Prime or nothing else. The week was marked by the announcement of a number of significant deals in a commercial real estate market that is just waiting to take off again. These were obviously Parisian transactions. Transactions involving prime assets.
Leasing first. JP Morgan waited until the Choose France event to make official its arrival at 37 place du Marché-Saint-Honoré, in a 17,000 m² building that will be completely restructured. This transaction was previewed in the columns of Business Immo. The American bank is signing on the basis of a record rent of €1,200/sq.m/year, which further accentuates the dichotomy of the office market.
Gecina will certainly be looking for this type of customer when it puts €30-40 million of capex back into Solstys, the former Nexity headquarters purchased at over €13,000/sq.m. This transaction was announced in the columns of Business Immo. Once again, a transaction announced exclusively by Business Immo that could be THE deal of the year in Paris. Unless Union Investment finds a buyer for the Paris Trocadéro business center.
Investors only have eyes for prime real estate. What applies to office space extends to many other asset classes. In the residential, hotel and retail sectors, the investment market is driven more by the core than the distressed.
And this appetite extends beyond institutional investors. A study by Knight Frank shows that private investors, starting with the very wealthy, love real estate. More specifically, prime real estate. Just under half of the 150 family offices surveyed by the consultancy want to increase their allocation to real estate. And their appetite is focused on prime addresses. "One of the common features of their acquisitions is the search for high-quality assets, which can be defined as 'prime' or 'ultra-prime'," observes Magali Marton.
The real estate market is fracturing a little more every day, between assets and addresses where values are resisting, sometimes even taking off, and others that are devaluing, sometimes even collapsing.
Prime, when valued at more or less the yield of the 10-year OAT, is the price of liquidity for some, the price of scarcity for others. The two often go hand in hand.