and home
furnishings (Meubles Gautier, Maisons du Monde). Long present on
city outskirts, home-furnishings retailers grew nationwide in 2015 at
a rate unmatched since 2008. Discount retailers also boosted the
number of openings. Established French retailers continued their
expansion in peripheral zones (Centrakor, Gifi, Stockomani), while
international retailers new to France proliferated (Action) and
newcomers began their development in France (Kruidvat). More
low-cost retailers are expected to arrive. These budget retailers
adapt their offer to the French consumer's need for good value in a
weak economy.
The diversity of retailer demand was reaffirmed in 2015. Attracted
by innovative retail-park designs and by moderate occupancy costs,
retailers are equally interested in the consumer potential of
peripheral zones. French demographic growth is strong outside
towns and cities, where retailers are able to develop their activity
even on a limited budget. Retail parks are now attracting retailers
that before were largely (or even fully) absent from retail parks.
Clothing retailers traditionally located in shopping centers are now
opening in retail parks as opportunities arise (H&M, C&A, Célio) and
where they can test new concepts (Happy Chic). New trends in
French consumption can be seen in the restaurant sector, where
chains such as Burger King often provide drive-through service.
Entertainment and activities constitute an increasingly large part of
new development projects (Dock 39 in SuperGreen, near Thionville).
Developed by Frey, SuperGreen promotes the F-Expérience, a “new
concept based on FUN & FOOD FOR FAMILY, all part of a surprising
and original shopping experience.”
However, this success does not eliminate the problems
overshadowing the French market. Most retailers are focused on
store profitability and the need to optimize sales networks.
Relocations are on the rise, often to new retail parks or to better-
adapted space within the same zone. Such operations add to the
flow of releases and ultimately speed the decline of certain zones.
These changes can result in lower standards, with independent
retailers and discount chains developing at minimal cost.
PRIME RENTAL VALUES (€/M²/YEAR)Retail parks* Q4 2014 Q4 2015
France 180 180
Action store | ZAC des Courtes Épluches, Villabé (91)
Source: Cushman & Wakefield.
*For 1,000 m² and new space in prime slots in strong catchment areas.
Retail Property Market France | 7
RETAIL PROPERTY MARKETFRANCE | 2016
RETAIL INVESTMENT ACTIVITY IN FRANCE
1,92,3
4,8
1,2
1,9
3,63,3
3,64,0
7,7
5,2
0%
20%
40%
60%
80%
100%
0
1
2
3
4
5
6
7
8
9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Retail investment €bn Share of total investment (%)
Source: Cushman & Wakefield.
THE INVESTMENT MARKET
Amounts invested
Investor appetite for retail properties remains robust, while rising
market values bring fresh supply to the market. This dynamic
explains the healthy performances of the retail investment market.
More than €5.2 billion was invested in retail properties in 2015,
representing 21% of all investments made in France. Although
investment in 2015 declined by 32% from the level of 2014 (€7.7
billion), it was 53% higher than the most recent ten-year average
(€3.4 billion).
The near-total absence of megadeals played a decisive role in
investment decline in 2015. There was only one transaction of more
than €500 million (Celsius portfolio), compared with five large
deals totaling €4.5 billion in 2014 (Klepierre/Carmila portfolio,
Beaugrenelle, etc.). However, transaction amounts in 2015 were
much more evenly distributed than in 2014. Of the 128 transactions
in 2015, five were larger than €200 million, with total investment
coming to approximately €1.6 billion. On the other hand, the
number of deals between €100 million and €200 million doubled
year on year, and accounted for 33% of total investment (€1.7
billion, compared with €800 million in 2014). Transactions of
between €50 million and €100 million also trended upward, with 27
such deals in 2015, worth €747 million, compared with €581 million
in 2014. Smaller deals (less than €50 million) were virtually
unchanged in both number and volume.
INVESTMENT AMOUNTS*
0,40 0,41
0,78 0,75
0,58 0,75
0,80
1,74
5,13
1,56
0
1
2
3
4
5
6
7
8
9
2014 2015
1-15 €M 15-50 €M 50-100 €M
100-200 €M > 200 €M
Source: Cushman & Wakefield/*Total investment in French retail properties.
Retail Property Market France | 8
RETAIL PROPERTY MARKETFRANCE | 2016
38%
60%
19%
43%
29%
55%
19%11%
26%
France Ile-de-France Provinces
High streets Shopping centers/Malls
Retail warehousing
Investment in shopping centers
As in previous years, investment in 2015 went mainly to malls and
shopping centers. These two categories attracted €2.2 billion and
accounted for 43% of total retail investment in 2015 in France.
The most high-profile transactions included the Celsius portfolio,
sold by CBRE Global Investors to a joint venture comprising the
CIC Chinese sovereign wealth fund and AEW Europe. The deal
was for more than €500 million. Other major deals were the
acquisition for €312 million of Nicetoile by Allianz (90%) and
Hammerson (10%) from Unibail-Rodamco, and the roughly €200
million sale by Orion Capital Managers to Altarea Cogedim of 50%
of Qwartz.
Nevertheless, amounts invested in this market segment fell by
61% from levels a year earlier. This decline was due to the limited
number of very large deals. In 2015, investment activity was
focused mainly on high-potential smaller assets in midsized
provincial towns (Geric in Thionville, Les Cordeliers in Poitiers)
and in Ile-de-France (Bercy 2 in Charenton-le-Pont). In addition,
several shopping-mall portfolios traded hands in 2015. The
Ouessant portfolio, comprising 22 assets, was sold by Immochan
to Primonial Reim for €125 million, and the Pulse portfolio was
acquired by Carmila from CBRE Global Investors for €92 million.
Investment in high streets
In 2015, the amounts invested in high streets rose by 27% year on
year, to €2 billion. This solid performance was attributable mainly
to the finalization of several transactions of more than €100
million for ground-floor shops and mixed-use buildings.
The sale of 49−53 avenue des Champs-Élysées (L’Atelier Renault,
Häagen-Dazs) by Westbrook for approximately €300 million was
the largest ground-floor deal in 2015. Other high streets attracted
investors, especially in the luxury sector. For example, CBRE
Global Investors acquired the Roberto Cavalli flagship at 261 rue
Saint-Honoré, and La Française Real Estate Partners (on behalf of
a French institutional client) acquired the flagship Céline store at
53 avenue Montaigne. There were deals elsewhere in France too,
such as Amundi’s acquisition of the Louis Vuitton store on rue
Grignan in Marseille. In less upmarket sectors, the sales of the
Printemps department stores in Strasbourg and Lyon, and the
acquisition by a Grosvenor fund of H&M at 62 rue de la
République in Lyon, were among the largest deals outside of
Paris.
ASSETS AND GEOGRAPHIC DISTRIBUTION*
Le Printemps | Strasbourg (67)
Retail Property Market France | 9
RETAIL PROPERTY MARKETFRANCE | 2016
Source: Cushman & Wakefield/*% in value in 2015.
60%
10%
7%7% 6%
3%7%
France ChinaMiddle East GermanyUSA SwitzerlandOther
NATIONALITY OF INVESTORS IN 2015*
Investment in retail warehousing
In 2015, €986 million was invested in peripheral zones, compared
with €590 million in 2014 (+67% year on year). Acquisitions of
retail parks remain rare because of the scarcity of high-quality
supply on the market. Investors seek assets with large catchment
areas, well-known retailers, and firm commitment periods. The
largest deals in 2015 included La Française REM’s acquisition of
Urban Valley in Cormeilles-en-Parisis (Val d’Oise), for €35 million,
and the sale to TH Real Estate of the Park Avenue complex in
Saint-Maximin (Oise), for €25 million.
Portfolios of stores spawned a significant number of deals in 2015.
The portfolio acquired by Tikehau for approximately €240 million
included 100 stores leased to Babou, C&A, Kiabi, etc. A portfolio
of 18 Décathlon stores was acquired by Ciloger for €101 million.
Two portfolios of Buffalo Grill restaurants were sold to Perial (€40
million) and to La Française (€30 million). Finally, five But stores
were sold to Financière Teychené for €21 million.
Investor nationalities and profiles
The share of French investors in total retail investment volume
declined in 2015, even though they retained majority status (60%,
compared with 69% in 2014). French investors are active in
market segments via OPCIs and SCPIs, property-investment firms
/ REITs, insurance companies, and pension funds. The share of
French investors is higher in the provinces (76%), where there are
fewer foreign investors because of the limited supply of assets
that meet their acquisition criteria.
The share of foreign investors in total investment rose from 31% in
2014 to 40% in 2015. One of the highlights of 2015 was the first-
ever acquisition in France by the CIC Chinese sovereign wealth
fund. This transaction alone explains the rise in the share of
foreign investors in total retail investment in 2015. Activity of
North American and Middle Eastern investors was stable year on
year, while Europeans invested nearly €700 million less in 2015
than in 2014.
Villebon 2 | Villebon-sur-Yvette (91)
PRIME YIELDS (%)
Q4 2014 Q4 2015
Regional shopping centers 4.50 4.00
Shops 3.50 3.00
Retail parks 5.75 5.00Source: Cushman & Wakefield.
Retail Property Market France | 10
RETAIL PROPERTY MARKETFRANCE | 2016
Source: Cushman & Wakefield/*Total investment in French retail properties in 2015.
FRENCH RETAIL PROPERTY STOCKGeneral trends
After Surcouf in 2012, Virgin Megastore in 2013, and Bata in 2014,
more large retailers went out of business in 2015, while others
endeavored to stay afloat (Sinequanone and especially La Halle).
Disposals carried out by these retailers brought properties to the
market and replenished the supply of large stores, always highly
sought after by retailers. Despite sufficient demand, as confirmed
by the takeover of several Virgin stores (by H&M in Marseille and
Tati in Rennes) and several La Halle stores (by Galeries Lafayette
on boulevard Haussmann and by Action, C&A, and Orchestra in
peripheral zones), supply is still available and should enliven the
French market in 2016. Furthermore, the list of retailers and sectors
under strain is expected to grow longer, while several large
acquisitions (FNAC/Darty, Sergent Major/DPAM, Burger
King/Quick) foreshadow an acceleration of arbitrages.
Disposals will fuel the supply mainly of secondary sites and
midsized cities. This trend is all the more worrisome because
openings, though far from levels seen in 2012, recovered sharply in
2015 (775,000 m²) after a 32% decline in 2013 (840,000 m²) and
2014 (575,000 m²).
Trends in the supply of high streets
Although disposals may have created exceptional opportunities on
some of the most prestigious thoroughfares of Paris and other
French cities, prime retail slots remain rare and expensive. Retailers
are therefore forced to make do, either by refurbishing what they
already have or by looking at alternative locations that are less
expensive and offer more abundant supply. Several renovation
projects have replenished the supply of more-or-less prime sectors
in Paris and other French cities.
In Paris, the largest projects are mainly on the Left Bank, where the
renovated Marché Saint-Germain (3,500 m²) is expected to open in
2016. Large operations are also under way on the Right Bank. The
renovation of the Samaritaine, and the redevelopment of the Poste
du Louvre and the Louvre des Antiquaires, are planned for
2017−2018.
Elsewhere in France, several large projects will be launched over
the next few months: renovation of the Bourse de Lille, extension
of the Passage Pommeraye in Nantes, and redevelopment of the
Banque de France buildings and the Hôtel Dieu in the historic heart
of Lyon.
Marché Saint-Germain | Paris (75006)
RETAIL OPENINGS FRANCE (THOUSANDS OF M²)*
960840
575775
0
200
400
600
800
1000
1200
2012 2013 2014 2015
Source: Cushman & Wakefield.
*Excluding redevelopment and including high streets, shopping centers, retail parks, factory-outlet centers, and transit areas.
Retail Property Market France | 11
RETAIL PROPERTY MARKETFRANCE | 2016
SIGNIFICANT OPENINGS | RETAIL PARKS
2015 M²
Toulouse Fenouillet | Fenouillet (31) 33,500
Sens Sud | Sens (89) 28,300
SuperGreen | Terville (57) 28,000
Enox | Gennevilliers (92) 26,700
St-Max Avenue | Saint-Maximin (60) 15,500
PAC Auchan | Saint-Jean-de-la-Ruelle (45) 9,000
2016 M²
La Petite Madelaine | Chambray-les-Tours (37) 31,500
Les Montagnes | Champniers (16) 22,200
Les Blancs-Monts | Cormontreuil (51) 18,500
Park Avenue | Saint-Maximin (60) 15,500
Cap Émeraude | Pleurtuit (35) 13,500
L’Hippodrome | Toulouse (31) 10,500
Trends in the supply of shopping centers
In 2015, 375,000 m² of shopping centers were opened, 12% more
than in 2014 and a completion rate of 80% of annual projected
volume. This increase is attributable to the relatively small size of
the development projects. Furthermore, while the number of
openings was the same in 2014 and 2015, it was the strong rise in
creations that demarcated 2015 from previous years. Creations
accounted for 83% of volume in 2015, compared with roughly 50%
during the period 2012−2014. Recent development projects, such
as Les Terrasses du Port in Marseille and the Polygone Riviera near
Nice, confirm the trend of large shopping centers characterized by
high-quality supply and architecture.
The construction of large complexes (e.g., the completion of
Ametzondo, near Bayonne, slated for the end of 2016) results in
the consolidation of the most-established sites. Major property-
investment firms have launched large-scale projects for extension
and redevelopment, such as Forum des Halles (opening 2016), Cap
3000, and Val d’Europe (2017). In addition to establishing the
domination of jumbo complexes, which occupy an increasingly
large position in the leisure and food sectors, these projects are
designed to adapt to new forms of consumer behavior. This trend
is all the more striking in the case of Vill’Up, which will open this
year in Paris, and Alpha 17 in Aubagne, a model for the large
shopping centers of tomorrow.
Trends in supply of retail parks
With 370,000 m² in 2015, i.e. 63% of annual projected volume, the
volume of completed retail parks is far from levels seen at the end
of the 2000s (580,000 m² per year on average during the period
2007−2010). This decline in volume results from the caution
exercised by developers since the beginning of the economic crisis
and from the maturation of certain geographic zones. Nonetheless,
business in 2015 was 32% higher than in 2014 thanks to large
deliveries (Enox in Gennevilliers), the partial redevelopment of
established zones (St-Max Avenue in the Oise at the former
Castorama), and the ongoing development from scratch of high-
quality complexes that leave more space for leisure activities and
restaurants (SuperGreen in Terville).
These trends are expected to continue in 2016, with the completion
of smaller projects boosting the number of openings. Retail parks
are now appearing on the outskirts of midsize cities and in rural
areas, while property-investment firms of large distribution
retailers are expanding their portfolios beyond hypermarkets to
include medium and large units (Immochan strip-mall projects, one
opened in 2015 near Orléans, in Saint-Jean-de-la-Ruelle, and the
other planned for Louvroil, near Maubeuge, in 2016).
SIGNIFICANT OPENINGS | SHOPPING CENTERS
2015 M²
Polygone Riviera | Cagnes-sur-Mer (06) 74,000
Les Saisons de Meaux | Meaux (77) 30,000
Le Jeu de Paume | Beauvais (60) 24,000
Promenade Sainte-Catherine | Bordeaux (33) 20,000
Les Docks | Marseille (13) 17,000
Les Passages Pasteur | Besançon (29) 14,700
2016 M²
Ametzondo | Saint-Pierre-d’Irrube (64) 76,000
L’Avenue 83 | La Valette-du-Var (83) 51,000
Vill’Up | Paris (75019) 24,000
Centre Bourse | Marseille (13) 21,000
Espace Fenouillet | Fenouillet (31) 17,000
Forum des Halles | Paris (75001) 11,000
Source: Cushman & Wakefield. Extensions and redevelopment projects are highlighted in blue.
Retail Property Market France | 12
RETAIL PROPERTY MARKETFRANCE | 2016
Source: Cushman & Wakefield. Extensions and redevelopment projects are highlighted in blue.
REGULATORY UPDATE
In 2015, French Economy Minister Emmanuel Macron pushed
through a controversial bill intended to promote growth, business
activity, and equal economic opportunities. The new law, which
had been debated for many years, raises the number of Sunday
openings authorized by the Mayor’s office from 5 to 12 per year
(authorized by the Paris Prefect). Retailers located in international
tourist zones (ITZ) are allowed to open every Sunday and to
remain open until midnight every night of the week. The law
applies to several districts in Paris, as decreed in the official
gazette of September 26, 2015. Deauville, Cannes, and Nice are
also concerned, though the official texts with regard to those cities
have not yet been published.
It remains to be seen whether the extension of retail hours and
Sunday openings will provide any real benefit to the economy, or
what the law’s impact will be on rental values and valuations of
assets located in ITZs. The few areas that were already authorized
to open on Sundays may be viewed as less attractive. However,
the law cannot take effect until negotiations have been completed
between management and unions. Some groups and retailers
anticipated the new law and began discussions in advance. For
example, Darty and Inditex have already reached labor
agreements. By contrast, negotiations have stalled at the FNAC
and at major department stores, despite offers of terms considered
more advantageous than those available elsewhere in France.
Department stores have at least managed to avoid the application
of an amendment that would have extended the TASCOM tax to
city-center retailers of more than 400 m² opened before 1960.
Presented by members of congress Sandrine Mazetier (Paris) and
Pascal Cherki (Paris), this amendment was adopted by the National
Assembly after the first reading but rejected by the Senate in
December of 2015.
Intended to promote growth, business activity, and equal
economic opportunities, the new law contains other provisions that
over time could affect the French retail market. The law reflects the
current government's desire to simplify the procedures for
obtaining a building permit and to limit abusive claims. This topic is
especially important because of the growing gap between the time
needed to complete retail projects and the rapid changes in
consumer behavior.
Retail Property Market France | 13
The world is changing rapidly, and it is not slowing for us. This new world awaits neither regulations nor governments. It moves fast, is disruptive, and therefore has a destabilizing effect on social, fiscal, and regulatory issues. However, this new world is an extraordinary source of new jobs, innovation, and productivity.
Emmanuel Macron, French Economy Minister, speaking at the OECD on September 18, 2015.
RETAIL PROPERTY MARKETFRANCE | 2016
Cushman & Wakefield France21 rue Balzac75008 Paris
CONTACTS
Christian DuboisHead of Retail Services
Cushman & Wakefield France
David BourlaHead of Research
Cushman & Wakefield France
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