Office Rents Seen Falling 7.5% in 2010

PARIS-Prime office rents in central Paris are expected to decline around 7.5% next year against a background of growing supply and stagnating demand, according to a new survey by the London-based Investment Property Databank and the Paris-Ile de France regional development agency.

Prime CBD office rents are forecast to fall to an average of €620 per square meter at end-2010 from €673, currently. Some 15% of office leases have been renegotiated this year, leading to rental reductions of 14% on average, and this decline is not expected to accelerate in 2010. However, the vacancy rate in the Ile de France area is projected to rise to 8.3% at the end of 2010, from 6.5% at end-September and 5.4% at end-2008. Transactions are expected to be little changed at 1.6 million square meters compared with 1.7 million square meters in 2009. The level of transactions stood at 2.391 million square meters in 2008.